Want To Make Money While You Sleep? Here Are Warren Buffett's Top Dividend Picks

Influential investor Warren Buffett has been doling out investment advice since the beginning of his career. 

A staunch advocate of value investing in large-cap, well-managed equities, Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die."

Investing in high-quality dividend stocks can help you generate substantial passive income, creating a sturdy cushion for retirement as well as side earnings. Companies categorized as dividend aristocrats have a decades-long history of periodically distributing dividends, making them a good source of income during turbulent market conditions and recessionary fears. 

Buffett, who currently ranks No. 5 on the Forbes real-time billionaires list with a net worth of $114 billion, is a stalwart supporter of industry-leading blue chip stocks. 

"Beware the investment activity that produces applause; the great moves are usually greeted by yawns," Buffett once said. 

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Take a look at some of Buffett's most trustworthy dividend-paying stocks. 

Coca-Cola Co.

Buffett has said dividend stocks are the "secret sauce" behind Berkshire Hathaway Inc.'s success. He called out the Coca-Cola Co. KO in Berkshire Hathaway's 2022 shareholder letter, stating, "[Dividend] growth occurred every year, just as certain as birthdays."

Buffett and his right-hand man Charlie Munger, vice chairman of Berkshire Hathaway, invested $1.3 billion in Coca-Cola, obtaining 400 million shares in 1994 when it generated a dividend income of $75 million. As of 2022, annual dividends from Coca-Cola shares have catapulted to $704 million — a more than 800% rise in less than three decades. 

Berkshire Hathaway's stake in Coca-Cola was valued at $25 billion as of 2022, marking a more than 1,800% rise from the initial investment of $1.3 billion. As of last year, Coca-Cola stock accounted for approximately 5% of Berkshire Hathaway's total holdings. 

American Express Co.

Buffett made similar gains from his investment in American Express Co. AXP. He invested nearly $1.3 billion in American Express in 1995, which is now valued at $22 billion. This marks a nearly 1,600% rise in valuation. 

Capital gains are not the only benefit American Express stock has generated for Buffett. The world's largest portfolio manager also pocketed dividend income of $302 million from his American Express holdings in 2022, up from $41 million during the initial investment in 1995. 

"Those [American Express dividend] checks, too, seem highly likely to increase," Buffett said in Berkshire Hathaway's 2022 shareholder letter. American Express shares also account for nearly 5% of Hathaway's net worth. 

Apple Inc.

While Apple Inc. AAPL is not considered a dividend stock by most investors, the tech giant's dividend payouts have made the stock one of Buffett's family jewels. Berkshire Hathaway holds a nearly 5.8% stake in Apple. 

Buffett describes Apple as a "better business than any we own." He credits his substantial stake in Apple to multiple share repurchases executed by the company over the years, making it "costless" for Berkshire Hathaway to increase its Apple stock holdings. 

Buffett's dividend income from Apple averaged about $775 million annually as of 2020, according to Berkshire Hathaway's 2020 shareholder letter. Apple currently has 11 consecutive years of dividend growth history. 

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