When Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett buys or sells a stock, Wall Street and retail investors tend to pay close attention. That's because the Oracle of Omaha, as he's come to be known, has averaged -- averaged! -- a 20.1% annual return since taking the reins in 1965.

There's a laundry list of reasons that explain why Buffett has been such a successful investor. In no particular order, he thinks long term, stays focused on a small subset of sectors and industries he fully understands, piles into cyclical stocks, and runs a relatively concentrated portfolio.

But perhaps the biggest advantage is that Berkshire Hathaway's portfolio is packed with dividend stocks. Dividend stocks have a history of handily outperforming non-dividend payers, and Buffett's company looks to be on pace to collect north of $6 billion in dividend income over the next year. Amazingly, $4.3 billion of this passive income will originate from just five stocks.

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Source Fool.com