GM - Buy 7 April Buffett Dividend Dogs And Watch 2

2023-04-26 18:53:07 ET

Summary

• This Warren Buffett holdings list from Kiplinger first appeared 2/14/23 online. YCharts and Dogs of The Dow both track this Buffett/Berkshire batch. Here is your update from 4/25/23 YCharts data.
• 33 of 49 current Berkshire-Hathaway-owned-stocks pay dividends. As of 4/25/23, the top-ten ranged 3.48%-6.04% by annual-yield and 47 of 49 ranged -1.05% to 71.17% per broker-estimated target-price-upsides.
• Analyst-augured top-ten net-gains from Buffett’s April dividend dogs ranged 15.89%-50.2% from KHC, GL, C, BAC, BK, ALLY, CE, TSM, USB, and top pick GM per YCharts data.
• $5k invested in the lowest-priced five top-yield Buffett/Berkshire-held April dividend dogs showed 10.78% more net-gain than from $5k invested in all ten. Little (lower-priced) Berkshire-collected dogs led Buffett’s April 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 April 25 data for 33 dividend paying stocks in the Kiplinger-documented collection of 49 owned by Warren Buffett through his Berkshire Hathaway Inc. ([[BRK.A]], [[BRK.B]]) firm as of 4/25/23.

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 May.

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 April 2023 update shows that the following seven 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: U.S. Bancorp ( USB ); Ally Financial Inc. ( ALLY ); Paramount Global ( PARA ); Kraft Hienz Co ( KHC ); Jefferies Financial Group Inc. ( JEF ); HP Inc. ( HPQ ); Bank of America ( BAC ).

Two more are within $5.00 or 9.5% of the ideal: Citigroup Inc ( C ), and Bank of New York Mellon Corp ( BK ). Those stocks show potential small 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 April pack of dogs, check-out the Dividend Dog Catcher investing group site (by clicking on the last summary bullet above) after May 1.

Actionable Conclusions (1-10): Analysts Estimated 15.89% To 50.19% Net Gains For Ten Top Buffett-Held Dividend Stocks Come April, 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 April 25, 2024 were:

General Motors Co ( GM ) netted $501.96 based on the median of estimates from 24 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 34% greater than the market as a whole.

U.S. Bancorp was projected to net $495.16, based on a median of target price estimates from 22 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 7% below the market as a whole.

Taiwan Semiconductor Manufacturing Company Limited ( TSM ) was projected to net $384.89 based on a median of target price estimates from 11 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 11% over the market as a whole.

Celanese Corp (CE) was projected to net $330.21 based on dividends, plus the median of target price estimates from 21 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 30% greater than the market as a whole.

Ally Financial Inc was projected to net $291.79 based on dividends, plus the median of target price estimates from 18 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 34% over the market as a whole.

Bank of New York Mellon Corp was projected to net $281.57, based on dividends, plus the median of target price estimates from 17 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 7% greater than the market as a whole.

Bank of America Corp was projected to net $268.77, 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 37% greater than the market as a whole.

Citigroup Inc netted $216.32 based on the median of estimates from 22 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 57% more than the market as a whole.

Globe Life Inc. ( GL ) was projected to net $200.72, based on the median of target estimates from 10 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 Kraft Heinz Co was projected to net $158.90, 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 31% under the market as a whole.

The average net gain in dividend and price was estimated at 31.3% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility 15% 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 4/25/23 by yield represented six of eleven Morningstar sectors.

Five places went to dogs from the financial services sector, U.S. Bancorp [1], Ally Financial Inc [2], Citigroup Inc [4], Jefferies Financial Group Inc [6], and Bank of New York Mellon Corp [10].

Next, the lone communication services company placed third, Paramount Global [3]. Then, a lone consumer defensive sector representative placed fifth, The Kraft Heinz Co [5].

The lone industrials member of the top ten placed eighth, United Parcel Service ( UPS ) [8].

One from the technology sector, placed eighth, HP Inc [8].

Finally, taking ninth, was one from the energy sector, Chevron Corp (CVX) [9], to complete the April Buffett/Berkshire top ten dividend dogs.

Actionable Conclusions: (21-30) Top-Ten April Berkshire/Buffett Dogs Showed 15.60%-50.11% Price Upsides, While (31) Three -.039% to -1.60 % Downsides Showed

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 10.78% Advantage For 5 Highest Yield, Lowest Priced, Of 10 Top Buffett-Collected Dividend Stocks To April, 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 4/25/23 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 18.11% Vs. (32) 16.35% Average Net Gains by All Ten Come April 25, 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 10.78% more gain than $5,000 invested as $.5k in all ten. The fifth lowest-priced selection, U.S. Bancorp, was projected to deliver the best analyst-estimated net gain of 49.52%.

The five lowest-priced top-yield Buffett-backed dividend dogs as of April 25 were: Paramount Global; Ally Financial Inc; HP Inc; Jefferies Financial Group Inc; US Bancorp, with prices ranging from $21.97 to $31.77.

Five higher-priced Berkshire-picked dividend dogs as of April 25 were: The Kraft Heinz Co; Bank of New York Mellon Corp; Citigroup Inc; Chevron Corp; United Parcel Service Inc, whose prices ranged from $39.44 to $176.29.

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 25% 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 seven stocks ready for pick-up, and the two emerging ideal picks at the start of the article, here is a reprise of the list at the end:

This April 2023 update shows that the following seven 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: U.S. Bancorp; Ally Financial Inc ; Paramount Global; Kraft Hienz Co; Jefferies Financial Group Inc; HP Inc; Bank of America.

Two more are within $5.00 or 9.5% of the ideal: Citigroup Inc, and Bank of New York Mellon Corp. Those stocks show potential small 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 those nine and all the rest, check-out the Dividend Dog Catcher investment group site (by clicking on the last summary bullet above) after May 1.

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 $96 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 54.3% 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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