Warren Buffett and his company, Berkshire Hathaway, have never paid a dividend. Buffett has always believed that he could use the money in a better way for shareholders. Over six decades, the Oracle of Omaha has proven that idea.
But that doesn’t mean Buffett and his team of investors don’t like investing in stocks that pay dividends. After all, what’s better than knowing that every year, your investments will generate passive income? This year, Buffett and Berkshire will collect over $1.3 billion in passive income from their investments in two stocks.
Buffett and Berkshire have shown a keen interest in U.S. oil and energy producers in recent years. Even though the price of oil has stayed low, Buffett clearly believes that oil and gas will continue to be in demand. This idea has led Berkshire to buy over 118.6 million shares of Chevron.
That makes up almost 6% of Berkshire’s portfolio at the end of the first quarter of the year. It also makes Chevron Berkshire’s fifth biggest stock holding. Chevron has paid a dividend of $1.71 per share for the first two quarters of the year.
It currently pays a dividend yield of about 5%. If this continues and Berkshire keeps its stake in the company the same, Berkshire will collect close to $811.3 million in dividends from Chevron this year. The Houston-based company has a good history of paying dividends.
Chevron increased its dividend this year by 5%. This marks the 38th year in a row the company has increased its annual dividend. Free cash flow in the first quarter of 2025 was lower than normal at $1.3 billion.
But not including working capital, free cash flow was $3.7 billion. This was enough to cover the $3 billion in dividends paid in the quarter.
Buffett’s dividend-focused strategy
Management said that growth projects underway are expected to generate an extra $10 billion of free cash flow in 2026, if oil is at $70 per barrel. Many investors who follow Buffett know his history with Kraft Heinz well. Berkshire teamed up with the Brazilian firm 3G to buy Heinz for over $23 billion in 2013.
They then oversaw its merger with Kraft in 2015 to form the company it is today. Since that time, the stock has faced challenges. Investors have said for several years that Kraft Heinz may go down as one of Buffett’s worst investments.
Some think that Berkshire may sell some of its position. Berkshire’s two representatives on Kraft Heinz’s board of directors are set to leave the board. Kraft Heinz has paid dividends for the past decade.
But the company cut the dividend a lot in 2019 to help pay down debt. It hasn’t raised the dividend since then. Still, Kraft Heinz’s dividend yield is over 6%.
If Berkshire keeps its position of over 325.6 million shares, the company stands to collect over $521 million in dividends this year. Kraft Heinz’s free cash flow yield over the past 12 months is close to 9.5%. Wall Street analysts expect $2.63 in free cash flow per share this year.
This is more than enough to cover the expected $1.60 per share in dividends. While it’s uncertain what the future holds, the company is looking at options that may unlock value for shareholders. The dividend looks safe for now.
In summary, Warren Buffett’s notable investments in Chevron and Kraft Heinz show his commitment to dividend-paying stocks as a source of reliable passive income. While Berkshire Hathaway itself does not pay dividends, Buffett’s approach of investing in strong dividend-paying companies continues to be a key part of their success.
