Key Points

• Buffett's Berkshire Hathaway portfolio includes only one ultra-high-yield stock.

• However, his "secret portfolio" is loaded with ultra-high-yielders.

• The best of the bunch has increased its dividend for 30 consecutive years and has solid growth prospects.

Warren Buffett is known as a value investor, not as an income investor. However, that doesn't mean the "Oracle of Omaha" doesn't own stocks that many income investors would find highly attractive.

You might be surprised that Buffett even has positions in nine ultra-high-yield dividend stocks. By the way, the threshold used for a dividend yield to qualify as "ultra-high" is four times the yield of the SPDR S&P 500 ETF. Here are all of Buffett's ultra-high-yield dividend stocks, along with which one is the best of the bunch.

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Berkshire Hathaway's sole ultra-high-yielder

Buffett's Berkshire Hathaway portfolio features only one ultra-high-yield dividend stock: Kraft Heinz (NASDAQ: KHC). The food and beverage company pays a forward dividend yield of 6%.

Kraft Heinz's dividend yield isn't so high because the company has increased its dividend payout. Instead, it's the result of a steadily deteriorating share price over the last few years, combined with maintaining the dividend at the same level during the period.

Berkshire does have stakes in a couple of other stocks with yields that aren't too far away from meeting the ultra-high threshold. Oil and gas giant Chevron offers a forward dividend yield of 4.61%. Satellite radio and podcast provider Sirius XM Holding's yield is 4.45%. However, the stocks didn't quite make the cut for our list.

Buffett's "secret portfolio"

Where can Buffett's other seven ultra-high-yield dividend stocks be found? In his "secret portfolio." I'm referring to the stocks owned by New England Asset Management (NEAM).

Berkshire Hathaway acquired General Re in 1998, which had acquired NEAM three years earlier. While NEAM reports its stock holdings to the U.S. Securities and Exchange Commission separately from Berkshire, Buffett owns all of the stocks in its portfolio just as much as he does any stock listed in Berkshire's SEC filings.

NEAM's two highest-yielding stocks are both business development companies (BDCs). Globus Capital BDC (NASDAQ: GBDC) pays an especially juicy forward dividend yield of 11.17%. It's followed by Ares Capital, the largest publicly traded BDC, with a yield of 8.57%.

A couple of big pharma stocks in Buffett's secret portfolio pay great dividends. Pfizer's (NYSE: PFE) forward dividend yield is 6.78%, while Bristol Myers Squibb (NYSE: BMY) offers a forward yield of 5.29%.

There's one ultra-high-yield overlap between Berkshire's and NEAM's portfolios -- Kraft Heinz. NEAM also owns another food company with an exceptionally high dividend payout. Campbell's (NASDAQ: CPB), which is best known for its soups, pays a forward dividend yield of 4.99%.

Two real estate investment trusts (REITs) are also in the mix. Realty Income's (NYSE: O) forward dividend yield is 5.6%. Lamar Advertising's (NASDAQ: LAMR) yield is 4.99%.

Finally, Buffett owns a stake in telecommunications giant Verizon Communications (NYSE: VZ) via NEAM's portfolio. Verizon's forward dividend yield is a lofty 6.22%.

The best of the bunch

How can we determine which of these ultra-high-yield dividend stocks owned by Buffett is the best of the bunch? We should obviously consider the dividend yield. In addition, the ability of the company to continue paying (and preferably increasing) its dividend is important. Growth prospects and valuation should be included, too. Based on these criteria, I think three of the nine stocks stand out above the rest.

Ares Capital's sky-high yield is a big plus. The BDC has either maintained or grown its dividend for 63 consecutive quarters (almost 16 years). It's the leader in the fast-growing private capital market. Ares Capital has also trounced the S&P 500 since its initial public offering in 2004.

Verizon is a longtime favorite for income investors. Its juicy dividend appears to be safe with the company's growing free cash flow. Verizon has also increased its dividend for 18 consecutive years. The biggest knock against the telecom provider is that its revenue and earnings growth haven't been spectacular. However, Verizon could enjoy stronger growth going forward once its acquisition of Frontier Communications closes.

The best stock overall of the group, in my opinion, is Realty Income. Its dividend yield is very attractive. Even better, the REIT pays its dividend monthly and has increased its dividend for an impressive 30 consecutive years.

Realty Income has delivered a positive total operational return every year since its IPO in 1994. Its diversified real estate portfolio, with nearly 1,600 clients representing 91 industries, helps make the company's cash flow stable. The REIT also has strong growth prospects, particularly in Europe, where it faces minimal competition.

The main drawback with this stock is its valuation. Realty Income's shares trade at 43 times forward earnings. However, I think the company's sterling track record justifies a premium price tag.

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Keith Speights has positions in Ares Capital, Berkshire Hathaway, Bristol Myers Squibb, Chevron, Pfizer, Realty Income, and Verizon Communications. The Motley Fool has positions in and recommends Berkshire Hathaway, Bristol Myers Squibb, Chevron, Pfizer, and Realty Income. The Motley Fool recommends Campbell's, Kraft Heinz, and Verizon Communications. The Motley Fool has a disclosure policy.

Key Points

• Ares Capital has delivered a long-term cumulative return that trounced the S&P 500.

• Enterprise Products Partners is resilient and has better long-term prospects than many might think.

• Verizon Communications has staying power and should be a key player in 6G wireless networks in the future.

True or false: The higher the dividend yield, the more worried you should be.

This is a tricky question, if not a trick question. With some stocks, a high dividend yield can be a cause for alarm. With other stocks, though, a high yield isn't concerning whatsoever.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

I own quite a few stocks with dividend yields of over 5%. I wouldn't necessarily commit to owning all of them over the next 20 years. However, here are three ultra-high-yield dividend stocks I don't plan on ever selling.

1. Ares Capital

Ares Capital (NASDAQ: ARCC) is the largest publicly traded business development company (BDC). The company has invested more than $17 billion since its inception in 2004. The BDC focuses on middle-market companies with annual revenue between $10 million and $1 billion.

I really like Ares Capital's dividend, with its forward yield of 8.63%. Even better, the company has either maintained or grown its dividend for 63 consecutive quarters -- a streak that I'm confident will continue.

But I probably wouldn't plan on never selling this stock if all that it had going for it was its juicy dividend. A key factor behind my intention to own Ares Capital over the long run is its position in a growing market. There has been a clear shift in recent years to private capital. Ares Capital targets a total addressable market of around $5.4 trillion. I think it's easily the best BDC around, with its diversified portfolio, strong industry relationships, and rock-solid risk management.

I'm also impressed by Ares Capital's performance. Since its initial public offering (IPO), it has delivered a cumulative total return that's 80% higher than the S&P 500. Maybe the stock won't be able to continue beating the market so handily going forward, but I wouldn't bet against it.

2. Enterprise Products Partners

Enterprise Products Partners (NYSE: EPD) is a master limited partnership (MLP) that is a leader in the North American midstream energy industry. It operates more than 50,000 miles of pipeline in addition to numerous other assets.

Many MLPs pay highly attractive distributions. Enterprise Products Partners is no exception, with its forward distribution yield of 6.81%. Even better, the company has increased its distribution for 26 consecutive years.

Am I crazy to believe that I can own a stock that's dependent on fossil fuels for years to come? I don't think so. Sure, renewable energy sources will almost certainly be more widely used in the future. However, the demand for oil and gas (especially natural gas and natural gas liquids) should continue to grow for decades to come. That means the demand should remain strong for Enterprise Products Partners' pipelines.

This MLP has already proved its resilience. Enterprise Products Partners delivered steady cash flow per unit during every major crisis affecting the oil and gas industry over the last two decades.

3. Verizon Communications

While you might not have heard of Ares Capital or Enterprise Products Partners, odds are that you're quite familiar with Verizon Communications (NYSE: VZ). The telecommunications giant serves millions of customers worldwide.

Many income investors will especially like Verizon. Its forward dividend yield is a lofty 6.22%. The company has also increased its dividend for 18 consecutive years.

I've tried to picture a world where wireless services from companies like Verizon aren't needed, but my imagination just isn't that good. I also seriously doubt any new competition will arise in this market, considering the massive amount of capital required to build out wireless networks. The bottom line is that I believe Verizon has staying power.

Will Verizon be a huge growth machine? Probably not. However, 6G is on the way -- probably by the end of the decade. This new higher-speed wireless protocol could hold the potential for holographic communication, immersive extended reality (think augmented reality and virtual reality at a whole new level), and more. I fully expect Verizon will be a major player in 6G and could deliver more impressive growth in the future.

Should you invest $1,000 in Ares Capital right now?

Before you buy stock in Ares Capital, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks 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 $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $976,677!*

Now, it’s worth noting Stock Advisor’s total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of June 30, 2025

Keith Speights has positions in Ares Capital, Enterprise Products Partners, and Verizon Communications. The Motley Fool recommends Enterprise Products Partners and Verizon Communications. The Motley Fool has a disclosure policy.