1 Top Warren Buffett Stock for Dividend Investors

Berkshire Hathaway, led by former CEO Warren Buffett and current CEO Greg Abel, has struck a potential dividend gem with Macy's (NYSE: M). This retail giant has not only increased its quarterly dividend by 5% in 2023, but has also maintained a strong track record of annual dividend hikes. With a payout ratio of just 29%, Macy's appears to have a comfortable balance between returning value to shareholders and retaining earnings for growth.

The retailer's stock has seen a 29.6% increase in the past year, outperforming the S&P 500's 18.4% gain. Moreover, Macy's boasts a higher dividend yield of 3.4% compared to the S&P 500's 1.1%. The company's turnaround strategy, which includes improving the shopping experience, closing unprofitable stores, and expanding its luxury brands, has led to positive same-store sales growth.

With a low P/E ratio of 9, Macy's offers an appealing value proposition compared to the S&P 500's higher valuation. Despite not being included in the Motley Fool's top 10 list of long-term growth stocks, Macy's remains an attractive option for dividend investors seeking potential upside.