UPS - Buy 4 July Buffett Dividend Dogs And Watch 4 More

2023-07-25 18:55:51 ET

Summary

• This Warren Buffett holdings list from Kiplinger first appeared 5/20/23 online. YCharts and Dogs of The Dow both track this Buffett/Berkshire batch. Here is your update from 7/21/23 YCharts data.
• 32 of 48 current Berkshire-Hathaway-owned-stocks pay dividends. As of 7/21/23, the top ten ranged 2.95%-8.52% by annual-yield and 46 of 48 ranged -25.29% to 39.55% per broker-estimated target price upsides.
• Analyst-augured top-ten net-gains from Buffett’s July dividend dogs ranged 10.64%-31.19% from MA, KO, V, BAC, ALLY, CVX, C, PARA, KHC, and top pick GM per YCharts data.
• $5k invested in the lowest-priced five top-yield Buffett/Berkshire-held July dividend dogs showed 4.06% more net-gain than from $5k invested in all ten. Little (lower-priced) Berkshire-collected dogs recovered the lead for Buffett’s July 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, and this Buffett/Berkshire batch is perfect for the dogcatcher process. Here is the July 21 data for 32 dividend paying stocks in the Kiplinger-documented collection of 48 owned by Buffett through his Berkshire-Hathaway (BRK.A) firm.

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, following 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 July 2023 update shows that the following four 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 from of Jefferies Financial in January] ( VTS ); The Kraft Heinz Co ( KHC ); Ally Financial Inc ( ALLY ); and HP Inc ( HPQ ).

Four more top ten by yield are within $20.00 or 32% of the ideal: Bank of America Corp ( BAC ), Citigroup Inc ( C ), Jefferies Financial Group, Inc ( JEF ), The Coca-Cola Co ( KO ). 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 July 31.

Actionable Conclusions (1-10): Analysts Estimated 10.64% To 31.19% Net Gains For Ten Top Buffett-Held Dividend Stocks Come July, 2024

Six 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 60% 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 July 21, 2024 were:

General Motors Co ( GM ) netted $311.88 based on the median of estimates from 23 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 37% greater than the market as a whole.

The Kraft Heinz Co was projected to net $237.29, 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 35% under the market as a whole.

Paramount Global ( PARA ) was projected to net $201.35 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 65% greater than the market as a whole.

Citigroup Inc netted $194.27 based on the median of estimates from 22 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 56% more than the market as a whole.

Chevron Corp (CVX) was projected to net $177.51 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 16% over the market as a whole.

Ally Financial Inc was projected to net $171.17 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 32% over the market as a whole.

Bank of America Corp was projected to net $130.07, 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 36% greater than the market as a whole.

Visa Inc ( V ) was projected to net $128.95, based on dividends, plus the median of target price estimates from 35 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 3% under the market as a whole.

Coca-Cola Co was projected to net $124.56 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 46% below the market as a whole.

Mastercard Inc ( MA ) was projected to net $106.42, based on the median of target estimates from 34 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 11% greater than the market as a whole.

The average net gain in dividend and price was estimated at 17.84% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility 17% 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."

46 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 7/21/23 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 Jefferies Financial in January), 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, Citigroup Inc [3], Ally Financial 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 ( UPS ) [6].

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

Actionable Conclusions: (21-30) Top-Ten July Berkshire/Buffett Dogs Showed 10.51%-31.26% Price Upsides, While (31) Five -1.41 to -5.4% Downsiders Trailed the Pack

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 4.06% Advantage For 5 Highest Yield, Lowest Priced, Of 10 Top Buffett-Collected Dividend Stocks To July, 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 7/21/23 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 11.84% Vs. (32) 11.38% Average Net Gains by All Ten Come July 21, 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 4.06% more gain than $5,000 invested as $.5k in all ten. The fifth lowest-priced selection, The Kraft Heinz Corp, was projected to deliver the best analyst-estimated net gain of 23.73%.

The five lowest-priced top-yield Buffett-backed dividend dogs as of July 21 were: Vitesse Energy Inc; Ally Financial Inc; Bank of America Corp; HP Inc; The Kraft Heinz Co, with prices ranging from $23.47 to $36.32.

Five higher-priced Berkshire-picked dividend dogs as of July 21 were: Jefferies Financial Group Inc; Citigroup Inc; Coca-Cola Co; Chevron Corp; United Parcel Service Inc, whose prices ranged from $36.82 to $187.30.

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 July 2023 update shows that the following four 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.

Four more are within $20.00 or 32% of the ideal: Bank of America, Citigroup Inc, Jefferies Financial Group Inc, and Coca-Cola Co. 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 July pack of dogs, check-out the Dividend Dog Catcher investing group site (by clicking on the last summary bullet above) after July 31.

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 four fair priced dogs in the top ten, plus six out-of- bounds-priced stocks. The six outliers need to trim prices between $1.01 and $106.80 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, inflationary, and pre-recession times.

Market action is the key. Mr. Market needs to drop up to 57.02% 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: