The stock market has been severely volatile over the past few weeks, as evident from the CBOE Volatility Index's 8.3% rise over the past month. The U.S. economy has been under extreme inflationary pressure, with the consumer price index increasing 8.3% in April, higher than the Dow Jones estimate of 8.1%. The Federal Reserve is determined to implement a much tighter monetary policy to fight persistently high inflation.
Furthermore, Goldman Sachs strategists have forecasted a 35% chance of the U.S. economy slipping into recession in the next two years. Amid the rising recession risks, dividend-paying stocks are considered solid hedges against elevated market volatility by securing a steady income stream. Berkshire Hathaway (BRK.A) (BRK.B) CEO Warren Buffett is known for investing in high-yielding stocks. Of the six bank stocks in Berkshire Hathaway's equity portfolio, three stocks pay high dividend yields and create passive income for investors.
