V - 3 January Buffett Dividend Dog Buys Plus 5 To Watch

Summary

• This Buffett holdings list from Kiplinger first appeared 11/15/22 on line. YCharts and Dogs of The Dow both track this Buffett/Berkshire batch. Here is your update from 1/23/23 YCharts data.
• 33 of 49 current Berkshire-Hathaway-owned-stocks pay dividends. As of 1/23/23 the top-ten ranged 3%-4.54% by annual-yield and 47 of 49 ranged -5.52% to 72.83% per broker-estimated target-price-upsides.
• Analyst-augured top-ten net-gains for Buffett’s January dividend dogs ranged 11.56%-37.2% from TSM, V, OXY, USB, MDLZ, BK, AAPL, KR, BAC, and top pick, GM per YCharts data.
• $5k invested in the lowest-priced five top-yield Buffett/Berkshire-held January dividend dogs showed 31.41% LESS net-gain than from $5k invested in all ten. Big (higher-priced) Berkshire-collected dogs topped Buffett’s January dividend payers.

Foreword

Dan Burrows says, in Kiplinger Investing:

"The Berkshire Hathaway portfolio is a diverse set of blue chips and, increasingly, lesser-known growth bets. Here's a look at every stock picked by Warren Buffett and his lieutenants."

Any collection of stocks is more clearly understood when subjected to yield-based (dog catcher) analysis, this Buffett/Berkshire batch is perfect for the dogcatcher process. Here is the January 23 data for 33 dividend-paying stocks in the Kiplinger-documented collection of 49 owned by Buffett through his Berkshire Hathaway (BRK.A) firm as of 1/23/23.

Another resource consulted for this article was dogsofthedow.com which also keeps an ongoing spreadsheet of the Buffett/Berkshire stocks updated quarterly per BRK SEC filings, the next of which reports in February.

A rapid market recovery, after the Ides of March 2020 plunge, made the possibility of owning productive dividend shares reflecting this collection out of reach for first-time investors.

This January 2023 update shows that the following three top dogs of Berkshire stocks now live up to the dogcatcher ideal of paying annual dividends (from a $1K investment) exceeding their single share prices: Paramount Global ( PARA ); Ally Financial Inc ( ALLY ); HP Inc ( HPQ ).

Five more are within $11 or 22% of the ideal: Bank of New York Mellon Corp ( BK ); Citygroup Inc ( C ); Jefferies Financial Group ( JEF ); U.S. Bancorp ( USB ); The Kraft Heinz Co ( KHC ). Those five stocks show potential small price decreases that would pay dividends at current payout levels from $1k invested equaling their single share prices.

To run-down the "safer" dividends of those eight and all the rest, check-out the Dividend Dog Catcher marketplace site (by clicking on the last summary bullet above) after January 30.

Actionable Conclusions (1-10): Analysts Estimated 11.56% To 37.2% Net Gains For Ten Top Buffett-Held Dividend Stocks Come January, 2024

Two of these ten Buffett-held top dividend stocks by yield were also among the top ten gainers for the coming year based on analyst 1-year target prices. (They are tinted gray in the chart below.) Thus, this yield-based forecast for these Buffett dogs was graded by Wall St. Wizards as 20% accurate.

Estimated-dividends from $1000 invested in each of these highest-yielding stocks and their aggregate one-year analyst median target-prices, as reported by YCharts, produced the data points for the projections below. (Note: one-year target prices by lone-analysts were not applied.) Ten probable profit-generating trades projected to January 23, 2024 were:

General Motors Co ( GM ) netted $372.02 based on the median of estimates from 21 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 34% greater than the market as a whole.

Bank of America Corp ( BAC ) was projected to net $201.50, based on the median of target price estimates from 24 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 39% greater than the market as a whole.

The Kroger Co ( KR ) netted $201.11 based on the median of estimates from 19 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 48% less than the market as a whole.

Apple Inc ( AAPL ) was projected to net $187.77, based on the median of target price estimates from 42 analysts plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 24% over the market as a whole.

Bank of New York Mellon Corp was projected to net $157.01, based on the median of target estimates from 16 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 8% higher than the market as a whole.

Mondelez International Inc ( MDLZ ) was projected to net $146.59 based on dividends, plus the median of target price estimates from 24 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 33% under the market as a whole.

U.S. Bancorp was projected to net $137.91, based on a median of target price estimates from 23 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 4% under the market as a whole.

Occidental Petroleum Corp ( OXY ) was projected to net $128.63 based on dividends, plus the median of target price estimates from 26 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 78% greater than the market as a whole.

Visa Inc ( V ) was projected to net $115.85 based on a median of target price estimates from 34 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 5% under the market as a whole.

Taiwan Semiconductor Manufacturing Co Ltd ( TSM ) was projected to net $115.55, based on dividends, plus the median of target price estimates from 11 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 6% greater than the market as a whole.

The average net gain in dividend and price was estimated at 17.64% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility 10% greater than the market as a whole.

The Dividend Dogs Rule

Stocks earned the "dog" moniker by exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where (3) yield (dividend/price) grew higher than their peers. Thus, the highest yielding stocks in any collection became known as "dogs." More precisely, these are, in fact, best called, "underdogs."

49 Buffett Holdings By Target Gains

33 Buffett Picks By Yield

Actionable Conclusions (11-20): 10 Top Buffett-Held Stocks By Yield Are The Dogs of Berkshire-Hathaway

Top ten Buffett-held stocks selected 1/23/23 by yield represented six of eleven Morningstar sectors.

First place went to the lone communication services company , Paramount Global [1].

Five dogs from the financial services sector, placed second, fourth, fifth, ninth, and tenth: U.S. Bancorp [2], Citigroup Inc [4], Ally Financial Inc [5] Jefferies Financial Group Inc [9], and Bank of New York Mellon Corp [10].

Next, the lone consumer defensive sector representative placed third, The Kraft Heinz Co [3].

One from the technology sector, placed sixth, HP Inc [6]. The lone industrials stock placed seventh, United Parcel Service ( UPS )[7].

Finally. taking eighth, was one from the energy sector, Chevron Corp ( CVX ) [8], to complete the January Buffett/Berkshire top ten dividend dogs, by yield.

Actionable Conclusions: (21-30) Top-Ten January Berkshire/Buffett Dogs Showed 10.76%-37.21% Upsides, While (31) Three Showed Downsides of -1.23% to -5.52%

To quantify top-dog rankings, analyst median price target estimates provided a "market sentiment" gauge of upside potential. Added to the simple high-yield metrics, analyst median price target estimates became another tool to dig out bargains.

Analysts Forecast A 31.41% Disadvantage For 5 Highest Yield, Lowest Priced, Of 10 Top Buffett-Collected Dividend Stocks To January, 2024

Ten-top Buffett/Berkshire dividend dogs were culled by yield for this update. Yield (dividend/price) results provided by YCharts did the ranking.

As noted above, top ten Buffett-chosen dividend dogs screened 1/23/23 showing the highest dividend yields represented six of eleven Morningstar sectors.

Actionable Conclusions: Analysts Predicted 5 Lowest-Priced Of The Top Ten Highest-Yield Buffett-Held Dogs (31) Delivering 5.83% Vs. (32) 8.5% Average Net Gains by All Ten Come January 23, 2024

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten dividend Buffett-selected kennel by yield were predicted by analyst 1-year targets to deliver 31.41% LESS gain than $5,000 invested as $.5k in all ten. The seventh lowest-priced selection, Bank of New York Mellon Corp, was projected to deliver the best analyst-estimated net gain of 15.7%.

The five lowest-priced top-yield Buffett-backed dividend dogs as of January 23 were: Paramount Global; HP Inc; Ally Financial Inc; Jefferies Financial Group Inc; The Kraft Heinz Co, with prices ranging from $21.16 to $40.26.

Five higher-priced Berkshire-picked dividend dogs as of January 23 were: US Bancorp; Bank of New York Mellon Corp; Citigroup Inc; United Parcel Service; Chevron Corp, whose prices ranged from $47.67 to $180.86.

The distinction between five low-priced dividend dogs and the general field of ten reflected Michael B. O'Higgins' "basic method" for beating the Dow. The scale of projected gains, based on analyst targets, added a unique element of "market sentiment" gauging upside potential. It provided a here-and-now equivalent of waiting a year to find out what might happen in the market. Caution is advised, since analysts are historically only 20% to 85% accurate on the direction of change and just 0% to 15% accurate on the degree of change (within 2.5%).

Afterword

If somehow you missed the suggestion of the four stocks ready for pick-up, and the emerging ideal picks at the start of the article, here is a reprise of the list at the end:

This January 2023 update shows that the following three top dogs of Berkshire stocks now live up to the dogcatcher ideal of paying annual dividends (from a $1K investment) exceeding its single share prices: Paramount Global; Ally Financial Inc; HP Inc.

Five more are within $11 or 22% of the ideal: The Kraft Heinz Co at 0.7%; U.S. Bancorp at 8%; Jefferies Financial Group at 10%; Citigroup Inc at 13%; Bank of New York Mellon at 22%. Those five stocks show price decrease percentages that would pay dividends at current payout levels from $1k invested equaling their single share prices.

To run-down the 'safer' dividends of those eight and even more, check-out the Dividend Dog Catcher marketplace site (by clicking on the last summary bullet above) after December 30.

Price Drops or Dividend Increases Could Get All Ten Dogs of Buffett Back to "Fair Price" Rates For Investors

The charts above retain the recent dividend amount and adjust share price to produce a yield (from $1K invested) to equal or exceed the single share price of each stock. As you can see, this illustration shows the three fair priced dogs in the top ten (PARA, ALLY, & HPQ), plus seven out-of- bounds-priced stocks. The outliers need to trim prices between $0.28 and $105.35 to realize the 50/50 goal for share prices equaling dividend payouts from $10k invested.

The alternative, of course, would be for these companies raise their dividends. That, of course, is a lot to ask in these highly disrupted, dollar-flooded, understaffed, short-supplied, and inflationary times.

Market action is the key. Mr. Market needs to drop up to 58% for all ten to become Buffett Ideal dividend dogs.

The net gain/loss estimates above did not factor-in any foreign or domestic tax problems resulting from distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.

Stocks listed above were suggested only as possible reference points for your Buffett/Berkshire batch stock purchase or sale research process. These were not recommendations.

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