Berkshire Hathaway (BRK.A 0.64%) (BRK.B 0.54%) is led by arguably the most successful investor of all time, its chairman and chief executive officer Warren Buffett. With a net worth topping $100 billion, the Oracle of Omaha routinely places among the top 10 richest people in the world.
Needless to say, it makes sense to follow the stocks within Berkshire Hathaway's $337 billion investment portfolio to figure out which ones could be a fit for your portfolio. Here are two stocks that could be savvy buys for dividend growth investors for the final month of 2022 and beyond.
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1. Mastercard: A leader in the thriving payments industry
With operations in nearly every country and territory, Mastercard (MA -1.19%) boasts a payment network that consisted of almost 2.7 billion debit or credit cards in circulation as of Sept. 30. Trailing Visa's (V -0.48%) approximately 4 billion debit or credit cards in circulation, this makes the company the second-largest public payments processor in the world. Berkshire Hathaway's stake in Mastercard is worth $1.4 billion.
Due to Mastercard's status as the smaller player in a global duopoly, more and more merchants are going to be inclined to accept the company's network as a payment method moving forward. That's because with so many cards in circulation, merchants would likely be leaving possible business on the table by not doing so.
And then there's the global payments industry itself: As a result of growing cash displacement, Boston Consulting Group believes the industry will basically double from $1.5 trillion in 2021 revenue to $2.9 trillion by 2030. Mastercard also launched its Digital First virtual payment card brand back in 2019, which could become a potential trillion-dollar market itself by the end of this decade. This is why analysts are forecasting 20.9% annual non-GAAP (adjusted) diluted earnings per share (EPS) growth for the next five years from Mastercard.
The stock's 0.6% dividend yield is well below the S&P 500 index's 1.7% yield. But with a dividend payout ratio set to come in below 19% in 2022 and strong growth prospects, Mastercard has real potential to be a dividend-growth stock.
Mastercard stock is trading at a forward price-to-earnings (P/E) ratio of 28.2, which is well above the 15.2 forward P/E ratio of the credit services industry. However, the stock's world-class quality and superior growth profile arguably justify this sizable premium valuation.
2. United Parcel Service: Delivering big, growing dividends to shareholders
In the third quarter of this year, United Parcel Service (UPS 0.34%) delivered an average of 22.9 million packages a day around the globe. This makes the company the biggest package delivery company on the planet. With more than 120,000 package cars and vans, UPS possesses an almost impenetrable competitive moat.
And if that wasn't enough, the demand for package delivery should only rise as the years progress. This is because it is projected that global e-commerce retail sales will surge from $5.2 trillion in 2021 to $8.1 trillion by 2026. That is a lot more packages that will need to be delivered to customers. And given that UPS has the resources necessary to prepare for this increasing demand, analysts are predicting 5% annual earnings growth over the next five years from the logistics giant.
Berkshire Hathaway's stake in the company is worth a modest $11 million. But don't be fooled: UPS is more than just a business with solid growth prospects. The company's 3.3% dividend yield is nearly double the S&P 500 index's 1.7% yield. With the dividend payout ratio poised to come in at 47% in 2022, there is plenty of room for upper-single-digit annual dividend growth in the years to come.
UPS's forward P/E ratio of 15.1 is essentially in line with the integrated freight and logistics industry's average forward P/E ratio of 14.4. Since UPS is the most dominant logistics company out there, this is a more than reasonable premium for dividend growth investors to pay.
