These Are Warren Buffett’s 5 Top Dividend Stocks

Warren Buffett’s Berkshire Hathaway  isn’t known as a top dividend stock, but that doesn’t mean that Buffett doesn’t understand the power of income investing.

“The Oracle of Omaha” has maintained a strict no-dividend policy at the insurance giant for years. Since 1962, Berkshire has paid out only one distribution to shareholders; Warren Buffett even joked he, “must have been in the bathroom,” when that decision was made.

But while he may be stingy with shareholders, Buffett doesn’t mind collecting dividends himself. Every year, the conglomerate earns billions in distributions.

His portfolio has become a virtual “who’s who” of top dividend stocks.So if you’re looking for yield, you could do worse than skimming through Berkshire’s holdings.

No, the company isn’t a good idea for income investing, but Warren Buffett’s portfolio is filled with some of the best dividend stocks around. Here are five:

9 Best Undervalued Stocks To Buy And Hold For The Next 9 Years

The best holding period is forever, according to Warren Buffett, and we all should agree. 

Buying shares of high-quality businesses and holding them for years is the best way to compound your wealth. 

And if you can buy those shares at a discount to fair value, even better.

I evaluated 60 different companies this week to determine whether they are suitable for Defensive Investors. 

Out of those 60 companies, only 21 were found to be undervalued or fairly valued and suitable for either Defensive or Enterprising Investors.

Here are the 9 best results...

Why High-Yield Dividend Stock UBS Group Could Be A Buy

UBS is a $37 billion revenue-generating machine providing financial services to high net worth individuals and institutions throughout the world.

What makes UBS different from many others is that 50% of it business comes from fees from private wealth management. Investment banking accounts for 27% of all revenues while commodity banking services for personal and corporate clients contributes 15%. Asset management for corporate benefit plans takes up the remaining 8%.

In its core private wealth business, UBS has a loyal following among the world's wealthiest families. It takes about $10 million just to open a private bank relationship. Monthly fees are based on assets under management and do not vary greatly year to year.

Approximately 80% of its core income comes from recurring fees. UBS does not seek the highest absolute investment returns. Most clients are more concerned with capital preservation. This means that UBS enjoys some stability in its business.

UBS stock has fallen over 28% in 2016, pushing its $0.63 per share dividend to a yield of 4.5%. Dividend payments are limited to once a year so investors needing more frequent income will find their needs better met elsewhere.

UBS cut its dividend during the financial crisis and only recently began making payments again. Financial stocks usually employ a lot of leverage, which can make them riskier investments during recessions. As well, banks with heavy European exposure are being hit hard today, so investors should proceed with caution.

These are the corporate fundamentals and the dividend history compiled in two charts...

UBS Group -- Yield: 6.20%

UBS Group (NYSE:UBS) employs 60,093 people, generates revenue of $13,714.23 million and has a net income of $6,646.89 million. The current market capitalization stands at $55.59 billion.

UBS Group’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $16,143.20 million. The EBITDA margin is 50.49% (the operating margin is 17.87% and the net profit margin 20.79%).

Financials: The total debt represents 18.84% of UBS Group assets and the total debt in relation to the equity amounts to 321.14%. Due to the financial situation, a return on equity of 11.71% was realized by UBS Group.

Twelve trailing months earnings per share reached a value of $1.29. Last fiscal year, UBS Group paid $0.88 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 10.90, the P/S ratio is 1.61 and the P/B ratio is finally 0.88. The dividend yield amounts to 6.20%.

Stock Charts:

Long-Term Stock Price Chart of UBS Group (UBS)

Long-Term Dividend Payment History of UBS Group (UBS)

Long-Term Dividend Yield History of UBS Group (UBS)

These are several high yielding competitors of UBS...

Try This High-Yielding Telecom Stock And Their 6 Competitors To Boost Your Dividend Income

If you are in the UK or one of 170 countries, the name BT Group is as familiar its predecessor, British Telecom. 

The former government-owned telecom utility is now into offering a full compliment of fixed-line, broadband, mobile and Television products and services. 

It delivers these services through six business groups: Global Services, Business and Public Sector, Consumer, EE, Wholesale and Ventures and Openreach. 

The company was incorporated in 2001 and is headquartered in London. Fewer than a dozen players indirectly control the global communications market. In many countries the market is increasingly reaching maturity resulting in slower growth. 

However, this still leaves half of the worlds population either un-served or under served. This is especially accurate when consideration is given to mobile and Internet services. 

The amount of capital required to enter, compete and operate in this arena is great and is almost always influenced by government regulation. So the big are likely to get even bigger. BT Group has a long history paying a semi-annual dividend. The current payout of $0.96 offers investors a 3.6% yield. 

For a utility, BT's payout has been more volatile than average. The current payout is nearly 50% greater than 2009 but 45% below peak 2014 levels. The current payout ratio is a moderate 42% of EPS and 40% of Free Cash Flow, which is supportive of the current dividend payment.

Here are more details from the company and it's dividend history....

Why Insurer Metlife Could Be A Buy

MetLife is one of the oldest and most enduring companies in America, drawing its origins to 1863 in New York City. 

Over the past 16 decades it has grown from a simple provider of life insurance and annuities (60%) to a financial colossus that extends to employee benefits and asset management products and services.

From its famous Park Avenue location, MET reaches 90 million customers. This includes over 60 countries in Asia, Latin America, Europe and the Middle East that adds to nearly 30% of its business.

The insurance and financial services industry is highly competitive in all respects. Great importance is placed on attracting new retail and corporate customers since longevity is a key to success in the main insurance and annuity segments of MET's business.

At the same time, adequate reserves must be maintained to meet eventual policy payments to beneficiaries. MET earns its income making actuarial assumptions and earning an interest spread in the interim.

Low interest rates combined with historically narrow interest spreads have disrupted fixed income markets for the past several years. As long-term fixed income investments have matured, insurance companies have been hard pressed to reinvest these proceeds as profitably.

For MET this has caused the company to alter actuarial assumptions and change reserve practices that was announced with the most recent quarterly performance. During this period, the company's revenues fell by 2% to $17 billion and per share profits by 93% to $0.06.

MET has paid dividends either to policyholders or stockholders for more than 90 years with regular increases over the past four. Yes, the financial industry is going through difficult times but it is not the first.

During the financial crisis in 2008, MET revenues increased 8% while per share profits posted negative growth of 24%. The company consistently paid dividends during this period. This means that MET could be less sensitive to bear market pressures than the average company.

The payout ratio is just 41% of earnings-per-share and only 13% of free cash flow. This is unusually low even for insurance companies that are required to maintain adequate reserves for policyholder payments.

MET's balance sheet is not particularly leveraged, and profitability margins are above average. Operating margins at 10.7% are the highest in nearly five years as are the 6% return on invested capital and 8% return on equity.

MET stock has seriously under performed the general market, driving up the $1.60 per share payout to a well above average 3.9% yield.

Over the past decade, dividends have compounded at an 11% average annual rate and by 14.9% over the past five years. If the company can continue to grow dividends and the stock price recovers, MET could offer investors attractive total returns.

Here is a corporate profil and the dividend history of the stock...