Buffett Vs. Kiplinger Vs. Gates 2019 Portfolios
As the market dithers into the new year, income investors search for viable model investments to compare with their own holdings. Many examples exist and future Arnold Dogcatcher articles will bring others forward.
This is an answer for those who have questioned the intent, purpose, validity, and usefulness of various stock lists. Here's a case where a tradition is established to verify that any list of stocks in which most pay dividends is fair game for doggish analysis.
Best, however are my articles such as this that are able to note significant dividend investment opportunities missed in the hubub of market gossip and guesses.
Below are the top ten chosen equities owned by Berksire and Gates and recommended by Kiplinger January 21 at which time only data from January 18 was available.
Actionable Conclusions (1-10): Analysts Predicted 19.4% TO 35.6 Net Gains for Buffett/Kiplinger/Gates Stocks
The following probable profit-generating trades were identified by projections based on estimated dividend returns from $1k invested in each of the highest yielding stocks. Those dividends and their aggregate one-year analyst median target prices, as reported by YCharts, created the 2019-20 data points. Note: one-year target prices by single analyst were not applied. As you see by the color code 8 of the ten top dividend trade were from the Berkshire portfolio
Ten probable profit-generating trades from those three portfolios projected to January 18, 2020 were:
Delta Air Lines (DAL) was projected to net $356.03, based on a median of target estimates from twenty-one analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 13% more than the market as a whole.
Phillips 66 (PSX) netted $303.07 based on dividends plus a median target price estimate from nineteen analysts less broker fees. The Beta number showed this estimate subject to volatility 9% less than the market as a whole.
Synchrony Financial (SYF) was projected to net $294.91, based on dividends plus the median target price estimate from twenty-three analysts, less broker fees. The Beta number showed this estimate subject to volatility 3% above the market as a whole.
The Kraft Heinz Co (KHC) was projected to net $262.27, based on target price estimates from twenty-two analysts, plus annual dividends, less broker fees. The Beta number showed this estimate subject to volatility 23% less than the market as a whole.
Sirius XM Holdings Inc (SIRI) was projected to net $259.32, based on dividends, plus a median target price estimate from sixteen analysts, less broker fees. The Beta number showed this estimate subject to volatility 7% over the market as a whole.
Sanofi SA (SNY) was projected to net $256.20, based on a median of target price estimates from five analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 32% below the market as a whole.
DowDuPont (DWDP) from the Kiplinger list was projected to net $254.89, based on a median of target price estimates from twenty-four analysts, plus the projected annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 37% more than the market as a whole.
Restaurant Brands Int'l (QSR) netted $206.46 based on the median target price estimate from twenty-four analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 32% over the market as a whole.
General Motors (GM) was projected to net $201.76, based on a median target price from twenty-one analysts plus next year's dividends, less broker fees. The Beta number showed this estimate subject to volatility 23% over the market as a whole.
United Parcel Service (UPS), a stock held by both Buffett and Gates, was projected to net $194.36, based on an estimated target price based on a median target price from twenty-nine analysts plus next year's dividends less broker fees. The Beta number showed this estimate subject to volatility 22% more than the market as a whole.
Average net gain in dividend and price was estimated at 25.89% on $10k invested as $1k in each of the ten Buffett/Kiplinger/Gates listed stocks.
The Dividend Dogs Rule
The "dog" moniker was earned by stocks exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where (3) yield (dividend/price) grew higher than their peers. So, the highest yielding stocks in any collection have become affectionately known as "dogs." More precisely, these are, in fact, best called, "underdogs."
80 For the Money
Yield (dividend/price) results from YCharts.com verified by Yahoo Finance for Buffett/Kiplinger/Gates highlighted stocks as of market closing prices 1/18/19 for 80 equities revealed the actionable conclusions discussed below.
See any Dow 30 article for an explanation of the term "dogs" for stocks reported based on Michael B. O'Higgins book Beating The Dow (HarperCollins, 1991), now named Dogs of the Dow. O'Higgins' system works to find bargains in any collection of dividend paying stocks. Utilizing analysts' price upside estimates expanded the stock universe to include popular growth equities, as desired.
Actionable Conclusions (11-20): Buffett's Top Equity, By Yield, Sirius XM (SIRI), Led 10 For 2019
TheTop Buffett/Kiplinger/Gates 10 for 1/18/19 sorted by yield included 8 of 11 Morningstar sectors but did not include any Kiplinger picks.
Of the leading ten by yield, the top five were Buffett's. Tops was a consumer cyclical firm, Sirius XM Holdings Inc (SIRI) , another Buffett consumer cyclical placed seventh, General Motors Co (GM) .
In fifth place was the lone communication services representative, Verizon (VZ) . A jointly held Buffett/Gates industrial portfolio member placed eighth, United Parcel Service Inc (UPS .
Actionable Conclusions (21-30): Ten Buffett Broker Buys Led by Liberty Global PLC
The top ten Berkshire Stocks sorted by broker ratings calculated as of market close 1/18/19 included 6 of 11 Morningstar sectors. Tops was the communications services sector member, Liberty Global PLC (LBTYK) also held in the Gates folio.
Actionable Conclusions (31-40): Ten Kiplinger Broker Buys Led by Alibaba & Amazon
The top ten Kiplinger Stocks sorted by broker ratings calculated as of market close 1/18/19 also included 6 of 11 Morningstar sectors. Tops was the consumer cyclical sector member, Alibaba Group Holding Ltd (BABA) followed by Amazon.com (AMZN).
Actionable Conclusions (41-50): Top Ten Gates Broker Buy Goes To Microsoft Corp
The top ten Gates Stocks sorted by broker ratings calculated as of market close 1/18/19 included 5 of 11 Morningstar sectors. Tops was the technology sector member, took the prize for Gates. Fittingly, it was Microsoft Corp (MSFT), Gates own start-up.
Actionable Conclusions: (51-60) Top 10 Buffet/Kiplinger/Gates Stocks By Price Upsides Showed 18.20% To 71.34% Gains To January 2020; (61) No Downsiders Here
Judged only by price gains the B/K/G list was led by industrials, energy, financial, basic materials and healthcare and trailed by real estate (2), consumer cyclicals (2), and communication services.
To quantify top dog rankings, analysts' mean price target estimates provided a "market sentiment" gauge of upside potential. Added to the simple high-yield metrics, analysts' median price target estimates became another tool to dig out bargains.
Analyst Targets Predicted An 12.37% Advantage For 5 Highest Yield, Lowest Priced Buffett/Kiplinger/Gates Select Stocks To January 2020
The Top Buffett/Kiplinger/Gates 10 for 1/18/19 sorted by yield included 8 of 11 Morningstar sectors but did not include any Kiplinger picks.
As noted above, top 10 Buffett/Kiplinger/Gates 2019 Stocks as of 1/18/19 showing the highest dividend yields represented the consumer cyclical (2), consumer defensive (1), health (1), real estate (2), communication services (1), industrial (1), financial (1), and energy (1) sectors.
Actionable Conclusions: Analysts Expected 5 Lowest-Priced of the Top 10 Highest-Yield 2019 Buffett/Kiplinger/Gates Picks To (62) Deliver 21.36% Vs. (63) 19.01% Net Gains by All 10 To January 2020
$5k invested as $1k in each of the five lowest-priced stocks in the top 10 Buffett/Kiplinger/Gates kennel by yield were predicted by analyst one-year targets to deliver 12.37% more net gain than $5k invested in all 10. The eighth lowest priced Buffett/Kiplinger/Gates top yield stock, Phillips 66 (PSX), was projected to deliver the best net gain of 30.31%.
The five lowest-priced Buffett/Kiplinger/Gates top yield dogs for January 18 were: Sirius XM Holdings Inc (SIRI); STORE Capital Corp (STORE), General Motors Co (GM), Sanofi SA (SNY); The Kraft Heinz Co (KHC), with prices ranging from $5.85 to $46.87 per share.
Five higher-priced of the Buffett/Kiplinger/Gates Ten for January 18 were: Wells Fargo & Co (WFC), Verizon Communications Inc (VZ), Phillips 66 (PSX), United Parcel Service Inc (UPS), and Crown Castle International Corp (CCI), whose prices ranged from $50.00 to $108.11.
The distinction between five low-priced dividend dogs and the general field of 10 reflected Michael B. O'Higgins' "basic method" for beating the Dow. The scale of projected gains based on analysts' 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 80% accurate on the direction of change and just 0% to 20% accurate on the degree of change.
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 FoFave dog stock purchase or sale research process. These were not recommendations.
Disclaimer: This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation or endorsement to buy or sell any security. Prices and returns on equities in this article except as noted are listed without consideration of fees, commissions, taxes, penalties, or interest payable due to purchasing, holding, or selling same.
Graphs and charts were compiled by Rydlun & Co., LLC from data derived from Indexarb, YCharts, Yahoo Finance; analyst mean target price by Thomson/First Call from Yahoo Finance. Dog photo from pixshark.com.
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Disclosure: I am/we are long INTC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.