JEF - 6 June Buffett Dividend Dog Buys And 4 To Watch

2023-06-22 17:14:00 ET

Summary

• This Buffett holdings list from Kiplinger first appeared 5/20/23 on line. YCharts and Dogs of The Dow both track this Buffett/Berkshire batch. Here is your update from 6/20/23 YCharts data.
• 32 of 48 current Berkshire-Hathaway-owned-stocks pay dividends. As of 6/20/23 the top-ten ranged 3.00%-8.81% by annual-yield and 46 of 48 ranged -2.10% to 50.32% per broker-estimated target-price-upsides.
• Analyst-augured top-ten net-gains from Buffett’s June dividend dogs ranged 17.99%-33.66% from GL, CE, ALLY, C, OXY, CVX, BAC, PARA, GM, and top pick KHC per YCharts data.
• $5k invested in the lowest-priced five top-yield Buffett/Berkshire-held June dividend dogs showed 121.6% LESS net-gain than from $5k invested in all ten. Bigger (higher-priced) Berkshire-collected dogs led Buffett’s June 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 (dogcatcher) analysis, this Buffett/Berkshire batch is perfect for the dogcatcher process. Here is the May 25 data for 32 dividend paying stocks in the Kiplinger-documented collection of 48 owned by Buffett through his Berkshire Hathaway Inc. ([[BRK.A]], [[BRK.B]]) firm as of 6/20/23.

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 August.

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 May 2023 update shows that the following six 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: Vitesse Energy, Inc. [NEW, a spinoff form OXY] ( VTS ); The Kraft Heinz Co ( KHC ); Ally Financial Inc ( ALLY ); Jefferies Financial Group Inc ( JEF ); HP Inc ( HPQ ); Bank of America ( BAC ).

Four more top ten by yield are within $100.00 or 55% of the ideal: Citigroup Inc ( C ), Coca-Cola Co ( KO ), Chevron Corp ( CVX ), and United Parcel Service ( UPS ). Those stocks show potential double digit price decreases that would pay dividends at the current payout level from $1k invested equal to their single share prices.

To run-down the "safer" dividends of Buffett’s June pack of dogs, check-out the Dividend Dog Catcher investing group site (by clicking on the last summary bullet above) after June 30.

Actionable Conclusions (1-10): Analysts Estimated 17.99% To 33.66% Net Gains For Ten Top Buffett-Held Dividend Stocks Come June, 2024

Five 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 50% 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 June 20, 2024 were:

The Kraft Heinz Co was projected to net $336.57, based on the median of target price estimates from 19 analysts plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 32% under the market as a whole.

General Motors Co ( GM ) netted $312.57 based on the median of estimates from 23 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 33% greater than the market as a whole.

Paramount Global ( PARA ) was projected to net $266.36, based on a median of target price estimates from 24 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 68% greater than the market as a whole.

Bank of America Corp was projected to net $246.69, based on the median of target price estimates from 23 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 37% greater than the market as a whole.

Chevron Corp was projected to net $240.26 based on a median of target price estimates from 25 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 17% over the market as a whole.

Occidental Petroleum Corp ( OXY ) was projected to net $203.02, based on dividends, plus the median of target price estimates from 19 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 78% greater than the market as a whole.

Citigroup Inc netted $200.62 based on the median of estimates from 23 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 57% more than the market as a whole.

Ally Financial Inc was projected to net $184.28 based on dividends, plus the median of target price estimates from 19 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 34% over the market as a whole.

Celanese Corp (CE) was projected to net $183.88 based on dividends, plus the median of target price estimates from 23 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 31% greater than the market as a whole.

Globe Life Inc ( GL ) was projected to net $179.87, based on the median of target estimates from 9 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 21% lower than the market as a whole.

The average net gain in dividend and price was estimated at 23.54% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility 30% 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."

48 Buffett Holdings By Target Gains

32 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 6/20/23 by yield represented five of eleven Morningstar sectors.

At the top was one of two from the energy sector, Vitesse Energy Inc (1) (a new holding for Buffett spun off of his Occidental shares), and Chevron Corp [5].

Next, two consumer defensive sector representatives placed second and tenth, The Kraft Heinz Co [2], and Coca-Cola Co [10].

Four places went to dogs from the financial services sector, Ally Financial Inc [3], Citigroup Inc [4], Jefferies Financial Group Inc [7], and Bank of America [9].

Thereafter, the lone industrials member of the top ten placed sixth, United Parcel Service [6].

Finally, one from the technology sector, placed eighth, HP Inc [8], to complete the June Buffett/Berkshire top ten dividend dogs.

Actionable Conclusions: (21-30) Top-Ten May Berkshire/Buffett Dogs Showed 16.78%-31.30% Price Upsides, While (31) Two -0.47 & -2.06% Downsiders Followed

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 21.6% Disadvantage For 5 Highest Yield, Lowest Priced, Of 10 Top Buffett-Collected Dividend Stocks To June, 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 6/20/23 showing the highest dividend yields represented five of eleven Morningstar sectors.

Actionable Conclusions: Analysts Projected 5 Lowest-Priced Of The Top Ten Highest-Yield Buffett-Held Dogs (31) Delivering 13.25% Vs. (32) 16.91% Average Net Gains by All Ten Come June 20, 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 21.6% LESS gain than $5,000 invested as $.5k in all ten. The sixth lowest-priced selection, The Kraft Heinz Corp, was projected to deliver the best analyst-estimated net gain of 33.63%.

The five lowest-priced top-yield Buffett-backed dividend dogs as of June 20 were: Vitesse Energy Inc; Ally Financial Inc; Bank of America Corp; HP Inc; Jefferies Financial Group Inc, with prices ranging from $22.71 to $33.07.

Five higher-priced Berkshire-picked dividend dogs as of June 20 were: The Kraft Heinz Co; Citigroup Inc; Coca-Cola Co; Chevron Corp; United Parcel Service Inc., whose prices ranged from $36.62 to $177.27.

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 15% 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 six stocks ready for pick-up, and the four emerging ideal picks at the start of the article, here is a reprise of the list at the end:

This June 2023 update shows that the following six 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: Vitesse Energy Inc [NEW, a spinoff form OXY]; Kraft Heinz Co; Ally Financial Inc; Jefferies Financial Group Inc; HP Inc; Bank of America.

Four more are within $100.00 or 55% of the ideal: Citigroup Inc, Coca-Cola Co, Chevron Corp, and United Parcel Service, Inc. Those stocks show potential single and double digit price decreases that would pay dividends at the current payout level from $1k invested equal to their single share prices.

To run-down the "safer" dividends of Buffett’s June pack of dogs, check-out the Dividend Dog Catcher investing group site (by clicking on the last summary bullet above) after June 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 six fair priced dogs in the top ten, plus four out-of- bounds-priced stocks. The four outliers need to trim prices between $3 and $97 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 54.6% 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.

For further details see: