James Brumley said in Kiplinger Investing:
"Rich people often get perpetually richer for a reason, so it could be worthwhile to study what billionaires and high-asset hedge funds are plowing their long-term capital into."
As any collection of stocks is more clearly understood when subjected to yield-based (dogcatcher) analysis, this Buffett-holdings list is perfect for the dogcatcher process. Here is the June 24 data for 33 dividend paying stocks in the Kiplinger-documented collection of 48 owned by his Berkshire Hathaway (NYSE:BRK.B) firm.
Actionable Conclusions (1-10): Analysts Estimated 16.97% To 31.5% Net Gains For Ten Top Buffett-Held Dividend Stocks Come June 2020
Four of ten top yield Buffett-held dividend stocks by yield were 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 40% accurate.
Projections were based on estimated dividends from $1,000 invested in each of the highest yielding stocks and their aggregate one-year analyst median target prices, as reported by YCharts. Note: one-year target prices by lone analysts were not applied. Ten probable profit-generating trades projected to June 24, 2020, were:
Phillips 66 (PSX) was projected to net $314.97, based on a median of target price estimate from eighteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risks 1% less than the market as a whole.
General Motors Co. (GM) was projected to net $300.04, based on the median of target estimates from 21 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risks 61% more than the market as a whole.
American Airlines Group (AAL) netted $297.38 based on a median of estimates from twenty-one analysts, plus dividends. The Beta number showed this estimate subject to volatility 61% more than the market as a whole.
Delta Air Lines Inc. (DAL) was projected to net $209.93, based on dividends, plus the median of target price estimates from twenty-one analysts, less broker fees. The Beta number showed this estimate subject to volatility 16% more than the market as a whole.
The Kraft Heinz Co. (KHC) was projected to net $205.57, based on a median of target price estimates from twenty-one analysts plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk 16% less than the market as a whole.
United Parcel Service Inc. (STAY) was projected to net $197.77, based on dividends, plus a mean target price estimate from twenty-seven analysts, less broker fees. The Beta number showed this estimate subject to risk 19% over the market as a whole.
Sirius XM Holdings Inc. (SIRI) was projected to net $195.48, based on dividends, plus the median of target price estimates from seventeen analysts, less broker fees. The Beta number showed this estimate subject to risk 5% more than the market as a whole.
Bank of America Corporation (BAC) was projected to net $190.81, based on the median of target price estimates from twenty-nine analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risks 54% more than the market as a whole.
Goldman Sachs Group Inc. (GS) was projected to net $175.36, based on dividends, plus the median of target price estimates from twenty-seven analysts, less broker fees. The Beta number showed this estimate subject to volatility 27% more than the market as a whole.
Bank of New York Mellon (BK) was projected to net $169.67 based on dividends, plus the median of target estimates from twenty-two brokers, less transaction fees. The Beta number showed this estimate subject to risk 9% more than the market as a whole.
The average net gain in dividend and price was estimated at 22.57% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risks 21% more than the market as a whole.
Actionable Conclusion (11): (Bear Alert) Analysts Predicted One Buffett Top Yield Dog To Show A 5.17% Loss to June 2020
The probable losing trade revealed by YCharts to 2020 was:
Costco Wholesale Corp. (COST) projected a loss of $51.17 based on dividend and a median of the target price estimates from twenty-nine analysts, including broker fees. The Beta number showed this estimate subject to risks 9% less 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 Picks By Target Gains
48 Buffett Picks By Yield
Actionable Conclusions (12-21): 10 Top Buffett-Held Stocks By Yield
Top ten Buffett-held stocks selected 6/24/19 by yield represented six of eleven Morningstar sectors. Top dog from the consumer defensive sector placed first, The Kraft Heinz Co. (KHC) . Another consumer defensive holding placed eighth, Coca-Cola Co. (KO) .
The lone industrials representative placed sixth, United Parcel Service Inc. (UPS) .
Finally, the seventh slot was claimed by the lone real estate sector representative in the top ten, STORE Capital Corp. (STOR) , to complete the June Buffett-held top ten dividend dogs, by yield.
Actionable Conclusions: (22-31) Top Ten June Buffett-Held Dividend Dogs Showed 15.37%-29.48% Upsides While (31) Six Lowly Downsiders Ranged -0.04% To -5.09%.
To quantify top dog rankings, analyst mean price target estimates provide a "market sentiment" gauge of upside potential. Added to the simple high-yield metrics, analyst mean price target estimates became another tool to dig out bargains.
Analysts Forecast A 10.58% Advantage For 5 Highest Yield, Lowest Priced Buffett-Collected Dividend Stocks To 2020
Ten top Buffett-held dividend dogs were culled by yield for this update. Yield (dividend/price) results provided by YCharts did the ranking.
As noted above, top ten Kiplinger Buffet-chosen dividend dogs screened 6/24/19 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 (32) Delivering 17.52% Vs. (33) 15.83% Net Gains by All Ten Come June 2020
$5,000 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 10.68% more gain than $5,000 invested as $.5k in all ten. The eighth lowest priced selection, Phillips 66 (PSX), was projected to deliver the best net gain of 31.5%.
The five lowest-priced top-yield Buffett-Picked dividend dogs as of June 24 were: The Kraft Heinz Co. (KHC), Suncor Energy Inc. (SU); STORE Capital Corp. (STOR); General Motors Co. (GM); Wells Fargo & Co. (NYSE:WFC), with prices ranging from $30.52 to $46.27.
Five higher-priced Buffett-picked dividend dogs as of June 24 were: Coca-Cola Co. (KO); Restaurant Brands International Inc. (QSR); Phillips 66 (PSX); United Parcel Service Inc. (UPS); JPMorgan Chase & Co. (JPM), whose prices ranged from $51.92 to $108.66.
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 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 Kiplinger Billionaire Picks stock purchase or sale research process. These were not recommendations.
Graphs and charts were compiled by Rydlun & Co., LLC from data derived from IndexArb; YCharts; Yahoo Finance; analyst mean target price by YCharts. Dog photo: businessinsider.com.au
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.
Additional disclosure: 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.