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Investing $10,000 In Each Of These Warren Buffett Stocks Could Generate $2,100 In Passive Income This Year
Where can you get good ideas for generating passive income? There are several good options. A perhaps surprising one is looking at Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) holdings.
Berkshire doesn't pay dividends itself. However, the conglomerate's portfolio is chock-full of solid dividend stocks. Some offer especially appealing yields. Investing $10,000 in each of these Buffett stocks could generate $2,100 in passive income this year.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »
1. Kraft Heinz
Berkshire Hathaway owns almost 27% of Kraft Heinz (NASDAQ: KHC). That's such a huge stake that Berkshire's website includes the food company on the list of its subsidiaries.
Kraft Heinz hasn't been a big winner for Buffett. However, it does generate a hefty amount of income. The stock's forward dividend yield is 5.4%. An investment of $10,000 in Kraft Heinz should give you around $540 in passive income this year.
2. Sirius XM Holdings
Sirius XM Holdings (NASDAQ: SIRI) appears to be one of Buffett's favorite stocks these days. Although the legendary investor has been a net seller of stocks for eight consecutive quarters, he has increased Berkshire's position in Sirius XM. Berkshire now owns 34.6% of the satellite radio company.
Buffett undoubtedly likes Sirius XM's valuation. The stock trades at only 6.8 times forward earnings. Income investors should like its forward dividend yield of 4.91%. If you bought $10,000 worth of Sirius XM shares, you should receive $491 in passive income over the next 12 months.
3. Chevron
Berkshire's stake in Chevron (NYSE: CVX) is worth roughly $18.5 billion. That's enough to rank the oil and gas giant as Berkshire's fifth-largest holding. Buffett initiated a position in Chevron in 2020 after oil stocks tanked during the first months of the COVID-19 pandemic.
Chevron has been a favorite of income investors for a long time -- and for good reason. The company has increased its dividend for 37 consecutive years and is likely to soon extend that streak. Chevron's forward dividend yield is 4.19%. An investment of $10,000 in the stock would provide at least $419 of passive income over the next year.
4. Diageo
Diageo (NYSE: DEO) is one of the smallest positions in Berkshire's portfolio. Buffett (or his investment managers, Todd Combs and Ted Weschler) bought 227,750 shares of Diageo in the first quarter of 2023. The number of shares owned by Berkshire hasn't changed since then.
The bad news for Buffett and his team is that Diageo has performed dismally since it was added to Berkshire's portfolio, with shares roughly 33% below the level at the end of Q1 2023. The good news is that the stock generates solid income. Diageo's forward dividend yield is 3.41%. That translates to annual passive income of $341 for an initial investment of $10,000.
5. The Coca-Cola Company
The Coca-Cola Company (NYSE: KO) has a special place in Buffett's heart. He's owned Coca-Cola stock longer than he's owned any other. Berkshire still owns 400 million shares, making Coca-Cola the conglomerate's fourth-largest holding. Buffett also likes the company's products. He reportedly drinks five cans of Coke each day.
Thanks to Coca-Cola's forward dividend yield of 3.11% and Berkshire's large position, the conglomerate will likely rake in $776 million or more in dividends from Coke this year. You could make a nice chunk of passive income in 2025 from Coca-Cola, too. An investment of $10,000 should generate dividend payments of at least $311, bringing the total income from these five Buffett stocks to $2,102.
Your actual passive income could be even higher, though. Coca-Cola is a Dividend King with 62 consecutive years of dividend increases. It's very likely that the company will again raise its dividend payout in 2025.
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Keith Speights has positions in Berkshire Hathaway and Chevron. The Motley Fool has positions in and recommends Berkshire Hathaway and Chevron. The Motley Fool recommends Diageo Plc and Kraft Heinz. The Motley Fool has a disclosure policy.
