The Investment Wisdom of Warren Buffett: Earning Money While You Sleep

Warren Buffett, a renowned investor, has had a remarkable career marked by astounding returns. Over the span of almost six decades, from 1964 to 2022, his conglomerate, Berkshire Hathaway Inc. (NYSE: BRK), achieved an overall gain of 3,787,464%. This impressive performance significantly outshone the S&P 500, which delivered a return of 24,708% during the same period.

Buffett, known for his investment acumen, doesn’t solely rely on stocks that soar in value; he’s also a proponent of collecting dividends, often stating, “If you don’t find a way to make money while you sleep, you will work until you die.”

Many companies in Buffett’s extensive portfolio pay dividends to their shareholders. In this discussion, we’ll focus on Chevron Corp. (NYSE: CVX), the largest energy stock within Berkshire Hathaway’s holdings.

As of June 30, Berkshire Hathaway held a substantial 123,120,120 shares of Chevron. At that time, the value of this position was estimated at $19.4 billion, making Chevron the fourth-largest publicly traded holding in Berkshire’s portfolio.

The energy sector, driven by oil prices, can be quite volatile, experiencing significant price fluctuations. Chevron’s shares saw substantial gains in 2021 and 2022. However, in 2023, they faced a decline of approximately 6.7%.

Beyond the potential for capital gains through stock trading, investors can also benefit from the dividends offered by the energy giant. Chevron currently maintains a quarterly dividend rate of $1.51 per share, resulting in an annual yield of 3.7%. Given Berkshire’s substantial holding of 123,120,120 Chevron shares, this equates to a potential quarterly dividend income of $184.68 million from the company.

Picture: LinkedIn

The beauty of collecting dividends is that you don’t need to be the “Oracle of Omaha” to take advantage of opportunities like those presented by Chevron.
Growing Dividends from Chevron

In January, Chevron’s board made the decision to enhance the company’s quarterly dividend by 6%, bringing it to $1.51 per share. This increase sets Chevron on course to achieve its 36th consecutive year of boosting its annual dividend payout per share.

Chevron adheres to a quarterly distribution schedule. If an investor’s goal is to accumulate $1,000 per month from Chevron, this translates to $3,000 per quarter. To attain this income level, an investor would need to own approximately 1,986.75 shares of Chevron. This calculation is achieved by dividing the desired quarterly income of $3,000 by the per-share quarterly payout of $1.51.

Considering Chevron’s current stock price of $162.23 per share, amassing 1,986.75 shares would equate to an investment worth approximately $322,311.

For those with a more modest target of earning $200 per month, equivalent to $600 per quarter, they would require approximately 397.35 shares (calculated as $600 divided by $1.51) or an investment totaling around $64,462 in Chevron stock (computed as 397.35 shares multiplied by $162.23).

Although Chevron’s stock has recently experienced a pullback, analyst Nitin Kumar from Mizuho holds an optimistic outlook for the oil supermajor. Kumar has assigned a Buy rating to the company and set a price target of $215, which stands approximately 33% above the current stock price.

It’s important to note that stocks can exhibit considerable fluctuations, and even the most reputable analysts are not infallible. Therefore, conducting thorough research and due diligence before making investment decisions is always advisable.

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