Caleb Naysmith
4 min read
In This Article:
Most people spend their lives exchanging time for money, but Warren Buffett’s famous warning—“If you don’t find a way to make money while you sleep, you will work until you die” — captures the essence of building lasting wealth through passive income. For Buffett and many successful investors, one of the most reliable paths to earning money around the clock is investing in high-quality dividend stocks, or stocks with consistent returns and appreciation.
Buffett’s approach to dividend investing is rooted in the pursuit of long-term, sustainable wealth. He gravitates toward companies that not only pay consistent dividends but also have a track record of increasing those payouts over time. What makes this strategy powerful is its ability to generate passive income — money that flows into your account whether the market is up or down, and regardless of your day-to-day involvement.
Dividend stocks, when chosen wisely, allow investors to participate in the profits of established businesses. This steady stream of income can be reinvested for compounding growth or used to fund living expenses, making it possible to gradually shift from working for money to letting your money work for you.
Buffett’s own portfolio is a testament to the value of dividend investing. Below are the names of some of his biggest positions, and others with strong dividends.
A cornerstone of Buffett’s portfolio, Coca-Cola has paid and increased its dividend for decades. In 2024 alone, Berkshire Hathaway received nearly $776 million in dividends from Coca-Cola, a testament to the power of holding quality dividend payers over the long term. Coca-Cola is currently yielding a respectable 2.88% dividend, and coupled with its strong and consistent stock appreciation, it’s a no-brainer for any portfolio.
Currently offering a whopping 6.5% dividend, a $10,000 investment in Verizon could net you $650 in income every year. Coupled with respectable returns amidst an ongoing rebound, this could prove to be a strong value proposition for investors. While not currently in Buffett’s portfolio, he does own competitor T-Mobile, meaning Berkshire Hathaway is bullish on some telecoms, at least.
