2 Warren Buffett Dividend Stocks to Build Your Passive Income Empire
Coca-Cola is one of the best high-yield stocks to buy and hold for the long term.
SiriusXM's high cash flowing business can support its nearly 5% yield.
10 stocks we like better than Coca-Cola ›
Warren Buffett has created tremendous wealth for Berkshire Hathaway shareholders by investing in competitively positioned businesses at attractive valuations. Even while Buffett will be retiring at the end of the year, investors can find quality stocks among Berkshire's holdings that pay high yields and are approved by the master.
Here are two of those stocks I would consider right now.
Warren Buffett recognized the global appeal of Coca-Cola's (NYSE: KO) brand long before Wall Street caught on. He invested $1.3 billion in the stock more than 30 years ago, and Berkshire continues to hold 400 million shares. This large stake is set to earn Berkshire $816 million in dividend income over the next year, which is not a bad return on investment.
Coca-Cola is a resilient brand. Despite a pandemic and high inflation in recent years, the company's revenue continues to grow. It earned $11 billion in net income on $47 billion of revenue over the last year. Its consistent sales stem from exceptional marketing and a global distribution network that gives the brand ample shelf space at retail outlets.
This is one of the elite dividend stocks you can hold for retirement. It pays out about three-quarters of its annual earnings in dividends and has raised the dividend for 63 consecutive years. The dividend continues to grow along with the company's earnings, increasing by 55% over the last 10 years.
Coca-Cola still has opportunities to grow sales, earnings, and dividends. A combination of growth in global population and consumer spending will drive higher sales for the world's most recognizable beverage brand. Coca-Cola has 30 brands generating at least $1 billion in annual sales.
The quarterly dividend of $0.51 puts the forward dividend yield at 2.91%, but further growth in the dividend will keep increasing your income like it did for Berkshire Hathaway. Assuming it grows consistently with the last 10 years, the dividend could reach $0.75 by 2035. That would grow the annual income on an initial $10,000 investment to more than $400.
Berkshire originally invested in the satellite radio leader in 2016. Over the last year, Berkshire has significantly raised its stake as the stock has fallen well off its highs. This suggests SiriusXM (NASDAQ: SIRI) could be significantly undervalued.
On the surface, investors have a good hint of the stock's value by the high dividend yield. The company paid out just 22% of its free cash flow over the last year, but the forward yield is currently sitting at an attractive 4.78%. This is based on the current quarterly payout of $0.27.
One reason the stock is down is due to the recent declines in subscribers, which fell from 34 million in Q1 2023 to 32.8 million in Q1 2025. But there are millions of people who have been loyal paying members for years and never consider cancelling because of the wide range of great content, including live sports coverage, news, and exclusive podcasts. The podcasts are driving strong growth in advertising, with podcast-driven ad revenue up 33% year over year in Q1.
Buffett, or one of his investing deputies, are likely focusing on the historical stability of its subscriber base, and the consistent cash flows from recurring subscription fees. On a trailing-12-month basis, SiriusXM generated $976 million in free cash flow on $8.6 billion of revenue, which is a solid margin.
Most importantly, this free cash flow should increase over the next few years as SiriusXM lapses the recent one-time investment in new satellites. It spent $262 million on satellites last year. This will drop to virtually zero by 2028, freeing up more cash flow.
The stock is trading at a cheap free cash flow (FCF) multiple of 6.6 based on 2025 FCF guidance. In other words, if you were buying the whole business at the current market price, you would earn back your entire investment in less than seven years. Considering the prospects for higher free cash flow as capital spending on new satellites taper off, investors are looking at a very undervalued business, with an ultra-high yield to boot.
Before you buy stock in Coca-Cola, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Coca-Cola wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $689,813!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $906,556!*
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*Stock Advisor returns as of June 23, 2025
John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
2 Warren Buffett Dividend Stocks to Build Your Passive Income Empire was originally published by The Motley Fool
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