Undoubtedly, you’re familiar with Warren Buffet. What you
might not be aware of, however, is the fact that he is a huge fan of dividend
stocks. However, that doesn’t mean that Berkshire Hathaway necessarily has to
pay dividends...and it doesn’t. With that said, though, some of the most
important positions there are among the market’s most reliable and profitable dividend stocks currently available. We’re talking big names like Coca-Cola and
IBM!
Speaking of Coca-Cola, it has impressively increased its
dividends for 52 years, yet it still doesn’t have the most coveted position in
the portfolio. No, that honor goes to Wells Fargo, which features a very basic
and also very low-risk capital allocation policy. That fact is perhaps why it’s
so popular among today’s dividend investors.
Also, IBM, as one of Buffet’s only tech-related investments,
has had growing dividends that are looking like they will pay off big in the
long run.
So, why, exactly, are we telling you all this, and what
should you do with the information? Well, to put it plainly, we want you to
understand that dividends are important things to pay attention to. They
provide a very good key to the health and likely longevity of a business.
Companies that have great dividend growth are almost always
(nothing is certain in this industry...and in this economy) ones that are going
to withstand market and cycle changes. They also, typically, can protect their
sales and income.
We brought up Berkshire Hathaway because, though it doesn’t
pay dividends, that’s only because of its unique business model....and Buffett,
a truly exceptional investor, himself. That does not mean, though, that you
should not be paying attention to dividends for other companies. What it does
mean is that you should take something away from Buffett’s fine example- invest
in the best possible businesses that have proven themselves over years and
years.
The basic bottom line- invest in companies that show
regular, constant dividend growth, and it’s pretty hard to go wrong.
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