2 Warren Buffett Dividend Stocks to Buy for $500 Right Now

Warren Buffett is one of the greatest of all time. His investment decisions made early investors Berkshire Hathaway (BRK.A 0.91%) (BRK.B 0.83%) a fortune, delivering a return of 4,384,748% from 1965 to 2023.

While Buffett’s investment strategy doesn’t prioritize a company’s dividend record, it’s worth noting that many of the stocks Berkshire owns are industry-leading companies that pay regular dividends to their shareholders.

Consistent dividend payments usually indicate a solid business with a competitive edge that can safely grow your money over the long term. Here are two top Berkshire stocks that you can easily buy at least a few shares for $500.

1. Coca-Cola

Coca cola (K.O 0.77%) is one of the largest holdings in Berkshire’s portfolio. Buffett originally purchased $1.3 billion worth of Coca-Cola stock between 1987 and 1994. Today, Berkshire’s 400 million shares have a market value of $27 billion and pay $776 million dollars in annual dividend income.

Buffett continues to patiently hold the stock even though the stock hasn’t kept up S&P 500 in the last five years. But Coca-Cola is starting to see momentum in growing sales and expanding margins, which are sending the stock to new highs.

The company’s 62-year record of dividend increases won’t be threatened anytime soon. Coca-Cola’s business is doing great, with adjusted sales up 15% year over year in the second quarter. While currency headwinds pushed adjusted earnings up just 7% from the year-ago quarter, management’s efforts to improve margins by refranchising bottling operations and implementing artificial intelligence (AI) in operations have investors optimistic about Coke’s long-term earnings growth prospects.

Coca-Cola currently pays a quarterly dividend of $0.485 per share — 58% of adjusted Q2 earnings. Its forward dividend yield of 2.84% is double the S&P 500 average and looks very attractive for a top consumer brand that is showing strong financial results right now.

2. Chubb

Berkshire reported a new position in Chubb (CB 0.28%) in the first trimester. Berkshire acquired nearly 26 million shares in the property and casualty insurer, which would value the investment at $7 billion at current market prices.

There is no one better at evaluating the investment merits of an insurance company than Warren Buffett. Berkshire has been in the insurance business for 57 years, which has helped generate returns for Berkshire shareholders.

Chubb has paid an ever-increasing dividend for 31 years, denoting its record of profitable underwriting and financial strength. The company averaged a combined 89.9%, a key measure of insurance profitability, over the past decade. A ratio below 100 means the company’s underwriting is profitable, but Chubb’s rate has consistently been lower than its competitors, which is why it belongs in Berkshire’s portfolio.

Chubb’s superior record should continue as he continues to improve his risk assessment. It has invested in AI, and management believes it will begin to see the benefits of these efforts in underwriting and other areas of the business over the next few years.

Chubb is having a strong year, with net income up 24% year-over-year in the second quarter. It pays out just 14% of profits as dividends, but at the quarterly payment of $0.91, Berkshire will receive $94 million in annual income. Investors can follow Warren Buffett and get a decent forward return of 1.34%.