2 Warren Buffett Dividend Stocks to Buy While They Are on Sale

Warren Buffett's ability to spot undervalued gems in the stock market helped create tremendous wealth for Berkshire Hathaway shareholders. And he has managed to do so in good economic times as well as uncertain ones. It can be difficult to invest when stocks are falling, but Buffett has made some of his most rewarding investments when Wall Street is nervous.

A check on the stocks in the Berkshire portfolio shows that some are trading at a discount. Concerns over tariffs and the impact on the economy have driven some of Berkshire's holdings down to attractive valuations.

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 »

Here are two Berkshire-held stocks to consider buying now.

1. SiriusXM Holdings

Berkshire Hathaway holds over 117 million shares of satellite radio subscription service SiriusXM Holdings (NASDAQ: SIRI). Berkshire was buying more shares in Q4 2024. The stock is down after the company posted a slight decline in revenue and subscribers last year, but its 5% dividend yield looks very tempting at these lower share prices.

SiriusXM benefits from recurring revenues from around 33 million subscribers. It reported a subscriber decline of 296,000 last year but showed signs of turning around, with 149,000 subscribers added in the fourth quarter. Last year's decline is a blip for a company that has grown its annual revenue at a 7% annualized rate over the last 10 years.

Subscription-based businesses can make solid income investments. The company paid out just 14% of its free cash flow in dividends last year. This low payout allowed the company to raise its quarterly dividend by 1.5% to $0.27, signaling confidence in its long-term growth prospects.

Buying a Berkshire-held stock with a forward dividend yield of 5% seems like a no-brainer, but how will SiriusXM continue to grow?

SiriusXM offers exclusive and curated content across music, news, comedy, and sports that has attracted a large subscriber base. It recently expanded its addressable market by launching the service in Tesla and Rivian electric cars. It also has an agreement with Mitsubishi extending from 2025 through 2030.

The business generated $1 billion in free cash flow last year. However, the launch of its next three satellites will decrease capital expenditures and likely increase free cash flow. Given that expectation, the stock looks like an incredible bargain, trading at just 7.6 times trailing-12-month free cash flow at the time of writing.

SiriusXM's extensive library of premium content makes it a difficult decision for customers to cancel, which has allowed it to maintain over 33 million subscribers over the last five years. The stock's value should be further supported by company guidance, where management expects free cash flow to improve to over $1.1 billion, with stronger subscriber results in 2025.

2. Constellation Brands

Berkshire recently started a position in the leading brewer and importer of beer in the U.S. Shares of Constellation Brands (NYSE: STZ) are down 18% year to date, which has driven its dividend yield up to multiyear highs. Berkshire held 5.6 million shares at the end of 2024.

Constellation Brands benefits from sales of some of the most popular Mexican beer brands, including Modelo, Corona, and Pacifico. This helps the business generate high-volume sales and margins, which reflects strong pricing power and competitive positioning. It also has a valuable portfolio of wine and spirits, including seven of the top 100 selling high-end wines in the U.S.

Overall, Constellation generated $1.7 billion in free cash flow on $10.2 billion of revenue last year. It pays less than half of its free cash flow in dividends, bringing its forward dividend yield to 2.22% based on the current quarterly payment of $1.01.

The potential for a soft economy is a risk for Constellation's sales, but this also gives investors with a long-term perspective a great opportunity to buy the stock at an attractive valuation. The stock is currently trading at just 13 times this year's earnings estimate and 19 times trailing free cash flow. This is below its five-year average free cash flow multiple of 26.

Long term, Constellation should benefit from favorable demographic trends. A higher proportion of the company's sales are coming from new legal-age drinkers between the ages of 21 and 24, while the Hispanic drinking-age population is growing at twice the rate of the broader drinking-age population in the U.S.

The stock has rarely offered a dividend yield over 2%, making now a great time to consider buying shares of this top beer and wine conglomerate.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $244,570!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $35,715!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $461,558!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Continue »

*Stock Advisor returns as of April 5, 2025

John Ballard has positions in Tesla. The Motley Fool has positions in and recommends Berkshire Hathaway and Tesla. The Motley Fool recommends Constellation Brands. The Motley Fool has a disclosure policy.