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As we continue to examine dividend bearing stocks as a means of augmenting income as well as allowing growth, we review Rebecca Lipman of report on the dividend companies Warren Buffett judged worthy enough to enter his company's portfolio. Any list from the Oracle of Omaha is going to be worth reviewing.

Company Market Cap ($B) Yield (as of 3/1/2012)
GlaxoSmithKline plc (GSK): Discovery, development, manufacture, and marketing of pharmaceutical products. $113.32 5.02%
Sanofi (SNY): Discovery, development, and distribution of therapeutic solutions. $100.81 4.68%
General Electric Company (GE): Operates as a technology, service, and finance company. $202.28 3.55%
Johnson & Johnson (JNJ): Research and development, manufacture, and sale of health care products. $178.92 3.50%
M&T Bank Corporation (MTB): provide commercial and retail banking. $10.35 3.42%
ConocoPhillips (COP): Operates as an integrated energy company. $98.88 3.42%
Procter & Gamble Co. (PG): Provides consumer packaged goods. $185.62 3.12%
Intel Corporation (INTC): design, manufacture, and sale of integrated circuits $136.09 3.08%
Kraft Foods Inc. (KFT): Manufactures and markets packaged food products. $67.14 3.05%
United Parcel Service, Inc. (UPS): Provides transportation, logistics, and financial services. $74.17 2.97%

This is a top flight portfolio that is worth measuring them our dividend bearing ETF portfolio:

Asset Fund in this portfolio
REAL ESTATE (ICF) iShares Cohen & Steers Realty Majors
FIXED INCOME (TIP) iShares Barclays TIPS Bond
Emerging Market (VWO) Vanguard Emerging Markets Stock ETF
US EQUITY (DVY) iShares Dow Jones Select Dividend Index
US EQUITY (VIG) Vanguard Dividend Appreciation ETF
INTERNATIONAL EQUITY (IDV) iShares Dow Jones Intl Select Div Idx
High Yield Bond (HYG) iShares iBoxx $ High Yield Corporate Bd
INTERNATIONAL BONDS (EMB) iShares JPMorgan USD Emerg Markets Bond

Portfolio Performance Comparison

Portfolio/Fund Name YTD
1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
Retirement Income ETFs Tactical Asset Allocation Moderate 1% 0% 0% 10% 76% 8% 59%
Retirement Income ETFs Strategic Asset Allocation Moderate 5% 2% 12% 21% 138% 3% 11%
Warren Buffett 10 Best Yielding Stock Holdings 5% 11% 54% 27% 146% 3% 11%

As we move away from the banking crisis and become used to the new normal of low interest rates and high volatility, we can see that these dividend paying giants are paying off in more ways than one. It's clear that for the long term investor, having a stake in global companies that pay dividends is a smart move.

Three Month Chart One Year Chart Three Year Chart Five Year Chart

Over the long term, we can see that the Buffett portfolio and the dividend bearing Strategic Asset Allocation ETF portfolio match relatively closely. The difference is that the Buffett portfolio is truly fire and forget whereas the ETF portfolio has some rebalancing included. All portfolios reinvest dividends.

Source: Warren Buffett's 10 Best Yielding Stock Holdings

Additional disclosure: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.