JEF - Warren Buffett's 5 Dividend Buys For November

2023-11-21 18:03:56 ET

Summary

• This Warren Buffett holdings list from Kiplinger first-appeared 11/14/23 on the Berkshire Hathaway SEC Form-13F. Kiplinger, YCharts, and Dogs-of-The-Dow all track this batch. Here is your update from 11/17/23 YCharts data.
• 27 of 45 current Berkshire-owned-stocks pay dividends. As of 11/17/23 the top-ten ranged 2.7%-4.73% by annual-yield and 39 of 45 ranged 2.18% to 63.69% by broker-estimated target-price-upsides.
• Analyst-augured top-ten net-gains from Buffett’s November dividend dogs ranged 14.16%-28.61% from KO, ALLY, C, OXY, DEO, KHC, TMUS, JEF, KR, and top pick CVX per YCharts data.
• $5k invested in the lowest-priced five top-yield Buffett/Berkshire-held November dividend dogs showed 10.64% LESS net-gain than from $5k invested in all ten. Big (higher-priced) Berkshire-collected dogs led Buffett’s November 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 are the November 17 data for 27 dividend paying stocks in the Kiplinger-documented collection of 45 now owned by Buffett through his Berkshire Hathaway Inc. (BRK.A, BRK.B) firm.

Another resource consulted for this article was Dogs of the Dow , 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, following the Ides of March 2020 plunge, made the possibility of owning productive dividend shares reflecting the Buffett collection out of reach for first-time investors.

This November 2023 update shows that the following five 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: The Kraft Heinz Co ( KHC ); Citigroup Inc ( C ); Ally Financial Inc ( ALLY ); HP Inc ( HPQ ); Bank of America Corp ( BAC ).

One more in the top ten by yield is within $0.31 or 0.89% of the ideal, Jefferies Financial Group Inc ( JEF ). Another stock, outside the top ten, shows dividends at the current payout level from $1k invested equaling its single share price, that is Sirius XM Holdings Inc. ( SIRI ) which is back in the Buffett batch after a one year absence.

To run-down the "safer" dividends of Buffett’s November pack of dogs, check-out the Dividend Dog Catcher investing group site (by clicking on the last summary bullet above) after November 27.

Actionable Conclusions (1-10): Analysts Estimated 14.16% To 28.61% Net Gains For Ten Top Buffett-Held Dividend Stocks Come November, 2024

Eight 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 80% 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 November 17, 2024 were:

Chevron Corp (CVX) netted $286.13 based on the median of estimates from 24 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 16% greater than the market as a whole.

The Kroger Co ( KR ) was projected to net $228.12, based on the median of target price estimates from 21 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 50% less than the market as a whole.

Jefferies Financial Group Inc was projected to net $203.73, based on the median of target estimates from 3 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 43% greater than the market as a whole.

T-Mobile US Inc ( TMUS ) was projected to net $196.08 based on a median of target price estimates from 29 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 47% less than the market as a whole.

The Kraft Heinz Co was projected to net $180.20, based on the median of target price estimates from 21 analysts plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 31% under the market as a whole.

Diageo PLC ( DEO ) was projected to net 153.51 based on dividends, plus the median of target price estimates from 7 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 39% less than the market as a whole.

Occidental Petroleum Corp ( OXY ) was projected to net $151.73, 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 71% over the market as a whole.

Citigroup Inc netted $142.70 based on the median of estimates from 23 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 56% more than the market as a whole.

Ally Financial Inc was projected to net $142.09 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 38% over the market as a whole.

Coca-Cola Co ( KO ) was projected to net $141.56 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 41% under the market as a whole.

The average net gain in dividend and price was estimated at 18.26% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility 3% 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."

39 Buffett Holdings By Target Gains

27 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 11/17/23 by yield represented four of eleven Morningstar sectors.

In first place was one of four consumer defensive sector representatives The Kraft Heinz Co [1]. The others placed seventh, ninth, and tenth: Coca-Cola Co [7]; Diageo PLC [9]; The Kroger Co [10].

Then four from the financial services sector placed second, third, sixth and eighth, Citigroup Inc [2], Ally Financial Inc [3], Jefferies Financial Group Inc [6], and Bank of America [8].

Then, in fourth place was the energy sector member, Chevron Corp [4]. One from the technology sector, placed fifth, HP Inc [5], to complete the November Buffett/Berkshire top ten dividend dogs.

Actionable Conclusions: (21-30) Top-Ten November Berkshire/Buffett Dogs Showed 11.95%-25.43% Price Upsides, While (31) One -0.44% Down-sider Trailed the Pack This Month

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 10.64% Disadvantage For 5 Highest Yield, Lowest Priced, Of 10 Top Buffett-Collected Dividend Stocks To November, 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 11/17/23 showing the highest dividend yields represented four of eleven Morningstar sectors.

Actionable Conclusions: Analysts Projected 5 Lowest-Priced Of The Top Ten Highest-Yield Buffett-Held Dogs (31) Delivering 15.38% Vs. (32) 17.21% Average Net Gains by All Ten Come November 17, 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 10.64% LESS gain than $5,000 invested as $.5k in all ten. The tenth lowest-priced selection, Chevron Corp, was projected to deliver the best analyst-estimated net gain of 28.61%.

The five lowest-priced top-yield BKB stocks November 17 were: Ally Financial Inc; HP Inc; Bank of America Corp; The Kraft Heinz Co; Jefferies Financial Group Inc, with prices ranging from $27.51 to $35.02.

Five higher-priced Berkshire-backed dividend dogs as of November 17 were: The Kroger Co; Citigroup Inc; Coca-Cola Co; Diageo PLC; Chevron Corp, whose prices ranged from $42.44 to $144.46.

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 November 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.

One more is within $0.31 or 0.89% of the idea, Jefferies Financial Group Inc. That stock shows the smallest price decrease that would pay dividends at the current payout level from $1k invested equal to its single share price.

To run-down the "safer" dividends of Buffett’s September pack of dogs, check-out the Dividend Dog Catcher investing group site (by clicking on the last summary bullet above) after November 27.

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 five fair priced dogs in the top ten, plus five out-of- bounds-priced stocks. The five outliers need to trim prices between $0.31 and $78.33 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 56% 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: