The Smartest High-Yield Dividend Stocks in Warren Buffett's "Secret Portfolio" to Buy Right Now
Ares Capital offers an ultrahigh dividend yield and a history of delivering market-beating total returns.
Duke Energy is a safe haven with solid growth opportunities.
Verizon Communications has increased its dividend for 18 consecutive years.
10 stocks we like better than Ares Capital ›
Warren Buffett's secret is out of the bag. He's stepping down as CEO of Berkshire Hathaway at the end of the year. However, the legendary investor has another secret that many don't know about: a portfolio of stocks that doesn't appear on Berkshire's regulatory filings.
Berkshire Hathaway acquired General Re in 1998, which had bought New England Asset Management (NEAM) three years earlier. This deal gave Buffett a "secret portfolio" often overlooked by investors.
But if you're seeking great income opportunities, you can find plenty among NEAM's holdings. Some of the stocks offer exceptionally juicy dividends. Here are the smartest high-yield dividend stocks in Buffett's "secret portfolio" to buy right now.
NEAM owns 225,900 shares of Ares Capital (NASDAQ: ARCC), giving Buffett an indirect stake in the largest publicly traded business development company (BDC). Savvy income investors know that BDCs often provide attractive dividend yields because the companies must return at least 90% of their earnings to shareholders as dividends to be exempt from federal income taxes.
I think Ares Capital has the best dividend program in the BDC industry. Its forward dividend yield is an ultra-high 9.12%. Ares has paid stable or increasing dividends for 63 consecutive quarters. The company has also delivered the highest base dividend growth over the last 10 years of any externally managed BDC with a market cap of over $700 million.
Ares Capital could even appeal to investors who aren't primarily focused on income. Since its initial public offering in 2004, the stock has delivered a 70% greater cumulative total return than the S&P 500 and an average annual total return of 13%.
With the Federal Reserve concerned about stagflation, could Ares Capital's business suffer over the near term? Maybe. However, CEO Kort Schnabel believes his company could increase its market share in direct lending. BDCs such as Ares Capital could also be more attractive to middle-market businesses as banks reduce their risk exposure.
Utility stocks tend to be great safe havens for investors during turbulent periods. Buffett's "secret portfolio" owns several solid utility stocks. I think Duke Energy (NYSE: DUK) is the best of the bunch. The company provides electricity to 8.6 million customers in North Carolina, South Carolina, Florida, Indiana, Kentucky, and Ohio. It also operates natural gas utilities that serve 1.7 million customers in the Carolinas, Kentucky, Ohio, and Tennessee.
Most income investors will probably like Duke Energy's forward dividend yield of 3.47%. I suspect they'll also love the company's dividend track record. Duke has paid a dividend for 99 consecutive years. The company has increased its dividend every year since 2007.
While the Trump administration's tariffs are a major concern for many U.S. companies, they present only a minor issue for Duke Energy. CFO Brian Savoy said in the company's first-quarter earnings call that tariffs should impact only 1% to 3% of Duke's five-year capital plan. He added, "And we are confident in our ability to further minimize the impact, leveraging our size and scale to work with suppliers across our diverse supply chain."
Duke Energy is also poised to deliver solid growth on top of its juicy dividends. The company projects long-term earnings-per-share growth of 5% to 7%. The Carolinas and Florida rank among the top U.S. states in population growth. Duke should benefit from data center and manufacturing facility construction as well.
Berkshire Hathaway has invested in Verizon Communications (NYSE: VZ) in the past, but no longer has a direct stake in the telecommunications giant. However, Buffett still owns shares of Verizon thanks to NEAM's portfolio.
The "Oracle of Omaha" might be thankful for that continued position in Verizon. The telecom company's shares have jumped roughly 9% year to date while the major market indexes floundered. This success is a direct result of Verizon's solid quarterly updates in 2025.
Verizon remains a favorite for income investors with its forward dividend yield of 6.21%. The company has increased its dividend for 18 consecutive years. Management ranks supporting and growing the dividend as one of its top capital allocation priorities.
Even stronger growth could be on the way for Verizon. The company hopes to close its pending acquisition of Frontier Communications in early 2026. This deal will expand Verizon's fiber footprint and help the company in offering new services related to artificial intelligence (AI) and the Internet of Things.
Before you buy stock in Ares Capital, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Ares Capital 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 $614,911!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $714,958!*
Now, it's worth noting Stock Advisor's total average return is 907% — a market-crushing outperformance compared to 163% for the S&P 500. Don't miss out on the latest top 10 list, available when you join .
See the 10 stocks »
*Stock Advisor returns as of May 12, 2025
Keith Speights has positions in Ares Capital, Berkshire Hathaway, and Verizon Communications. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Duke Energy and Verizon Communications. The Motley Fool has a disclosure policy.
The Smartest High-Yield Dividend Stocks in Warren Buffett's "Secret Portfolio" to Buy Right Now was originally published by The Motley Fool
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
33 minutes ago
- Yahoo
Those who invested in Malaysian Pacific Industries Berhad (KLSE:MPI) five years ago are up 96%
When we invest, we're generally looking for stocks that outperform the market average. And in our experience, buying the right stocks can give your wealth a significant boost. For example, long term Malaysian Pacific Industries Berhad (KLSE:MPI) shareholders have enjoyed a 85% share price rise over the last half decade, well in excess of the market return of around 6.6% (not including dividends). So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS). Over half a decade, Malaysian Pacific Industries Berhad managed to grow its earnings per share at 6.6% a year. This EPS growth is lower than the 13% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth. The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image). We know that Malaysian Pacific Industries Berhad has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts. When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Malaysian Pacific Industries Berhad's TSR for the last 5 years was 96%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments! While the broader market lost about 7.2% in the twelve months, Malaysian Pacific Industries Berhad shareholders did even worse, losing 47% (even including dividends). Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 14% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Malaysian Pacific Industries Berhad has 1 warning sign we think you should be aware of. If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation). Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Malaysian exchanges. — Investing narratives with Fair Values Vita Life Sciences Set for a 12.72% Revenue Growth While Tackling Operational Challenges By Robbo – Community Contributor Fair Value Estimated: A$2.42 · 0.1% Overvalued Vossloh rides a €500 billion wave to boost growth and earnings in the next decade By Chris1 – Community Contributor Fair Value Estimated: €78.41 · 0.1% Overvalued Intuitive Surgical Will Transform Healthcare with 12% Revenue Growth By Unike – Community Contributor Fair Value Estimated: $325.55 · 0.6% Undervalued View more featured narratives — Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Bloomberg
42 minutes ago
- Bloomberg
Japan PMI Pickup Points to Front-loading Ahead of US Tariff Jump
Japan's manufacturing activity expanded for the first time in more than a year in June in a likely sign of front-loading of output ahead of a scheduled increase in US tariffs next month. The au Jibun Bank purchasing managers' index of manufacturing activity rose to 50.4 from 49.4 in May, crossing the boom-or-bust 50 threshold for its highest reading since May 2024, according to data released Monday by S&P Global. The index for services also increased to 51.5 from 51.0.
New York Times
an hour ago
- New York Times
Global Markets Dip as Traders Gauge Fallout From U.S. Strikes on Iran
Stocks edged lower and oil prices climbed in Monday trading in Asia, reflecting investor concern over potential economic fallout from the U.S. strikes on three Iranian nuclear facilities over the weekend. Futures contracts for the S&P 500, indicating how the index might perform when markets open in New York, slipped by about 0.3 percent. The price of West Texas Intermediate, the benchmark for U.S. crude, gained roughly 3 percent. Gold, a traditional safe-haven asset, also rose. Markets in Asia, the first to open after the strikes in Iran, were down. Stocks in Taipei, Taiwan, fell more than 1 percent. Benchmark indexes in Japan, Hong Kong and South Korea also dipped. Traders were waiting for clearer indications of whether there would be an escalation in conflicts in the Middle East — particularly any moves by Iran to disrupt shipping through the Strait of Hormuz. The Strait of Hormuz is a critical transit point for global oil supplies. Last year, about 20 million barrels of oil were shipped through the waterway each day, representing about 20 percent of the world's total supply. Most of that oil was bound for Asia. Places like Japan and Taiwan rely on the Middle East for almost all of their crude oil imports, meaning that any disruption to traffic through the strait could inflict a large economic blow. China is the largest purchaser of Iranian oil. Oil prices, hovering around $76 a barrel, are expected to enter the $80 range, but if the risk of Iran blocking the Strait of Hormuz is seen as increasing, they will rise even further, said Takahide Kiuchi, executive economist at Nomura Research Institute. In that case, 'the Japanese economy could be exposed to downside risks that exceed those of the Trump tariffs,' he said. Other analysts expect fallout from the U.S. strikes to be relatively short-lived. The oil market is better equipped to respond to shocks than it has been in the past because of spare capacity held by exporters, according to Daniel Hynes, a senior commodity strategist at ANZ Research. Geopolitical events involving producers can have a big impact on oil markets, but in recent years, prices have tended to quickly retreat as risks ease, Mr. Hynes said. Daniel Ives, an analyst at Wedbush Securities, said there could be more volatility in stock movements this week. But, he said, the market may view the Iran threat as 'now gone.' In that case, he said, 'the worst is now in the rearview mirror.' Joe Rennison contributed reporting from New York.
