Warren Buffett likes to brag about the big dividends some of his S&P 500 stocks pay. But this year, like most investors he is scoring the biggest gains with Warren Buffett stocks that don’t pay any dividend at all.
X
Seven of the top eight best-performing U.S.-listed stocks in Berkshire Hathaway‘s (BRKB) public portfolio — including financials Nu Holdings (NU) and StoneCo (STNE) as well as Amazon.com (AMZN) — pay no dividend whatsoever. And yet, these seven Warren Buffett stocks are up an average of 36.7% — blowing away the S&P 500’s 9.6% year-to-date gain and the 6.2% gain of the average stock in the Berkshire Hathaway portfolio.
Buffett’s experience is in line with one of the most surprising trends in the S&P 500: Dividend stocks are flopping this year.
It seems if you can get 4% or higher interest rates from an FDIC-insured savings account, the S&P 500’s 1.6% dividend yield isn’t worth the trouble.
“Dividend stocks are in a long winter,” said Bespoke Investment Group.
Even Warren Buffett Stocks That Pay Dividends Are Whiffing
Dividend stocks are out — even most of the ones Buffett picked.
The iShares Select Dividend ETF (DVY) is down 7.3% despite yielding twice the S&P 500’s 3.4%. Meanwhile, the SPDR Portfolio S&P 500 Growth ETF (SPYG), which yields just 1.5%, is up 13%.
Several of Buffett’s very worst stocks this year are big dividend payers. Shares of Bank of America (BAC) are down more than 14% even after paying a fat 3.1% yield. And Chevron (CVX) and Jefferies Financial (JEF) are off 14.2% and 11.2%, respectively, despite their nearly 4% yields.
And don’t assume some of these stocks are falling just because they’re in the financial sector. Berkshire Hathaway’s top stock this year, Nu Holdings, is also a financial. Shares of the U.S.-listed digital banking company based in Brazil are up nearly 58% this year. And that’s despite paying zip in terms of a dividend.
Other Winning $0 Dividend Stocks
Another financial stock Buffett owns, StoneCo, is also a big winner despite paying no dividend.
Shares of the financial technology firm are up more than 44% this year. It’s not a huge position for Buffett. Berkshire Hathaway owns less than 4% of the company’s shares outstanding. Nonetheless, StoneCo makes up in growth for what it lacks in dividends. Analysts think the company’s adjusted profit will boom by more than 95% this year to $3.34 a share.
Similarly, Amazon.com is a tiny holding for Berkshire Hathaway, worth just $1.2 billion. Berkshire Hathaway owns less than 0.2% of the company — perhaps because it’s a megacap tech that still doesn’t pay a dividend. Nonetheless, Amazon is up 41% this year, making it the No. 3 performer among U.S.-listed Buffett stocks.
That’s not to say none of Buffett’s dividend payers is paying off. Apple (AAPL) is Berkshire Hathaway’s largest position by far, occupying about half of the U.S.-listed public portfolio. And Apple is the exception — sort of. Shares are up a strong 35% this year, and the company does pay a dividend. It’s a tiny dividend, though, of just 0.6%.
But, by and large, you won’t be hearing many complaints this year about some of Berkshire Hathaway’s stocks not paying a yield. That’s what a savings account is for, it seems.
These Warren Buffett Stocks Pay Zilch
Seven of Berkshire Hathaway’s top eight stocks this year pay no dividend
| Company | Symbol | Dividend | YTD change | Sector |
|---|---|---|---|---|
| Nu Holdings | (NU) | 0% | 57.0% | Financials |
| StoneCo | (STNE) | 0 | 44.3 | Financials |
| Amazon.com | (AMZN) | 0 | 40.7 | Consumer Discretionary |
| DaVita | (DVA) | 0 | 35.2 | Health Care |
| Apple | (AAPL) | 0.6 | 34.7 | Information Technology |
| Floor & Decor | (FND) | 0 | 30.8 | Consumer Discretionary |
| Snowflake | (SNOW) | 0 | 28.4 | Information Technology |
| Formula One | (FWONK) | 0 | 22.6 | Communication Services |
Sources: S&P Global Market Intelligence, IBD
Follow Matt Krantz on Twitter @mattkrantz
YOU MAY ALSO LIKE:
Four Stocks Turn $10,000 Into $50,000 In Four Months
