If anyone knows that it takes money to make money, it’s Warren Buffett. But the time Berkshire Hathaway (BRK.A 0.64%) (BRK.B 0.25%) The CEO also knows that generating significant passive income is really easy if you have enough to invest in the right stocks.
Some great stock ideas can be found in Berkshire’s own portfolio. Investing $100,000 in each of these three Buffett dividend stocks can generate more than $12,800 in combined passive income per year.
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1. Store Capital
store capital (TO STOCK 1.49%) it ranks as one of the highest-yielding dividend stocks among Berkshire holdings. Its dividend yield currently exceeds 5.4%. An initial investment of $100,000 in stock would generate an annual income of more than $5,400.
This should not be surprising. Store Capital is a real estate investment trust (REIT). REITs must return at least 90% of their taxable income to shareholders in the form of dividends.
However, Store Capital hasn’t given investors much to be happy about besides dividend income of late. Its shares have fallen with increasing economic uncertainty. The REIT focuses heavily on leasing properties to restaurants, many of which have been affected by rising rates of inflation.
But Store Capital itself is largely immune to the impact of inflation on its leases. The company has incorporated rent increases that help offset rising prices. Your business should be able to weather any storm relatively well.
2. Chevron
Chevron‘s (CLC 1.72%) the dividend yield of just over 3.6% is the lowest in several years. However, that’s enough for a $100,000 investment to provide more than $3,600 in passive income a year.
Incidentally, the oil and gas giant has not cut its dividend. Chevron has increased its dividend for 35 consecutive years. The company’s lower dividend yield is due solely to impressive stock performance.
Chevron has been a big winner for Buffett. The stock now ranks as Berkshire’s third-largest holding. And the Oracle of Omaha remains optimistic about the prospects for the oil industry.
Importantly, Chevron continues to invest in both traditional energy (ie oil and gas) and new energy sources. Company CEO Mike Wirth said on Chevron’s first-quarter conference call last week: “We are on track to deliver higher returns and reduce carbon emissions and reward our shareholders all along the way.”
3.AbbVie
If you’ve been aware, Store Capital and Chevron together could generate at least $9,000 in passive income per year. Invest another $100,000 in AbbVie (ABBV 1.17%) would add another $3,840, bringing the total to $12,840.
The AbbVie Dividend is as reliable as it gets. The big drugmaker is a Dividend King with a 50-year track record of dividend increases.
The stock has also held up well. AbbVie is comfortably outperforming the broader market so far this year. That’s true even after its shares plunged last week following the company’s disappointing first-quarter update. AbbVie missed Wall Street’s revenue estimate and lowered its adjusted earnings guidance for 2022.
However, there was plenty of good news in the company’s latest quarterly update. In particular, AbbVie appears to be in a strong position to quickly recover from the loss of US exclusivity for the best-selling Humira next year. The drug company should be able to keep those dividends flowing for a long time.
Reference-www.fool.com