A Closer Look At Warren Buffett's $2.2 Million Daily Dividend Stock

During a selling spree that started in mid-July, legendary investor Warren Buffett slashed his holdings in Bank of America Corp. BAC below 10%.

In an October filing with the U.S. Securities and Exchange Commission, Buffett revealed that he sold more than 9.5 million shares across three transactions. The sale reduces his holdings to 775 million shares, representing a roughly 9.87% stake in the company.

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With a 26-cent per share quarterly dividend, Berkshire Hathaway earns $201.5 million from the stock each quarter or $2.2 million per day.

According to CNBC, with its holdings now below the 10% threshold, Berkshire Hathaway is no longer obligated to report related transactions promptly. SEC regulations require shareholders with more than 10% of a company's equity to disclose their transactions within two business days.

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Buffett’s followers will have to wait to learn his next moves. The upcoming 13F filing in mid-November will only detail Berkshire Hathaway's equity holdings as of the end of September. Berkshire is still Bank of America's largest institutional investor.

In 2011, Buffett invested $5 billion in Bank of America preferred stock and warrants to boost confidence in the struggling lender after the subprime mortgage crisis. In 2017, he converted the warrants into common stock, establishing Berkshire Hathaway as the bank's largest shareholder. Buffett then expanded his stake by purchasing 300 million shares in 2018 and 2019.

Buffett's recent sales of Bank of America follow his gradual exit from several long-standing banking investments in recent years, including JPMorgan, Goldman Sachs, Wells Fargo and U.S. Bancorp. Last year, Buffett took a cautious stance on the 2023 banking crisis, expressing a pessimistic outlook.

Buffett has said that bank failures during the 2008 global financial crisis and again in 2023 have eroded confidence in the financial system, a problem exacerbated by ineffective communication from regulators and politicians. He also noted that digitization and the rise of fintech have made bank runs easier to trigger in times of crisis.

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Buffett's investment strategy reflects his distinct risk tolerance and long-term perspective. Individual investors may have different risk profiles and time horizons that don't align with Buffett's approach.

Buffett often makes investments at strategic moments, like market downturns or when a company appears undervalued. Attempting to replicate his moves without comparable market insight and timing may result in less favorable outcomes.

Berkshire Hathaway benefits from extensive resources, including a team of analysts and a large cash reserve, enabling it to make significant, strategic investments. Individual investors, however, may not have access to the same resources.

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