Warren Buffett Owns This Dividend Stock. Should You Buy It Too?

Warren Buffett got serious about Sirius XM (NASDAQ: SIRI) in his final few quarters as CEO of Berkshire Hathaway. Buffett's iconic conglomerate had been adding to its stake in Sirius XM over the past two years, amassing a stake of better than 37% in the satellite radio monopoly before the generational investor stepped down from the helm.

We may never know if it was Buffett or one of his many skilled executives who led the charge to build out Berkshire's position. We do know that Sirius XM stock underperformed the market during Buffett's time at Berkshire. However, it's been a different story this year. Sirius XM is beating the market with a 33% gain so far in 2026.

Offering a healthy yield and in the early stages of turning things around, is Sirius XM a dividend stock that you should buy, too? Let's hit the road and crank up the music. This could be Berkshire's biggest gainer in 2026.

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The volume knob is finally starting to move

Sirius XM may not look like much from the vantage point of the rearview mirror. It has posted modest revenue declines for three consecutive years. Its subscriber count peaked at nearly 35 million more than six years ago. The media stock may seem to be fading out like many of the musical tracks on its airwaves, but this song still has a few more verses to belt out.

For starters, Sirius XM has now posted back-to-back quarters of increasing revenue. It was just a 0.2% year-over-year uptick in the fourth quarter of last year and a 1.1% step up in last week's report, but there's a corner that is slowly but definitely being turned.

Coming around the bend

It's not just the fundamentals turning the corner. After five straight years of stock declines, Sirius XM is crushing the market in 2026. The stock's yield -- a hearty 4.1% even after the shares rising 35% off their November lows -- is attracting income investors. Routinely clocking in with 10-figure annual free cash flow ($1.35 billion projected by Sirius XM for this year), it's good for the money.

Sirius XM reiterated its 2026 guidance in last week's first-quarter report. This is great to see, but the risks remain. Sirius XM is directly in the path of two headwinds: rising gas prices and the impact they may have on diminishing consumer spending.

More pain at the pump in the coming months can limit the time folks spend driving. This would lower the perceived value of a premium radio service consumed primarily in automobiles. The other dagger is that with less disposable income after paying up for gas, a satellite radio subscription could be next on the chopping block for cost-cutting consumers.

There's also a bullish scenario: The war in Iran subsides, inflationary pressures recede, and car sales surge, along with Sirius XM's recent acceleration in revenue growth. Even if that scenario doesn't play out, the stock is still cheap for a business that appears to be coming around. You can buy Sirius XM for 8.6 times this year's earnings and 7.9 times next year's target.

Rick Munarriz has positions in Sirius XM. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.