Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B) has a portfolio of dozens of common stocks, many of which were hand-picked by CEO Warren Buffett himself. Buffett is a big fan of reliable dividends, so as you may expect, many of the stocks in the portfolio are dividend payers.However, some have high dividend yields, some pay Berkshire more money overall than others, and some have excellent track records of dividends. Berkshire's "top dividend stock" depends on how you define that term.In terms of dividend yield, the top dividend stock in the portfolio is real estate investment trust (REIT) Store Capital (NYSE: STOR). On the other hand, the stock that pays Berkshire the most money each quarter is Kraft Heinz (NASDAQ: KHC). Finally, the Buffett stock with the longest track record of dividend increases is Coca-Cola (NYSE: KO).The highest-yielding stock in Berkshire's portfolio is also one of its newest investments. Real estate investment trust Store Capital pays a … [Read more...] about Investing: What is Warren Buffett’s top dividend stock?
General Electric (NYSE: GE) cut its dividend in half in order to save money. The company hasn't been making enough money to cover its dividend recently, and the cut will save GE more than $4 billion per year. GE's free cash flow has declined for six years in a row, so cost-cutting measures had become necessary.There's no way to predict with 100% reliability whether a company will be able to maintain or grow its dividend payments in perpetuity, but there are a few things that can indicate your dividends might be in trouble.The most important dividend-related metric to know is the payout ratio. This is simply a stock's dividend, expressed as a percentage of its earnings. For example, if a stock pays $0.50 in dividends this year and earns $1.00, its payout ratio is 50%. A payout ratio of 60% or less is generally considered healthy, and 100% or more implies that the stock isn't earning enough to pay its dividend.In GE's case, the company was paying out dividends at a rate of … [Read more...] about Ask a Fool: Why did GE cut its dividend? Are my other dividend stocks safe?
By Chuck Mikolajczak NEW YORK (Reuters) - High dividend yield stocks such as telecoms and utilities are looking more tempting as investors become increasingly nervous about the outlook for equities and as U.S. Treasury yields hover near a 10-month low. The wide spread between the 10-year Treasury note and high-dividend payers, coupled with these stocks' reputation as a safer play, could tempt investors to move away from high growth names. A nuclear test from North Korea on Sunday rattled investors when markets opened on Tuesday after the extended holiday weekend, pushing the yield on benchmark 10-year Treasury notes to a 10-month low. "If rates can stay down here you will see people begin to return to those days of owning high dividend stocks," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey. Investors typically prize high dividend players in a low rate, low growth environment, as they search for high yielding and … [Read more...] about High dividend stocks may find favor as market headwinds abound
Bank stocks spiked Thursday after the Federal Reserve's completion of its annual financial sector test enabled large banks to raise dividends and issue stock buyback plans. The banks' moves heartened investors on a day of a broad sell-off. The financial sector was the top performer in the stock market Thursday, up 0.9%. The S&P 500 index fell 0.7%. In completing the second phase of its annual "stress tests," the Federal Reserve issued Wednesday its approval of the capital plans of all 34 banks it reviewed. Banks submit their capital plans -- which include how they plan to raise dividend payouts and buy back shares -- at the beginning of the year. They are allowed to proceed if they pass the second phase of the Fed's tests. Bank of America plans to increase its quarterly common stock dividend by 60% to 12 cents per share, beginning in the third quarter of 2017. The company, whose shares were up 1.8% Thursday, also plans to buy back $12 … [Read more...] about Bank stocks defy market downturn on dividends, stock buyback plans
Are stocks that pay dividends in trouble now that the Federal Reserve is serious about raising interest rates back to more normal levels? (The Fed hiked rates Wednesday for the third time since December and said another hike is likely this year with three next year.)The answer depends on what kind of stocks you own, according to an analysis by Santa Barbara Asset Management that looked at how dividend-paying stocks have done the past eight times since 1972 the Fed has been in rate-hike mode. The analysis found that stocks in the S&P 500 stock index that not only pay out a cash dividend, but which also increase the payout regularly, do best, posting average 36-month returns of 14% in those past tightening cycles. The next best performer? Dividend payers that didn’t boost payouts, with an average gain of 8%. Companies that pay dividends but cut them fared the worst, posting an average loss of 2%. Non-payers rose 1%.So what explains “dividend growers” better … [Read more...] about What Fed hikes mean for dividend stocks
Does the old adage "A bird in the hand is worth two in the bush" apply to investments? When it comes to stocks that pay dividends vs. those that don't, the answer is yes. According to Standard & Poor's, dividend-paying stocks in the S&P 500 outpaced the nonpayers in the benchmark index by 1.63% compounded annually from the end of 1979 through July 2010. That doesn't sound like much, but a $10,000 investment in the dividend payers would have grown to $360,821, while the same investment in nonpayers would have resulted in $230,631. Both figures are before taxes. The stocks that pay dividends also tend to be less volatile. "They don't go up as much in the good times and they don't go down as much in the bad times," said Howard Silverblatt, senior index analyst at S&P. That doesn't mean dividend payers will stay that way forever. Just a few years ago, banks and some of the biggest corporations paid out whopping dividends. Then came the financial crises. Companies … [Read more...] about Over long term, dividend stocks earn their chops
Who doesn't love Warren Buffett? One of the world's richest men wasn't born with a silver spoon in his mouth. He's just an investing genius who's been letting his fortune compound for decades. And he's humble about the whole experience to boot.So it makes sense that when investors are looking for a place to put their money, many start by evaluating what the Oracle of Omaha has done with his own money. Three of our Motley Fool investors are here to tell you what their favorite "Warren Buffett" stock is right now.Read on to find out why Markel (NYSE: MKL), Realty Income (NYSE: O), and Apple (NASDAQ: AAPL) are all worth your consideration. And know that in all three cases, our analysts have backed up their assertions by owning shares of the stock they're recommending.Steve Symington (Markel): Markel Corporation is often referred to as a "mini-Berkshire" for its striking similarities to the business Warren Buffett built but at less than a 30th of its size … [Read more...] about Buffett stocks picks: How to invest like the Oracle of Omaha
The short answer to this question is no. All retirees should have some exposure to stocks or stock-based funds in their portfolio. While they are indeed more volatile investments than bonds, for example, they are essential for achieving long-term growth, which you'll need if you want your retirement portfolio to keep pace with inflation.Having said that, it's a good idea to reduce your exposure to stocks as you get older. A rule of thumb I like to use is to subtract your age from 110 to determine the percentage your portfolio that should be in stocks. For example, if you're 65 years old, this formula suggests that your asset allocation ought to be roughly 45% stocks, with the rest in less-volatile fixed-income investments.Companies with rock-solid businesses and long histories of consistent dividend growth can work well for retirees; stalwarts such as Microsoft, ExxonMobil, and Johnson & Johnson immediately come to mind.Or, if you don't want to worry about company-specific … [Read more...] about Ask a Fool: Are stocks too risky for retirees to invest in?
The short answer? It depends.The rate at which dividends are taxed hinges on two main factors: your marginal tax bracket and whether the dividend is "qualified" or not.To be qualified, a dividend needs to meet two basic requirements. First, it must be paid by a U.S. corporation or a foreign corporation traded on a major U.S. stock exchange. Second, you must have owned the stock for more than 60 days in the 121-day period staring 60 days prior to the ex-dividend date.Furthermore, dividends paid by pass-through companies such as real estate investment trusts typically aren't considered to be qualified.If your dividend isn't a qualified dividend, it will be taxed as ordinary income at your marginal tax rate, or tax bracket. If your dividend is qualified, it is taxed at more favorable rates of 0% for the two lowest tax brackets, 15% for the 25%-35% tax brackets, and 20% for the top tax bracket. High earners are also subject to an additional 3.8% net investment income surtax, regardless of … [Read more...] about Ask a Fool: How are my dividends taxed?
Dividends don't directly affect the valuation of stock investments, as they aren't included in the calculation of most valuation metrics. However, a company's dividend activity or its dividend yield can certainly affect investor sentiment and move the price of the stock, thereby changing its valuation.First of all, a dividend doesn't have a direct impact on a stock's valuation. Common valuation metrics such as the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, and most others are calculated in the same way regardless of whether a stock pays a dividend.Having said that, dividends can affect stock prices and valuations in several ways.For example, if a company raises its dividend higher than the market expects, it could be taken as a positive sign and boost the stock's price. Similarly, a dividend cut can be interpreted as a sign of trouble and could result in a depressed valuation.Dividends can also help to create a "price floor" in stocks that otherwise may not exist. For … [Read more...] about Ask a Fool: How do dividends affect stock valuation?