5 ‘Smart Money’ Dividend Stocks to Buy

A look at high-conviction income plays from five superinvestors

Jul 31, 2012, 1:35 pm EDT | By Charles Sizemore, Editor, The Sizemore Investment Letter

Warren Buffett: Wal-Mart

Yield: 2.1%

We’ll start with Mr. Buffett. Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) has been accumulating shares of retail behemoth Wal-Mart (NYSE:WMT), and it’s not hard to understand why.

Wal-Mart is exactly the kind of company that Buffett is famous for buying. It has a dominant position as the leading discount retailer in the world. It has competitive “moats” in its size and logistical efficiency that competitors have a hard time scaling. And naturally, it’s attractively priced. Wal-Mart trades for 14 times 2013 expected earnings and at 0.55 times sales. Its 2.1% dividend, while not exceptionally high, is growing at a nice clip. Wal-Mart raised its dividend 9% last year and 20% the year before.