I think Warren Buffett is one of the best investors in the world. There are some wonderful ASX dividend stocks, in my opinion, that he would love to have.
Warren Buffett’s Berkshire Hathaway is one of the largest companies in the world. Mr. Buffett likes to invest in companies he understands. I think these two ASX stocks are really good options for Warren Buffett:
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is the company that most closely compares to Berkshire Hathaway in Australia.
It’s an investment conglomerate. It has both public and unlisted corporate holdings, just like Berkshire Hathaway.
The ASX stocks Soul Patts is invested in include TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), Australian Pharmaceutical Industry Ltd (ASX: API), Clover Corporation Limited (ASX: CLV), Milton Corporation Limited (ASX: MLT) and Bki Investment Co Ltd (ASX: BKI).
It is also invested in various unlisted industries such as financial services, commodities, agriculture, and swimming schools. Soul Patts is invested in private companies such as Ampcontrol, Seven Mile Coffee Roasters and Dimeo.
This ASX stock is much older than Warren Buffett’s Berkshire Hathaway. It has been listed since 1903, so it has shown that it has long-term stamina.
It has increased its dividend every year since 2000, including due to COVID-19. That’s the best record in dividend growth on the ASX. This is one of the main reasons why Soul Patts is such a good dividend in my opinion. A dividend is certainly not guaranteed, but it is very reassuring to know that your investment is very likely to grow the dividend in the next fiscal year.
Soul Patts has built up a substantial profit reserve and postage credit. It will continue to pay increasing dividends for the foreseeable future.
At the current Soul Patts share price, it offers an extrapolated dividend yield of 3.4%.
Brickworks is another ASX dividend stock that I think Warren Buffett would really like.
Berkshire Hathaway has a house building division called Clayton Homes, so I think Brickworks is close enough to Clayton that Brickworks wouldn’t put Mr. Buffett off.
I really like the long-term nature of Brickworks. The aim is to become the market leader in the brick market. It is the leading brick business in Australia as well as in the northeastern United States. In Australia, Brickworks also sells a number of other building products, including masonry, paving, roofing and precast.
Brickworks actually owns about 40% of Soul Patts. So it receives a reliable and growing stream of dividends from the investment conglomerate. Soul Patts’ dividends and earnings have helped Brickworks maintain a stable business over the past few decades, especially during the periods of construction slump.
Another pillar that Brickworks effectively builds is real estate. It owns half of an industrial property trust along with Goodman group (ASX: GMG). This real estate fund is recording steadily increasing property valuations and increasing net rental income. The Trust recently secured a 20-year pre-contractual agreement with Amazon at the Oakdale West Estate in Western Sydney. It also has an agreement with Coles Group Limited (ASX: COL).
Brickworks hasn’t cut its dividend in over 40 years. In other words, it has held or increased its dividend every year for more than four decades. That’s a great record for an ASX dividend stock.
At the current Brickworks share price, it offers an extrapolated dividend yield of 4.8%. It is also trading at 17 times its estimated FY21 profit.
Stupid takeaway food
I think Warren Buffett would like these two ASX dividend stocks. I know i do. That’s why Soul Patts is one of the largest ASX stocks in my portfolio. I really like the defensive character. It’s probably something I’ll still hold in 20 or 30 years.