Electronic income

4 Unstoppable Warren Buffett Dividend Stocks That Are Passive Income Machines

Warren Buffett made headlines on Thursday after Berkshire Hathaway ( BRK.A 1.78% )( BRK.B 1.90% ) announced an equity stake of approximately $4.2 billion in resume. Buffett has been on a buying spree lately – adding to Berkshire’s position in western oil and the purchase of Alleghany Insurance Company for approximately $11.6 billion.

Berkshire has many attractive holdings, but four dividend-paying stocks that stand out from the rest are United Parcel Service (UPS -0.90% ), Chevron (CLC 1.69% ), Procter & Gamble (PG 0.78% )and Coca Cola (KO 0.61% ). Here’s what makes each stock a great buy now.

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1. There’s never been a better time to own UPS

UPS and fedex ( FDX -1.10% ) The shares are both down more than 13% since March 29, although both companies continue to report strong results. The question isn’t how either company did, but rather where it might go from here.

UPS and FedEx managed to raise prices to fight inflation. But FedEx’s comment during its third-quarter fiscal 2022 earnings call on March 18 was a bit concerning. “Several macroeconomic forces, including the tragic conflict in Ukraine, uncertainty surrounding the pandemic, a tight labor market, supply chain disruptions, high energy prices and inflationary pressures have clouded the current outlook. of GDP globally and in the United States,” said Brie Carere. , chief marketing and communications officer of FedEx on the recent earnings conference call.

However, UPS posted record revenues and a strong operating margin throughout 2021, which enabled it to increase its dividend by 49%. UPS grew its business in 2020 and 2021 when many other industrial companies struggled. He expects slower growth in 2022, but continues to see strength in e-commerce and its international segment. With a price/earnings ratio (P/E) of just 13.1 and a dividend yield of 3.1%, UPS is just too good to pass up.

2. Chevron is primarily protected against downside risk

Like the rest of the oil majors, Chevron is having a great year as high oil and natural gas prices provide much-needed respite for energy companies that were taken to the cleaners during the height of the COVID-19 pandemic in 2020. Many exploration and production companies are more exposed to rising oil and gas prices than Chevron. But what Chevron has that many of its competitors don’t is an excellent balance sheet, low cost of production and a history of paying and increasing its dividend. Given its strong fundamentals, it’s no wonder Chevron is the 11th largest position in Berkshire’s portfolio.

3. Procter & Gamble may be the safest stock on the planet

Like UPS, Procter & Gamble is not immune to inflation. But he found ways to pass those costs on to customers. Sophisticated supply chains have helped Procter & Gamble maintain high gross margins, while other consumer staples companies have been hit harder by supply chain disruptions.

Procter & Gamble is not a cheap stock or a fast growing company. And it’s not a great value either, with the stock hovering around a 52-week high and a P/E ratio of 28.1. However, P&G is a proven company that has held up well during times of high inflation and even recession.

Like other defensive values, such as walmart or Wholesale Costco, P&G stock deserves a premium because its business should continue to do well even if the macroeconomic situation deteriorates. P&G has paid and increased its annual dividend for more than 65 consecutive years, making it one of the oldest Dividend Kings. A Dividend King is a S&P500 component that has paid and increased its dividend for at least 50 consecutive years.

4. Coca-Cola has a high dividend yield and stable business

Although Coca-Cola is a completely different company from P&G, the investment thesis for both stocks is very similar. Like P&G, Coca-Cola is a dividend king and has several well-known brands that consumers know and love. From its flagship soda products to Simply, Minute Maid, Vitamin Water, Smart Water and acquisitions like Topo Chico, Coca-Cola is much more than the Coca-Cola brand.

Coca-Cola’s investment thesis is that people are unlikely to cut spending on its products, even during an economic downturn, which makes its business stable. Coca-Cola stock has a dividend yield of 2.8%, which is a bit higher than P&G’s 2.2%.

A Diverse Basket of Proven Passive Income Winners

Investing equally in UPS, Chevron, Procter & Gamble, and Coca-Cola gives an investor a dividend yield of 2.9% and exposure to the industrials sector, the energy sector, and two different industries in the utilities sector. basic consumer goods. All four companies are proven long-term winners, but are particularly good buys in times of high volatility, as investors can be confident that each company won’t be disappearing any time soon.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.