Under the leadership of its legendary chief executive officer, Warren Buffett, Berkshire Hathaway has become one of history's most successful companies and delivered stellar returns for long-term shareholders. With a market capitalization of roughly $990 billion, Berkshire stands as one of the biggest companies in the S&P 500 and the eighth-largest company in the world.
While Berkshire Hathaway doesn't pay a dividend, Buffett and his advisors have built the company's stock portfolio around companies that do -- and the Oracle of Omaha's portfolio composition has helped his company crush the broader market.
Read on for a look at the two dividend-paying S&P 500 stocks that account for 42.4% of Berkshire's $315.4 billion stock portfolio.
This tech giant is still Buffett's biggest bet
Keith Noonan: Even after selling nearly half of its Apple (NASDAQ: AAPL) position last quarter, Berkshire still owns 400 million shares of the tech giant's stock. Apple continues to be the largest position in Berkshire's portfolio and accounts for roughly 29.4% of the company's total stock holdings. With a market cap of just over $3.5 trillion, Apple also stands as the biggest component in the S&P 500 and the world's largest company.
Apple's dividend yield of 0.4% may not look like much right now. On the other hand, it's still a substantial income generator for Berkshire. With its quarterly dividend sitting at $0.25 per share, Apple is on track to deliver $400 million in dividend income for Buffett's company during the next year even if the tech giant does not raise its payout. Although Apple has only raised its payout by roughly 30% during the past five years, the company has increased its payout on an annual basis for 13 years running -- so there's a good chance that the company will deliver another payout increase next year and beyond.
Crucially for a dividend-paying company, Apple's business is a cash-generating machine. Thanks in large part to its incredibly successful mobile hardware business, the company has also frequently ranked as the world's most profitable business during the past decade.
While most players in the mobile market have been hit by commodification trends that have pushed down prices and crushed margins, Apple's brand strength and loyal customer base have helped the company continue to record fantastic profitability with its iPhone hardware. In the second quarter, iPhone lines accounted for roughly 45% of total worldwide revenue in the smartphone market. Even more impressive, Apple accounted for roughly 85% of total global operating income in the category.