Warren Buffett is one of the best investors in the world, perhaps the best.
The company that he has impressively grown for decades, Berkshire Hathaway, famously doesn't pay a dividend. The idea is that shareholders benefit more from retaining a dollar than paying it out.
However, Mr Buffett likes investing in businesses that do pay dividends. These are two dividend shares on the ASX that I think he would want to invest in if he were looking on the ASX:
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Patts is an investment conglomerate and is sometimes called Australia's version of Berkshire Hathaway. Soul Patts takes investment stakes in listed businesses and it also likes to buy unlisted businesses outright, or grow them from scratch.
It has been operating for over a century and has built an impressive, diversified portfolio of businesses. Some of its most recent new investments include agriculture, luxury retirement living and swimming schools.
Every year Soul Patts increases its investments in different sectors a little more, making it a more compelling proposition.
It has increased its dividend every year since 2000, it has paid a dividend every year in its existence and currently offers a grossed-up dividend yield of 3.7%.
InvoCare Limited (ASX: IVC)
Warren Buffett likes to invest in businesses with a strong brand that allows them to earn higher returns than the competition and gives them a strong market position. He also likes businesses that earn a high return on equity (ROE). InvoCare fits both of these requirements.
InvoCare is Australia and New Zealand's biggest funeral operator, it has a number of nationally-recognised brands including White Lady Funerals, Simplicity Funerals and Value Cremations, as well as a number of regional brands.
Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050. That gives a lot of visibility for where earnings and dividends will go over the long-term.
InvoCare currently offers a grossed-up dividend yield of 3.9%. InvoCare is investing heavily for growth by renovating its existing locations and acquiring regional funeral providers.
Foolish takeaway
Both of these businesses have attractive long-term futures. Soul Patts would be my pick of the two, it has an enviable dividend record and it is very effectively future-proofed by its investment flexibility.
