Warren Buffett has built an unmatched track record and fortune as an investor. He has a net worth of around $80 billion. That’s after giving away billions already. He’s objectively the most successful investor ever.
The common stock portfolio he manages for Berkshire Hathaway is valued at more than $200 billion.
Buffett’s favorite stock in the portfolio pays him $2.2 million in dividends per day. I’ll tell you its name just ahead, but first…
There are many ways to go about building a fortune, but Buffett has chosen to buy stocks and businesses. Buffett is the chairman and CEO of Berkshire Hathaway Inc., which is a multinational conglomerate holding company. Berkshire Hathaway wholly owns a number of businesses ranging from GEICO to Dairy Queen. The conglomerate also owns a significant minority stake in a number of businesses through common stock.
The really cool thing about it is, any of us can invest in the same stocks. Anyone can buy the same stocks Buffett buys. That’s the beauty of US capitalism. An average Joe like me can buy stock in a world-class enterprise and participate in the long-term upside of a business.
Plus, I can get regularly paid as an owner. That occurs through juicy, beautiful, fantastic dividends. Dividends are a portion of the profit a company generates. If you build up a large enough portfolio of dividend-paying stocks, you could even live off of this passive dividend income cash flow.
I built up a six-figure portfolio of over 100 different high-quality companies, and these businesses collectively send me enough five-figure passive dividend income to live off of in my 30s. I built up this portfolio without a college degree or high-paying job, and that’s after growing up on welfare in Detroit. Better yet, most of these stocks are regularly growing their dividends. That’s because their profit is regularly growing.
I’ve invested in a lot of the same stocks that Buffett invested in. Buffett loves growing dividends. So do I. Buffett’s favorite stock accounts for about 38% of the $217 billion common stock portfolio he manages within Berkshire Hathaway. This stock sends Berkshire Hathaway dividends that average out to over $2.2 million per day. Today, I want to share with you which stock is Buffett’s favorite of all.
Buffett’s favorite stock is Apple Inc. (AAPL).
Founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne, Apple has become one of the largest and most impactful companies in history.
Its market cap is approximately $1.4 trillion as I shoot this video, making it one of the most valuable companies in the world.
Key products and services include iPhone, iPad, Macintosh, Apple Watch, Siri, App Store, and Apple Pay. Billions of people around the world interact with Apple’s products and services every single day. While it’s technically a technology company, Buffett has countered that assumption and classified it as a consumer products company. Rightly so, in my opinion.
Personal electronic devices, especially smartphones, have become some of the most important products that consumers own.
A smartphone has practically become an extra appendage at this point.
Access to mobile data and communication is almost as important to people as access to electricity or running water.
That’s where we’re at as a society, for better or worse.
Apple plays right into this by producing some of the most efficient and aesthetic personal electronic devices, including the sought-after iPhone, and they’ve intelligently built a suite of services to complement those devices.
This creates an ecosystem, which in turn creates a very sticky base of loyal customers. It should go without saying that this harmonious ecosystem leads to a lot of profit.
In fact, Apple brought in more than $55 billion in net income last fiscal year. That compares to $14 billion in net income a decade ago.
This kind of massive profit and huge growth has unsurprisingly attracted attention and admiration from Buffett, especially considering that Apple is such a prolific payer and grower of dividend payments. What’s perhaps surprising is just how much attention it’s getting from Buffett.
Apple is now the largest single holding in the $217 billion common stock portfolio Buffett manages for Berkshire Hathaway. Berkshire Hathaway’s stake in Apple is worth over $80 billion, accounting for about 38% of the value of the whole portfolio. For a guy who’s long been known for an aversion to technology companies, that’s significant. However, as I noted, Buffett sees this as more of a consumer products company, which I agree with.
What’s really incredible about this stake is the amount of unrealized gain that Berkshire Hathaway is sitting on. When Buffett sees a good deal, he goes big. And boy, did he ever go big on Apple. Berkshire Hathaway’s cost basis on its Apple stake was sitting at $35.287 billion as of the end of 2019.
Since the investment is now worth over $80 billion, that means Berkshire Hathaway has an unrealized profit of more than $45 billion. But I don’t think Buffett is in any kind of hurry to realize those gains and sell Apple stock. That’s because Apple is so busy sending Berkshire Hathaway reliable and rising dividend payments.
Check this out.
Apple’s current quarterly dividend payout is $0.82 per share. That’s $3.28 annualized. Berkshire Hathaway owns 245,155,566 shares of Apple. So that’s just over $804 million in dividends per year from their Apple stake. That equates to right about $2.2 million daily – even including weekends.
Now you can see why Buffett is so happy to remain an Apple shareholder, even while sitting on big gains. Better yet, we know that Apple is routinely growing their dividend.
They actually just announced a 6%+ dividend raise at the end of April – during the midst of a global pandemic! I’m sure Buffett was smiling when he saw that announcement. That marks the ninth consecutive year in which Apple has increased its dividend. And it seems very likely that they’ll continue to grow their dividend for many more years.
Of course, us regular retail investors won’t be able to own billions in Apple stock.
But that doesn’t take away from the fact that we all have the opportunity to buy shares in the same businesses as Warren Buffett. Use Buffett as inspiration, not a measuring stick. We don’t need millions or billions of dollars to be free and happy in life. Even just achieving a fraction of Buffett’s wealth will radically change your life.
I actually invested in Apple before Buffett did, initiating my position back in 2015. And while my stake is significantly smaller than what Berkshire Hathaway’s got, I’m certainly very happy every time my Apple dividends roll in.
You also have the opportunity to buy Apple, as well as any of the other stocks that Buffett has bought.
Now, not every stock that Buffett owns will be right for you. And not every Buffett stock is a good buy at this particular time. He’s built his portfolio over decades. But it’s never a bad idea to at least peek over the shoulder of the world’s most successful investor.
You can take a look at Buffett’s over-$200 billion common stock portfolio in the Warren Buffett Tracker.
This tracker lists all of Buffett’s stocks. It also tracks all of Buffett’s transactions on a quarterly basis, with massive special reports going over every transaction after they’re publicly announced.
— Jason Fieber
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