2 Top Warren Buffett Dividend Stocks That Should be on Your Radar

Key Points

• Buffett's Berkshire Hathaway doesn't pay a dividend, but it likes companies that do.

• One is a well-known restaurant chain operator that's been on the scene for decades.

• The other makes beverages you will find in those restaurants, plus a great many other venues.

• 10 stocks we like better than Domino's Pizza ›

Although the subject of dividends doesn't necessarily come up when discussing the illustrious career of Warren Buffett, they make a real impact on his investment vehicle Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B).

Last year, the company's vaunted equity portfolio took in $5.2 billion in dividend income alone. Buffett, in short, is a man who appreciates a good income investment. With that in mind, here are two popular Berkshire Hathaway dividend stocks worth considering: restaurateur Domino's Pizza (NASDAQ: DPZ) and beverage behemoth Coca-Cola (NYSE: KO).

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1. Domino's Pizza

Of the two stocks, by far the more recent arrival is Domino's. Berkshire disclosed its first stack of shares in the pie-slinger in late 2024, then added to it. As of June 30, Berkshire held more than 2.6 million shares of the company. In market cap terms, that stake is valued at more than $1.2 billion as of this writing, and comprises nearly 8% of Domino's shares outstanding.

It also produces plenty of scratch thanks to the quarterly dividend, which it's been paying out consistently -- and raising annually -- since 2013. Its latest increase, announced in February, was a flavorful 15% hike to $1.74 per share. That yields just under 1.5%, which is slightly more than the average dividend yield (1.2%) of all stocks on the S&P 500 index.

A predictable and rising dividend is comfort food for income investors. What's also been attracting many to Domino's lately is the company's encouraging top-line growth numbers. In its most recently reported quarter, it managed to increase its revenue by 4% year over year (to almost $1.15 billion). The previous quarter was also positive, with top-line growth of 3%.

The company's net income is a bit of a moving target, seesawing because of an investment in China's exclusive Domino's franchisee, DPC Dash. As such, earnings can rise or fall depending on the value of that stake. Nevertheless, Domino's has managed to land well in the black recently, at over $131 million in the latest quarter. A jump in DPC's value in the previous period cranked the bottom line up to $150 million.

Considering its longevity, size, and the fact that it's never strayed far from the comfort food it specializes in, Domino's is doing well. It seems to have particularly encouraging growth potential abroad, since its take for international franchise royalties and fees only comprised 7% of total revenue in the second quarter.

Domino's next dividend payout will occur on Sept. 30 to shareholders of record as of Sept. 15.

2. Coca-Cola

Personally, I think pizza goes quite well with a refreshing soft drink, so I find it appropriate that Domino's sits with Coca-Cola in the same famous equity portfolio. The soda giant is one of the more storied Berkshire stock holdings, as the company first started snapping up the shares in 1988.

It's also one of Berkshire's most significant positions, tipping the scales at a total market cap of $27.3 billion. That made it -- again, as of June 30 -- its fourth-largest holding in its collection of publicly traded companies. Berkshire is a top institutional Coca-Cola shareholder, with a stake of just under 9%.

Coca-Cola has been a great buy on dividend payouts alone. Among income investors, the company is renowned for its ultra-long stretch of annual dividend raises; in fact, its most recent one was its 63rd in a row. This hike was generous, too, amounting to a 5% increase to a quarterly $0.51 per share.

Many investors buy and hold Coca-Cola purely for the dividend, yet there always seems to be at least a little fizz in the fundamentals.

Non-GAAP (adjusted, and not in accordance with generally accepted accounting principles) revenue rose by 2% in the most recently reported quarter, to $12.6 billion. Better, adjusted net income increased 4% to land at almost $3.7 billion. This shakes out in a relatively very high net margin of almost 30%, which isn't at all unusual for this highly and consistently profitable business.

Analysts tracking the stock are, as usual, expecting improvements. Per their average estimate, annual revenue and per-share profitability should both rise 3% this year from 2024. For 2026, those rates are anticipated to be nearly 6% on the top line, and 8% for earnings per share.

The company's next $0.51 quarterly payout will be dispensed on Oct. 1 to investors of record as of Sept. 15. At the most recent closing share price, it yields about 3%.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Domino's Pizza. The Motley Fool has a disclosure policy.