The Smartest High-Yield Dividend Stocks in Warren Buffett's "Secret Portfolio" to Buy Right Now
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.
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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.
1. Ares Capital
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.
2. Duke Energy
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.
3. Verizon Communications
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.
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