Foreword
Dan Burrows in Kiplinger Investing says:
"They say on Wall Street that if you want to make a small fortune, start by investing a large one.
No, you can't become a billionaire solely by copying their every move, but it's always interesting -- and often constructive -- to know what the "smart money" is up to."
Any collection of stocks is more clearly understood when subjected to yield-based (dog catcher) analysis, this billionaire dividend holdings list is perfect for the dogcatcher process. Below are the June 2 data for 29 dividend paying stocks and funds in the Kiplinger collection of 50 stocks billionaires currently love.
The stocks and their prime billionaire benefactors are tagged on to the end of this article.
Actionable Conclusions (1-10): Analysts Estimated 11.46% To 82.11% Net Gains For Top Ten Billionaire Holdings Come June 2021
Four of ten big billionaire-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 June yield-based forecast for these big billionaire dogs was graded by Wall St. Wizards as 40% accurate.
Projections were based on estimated dividends from $1000 invested in each of the highest yielding stocks and the median of their one year analyst-estimated 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 2, 2021 were:
Source: YCharts.com
The Brink's Co. (BCO) was projected to net $821.09, based on the median of target price estimates from three analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 24% greater than the market as a whole.
Citigroup Inc. (C) was projected to net $233.88, based on the median of target price estimates from twenty-five analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 80% more than the market as a whole.
American International Group (AIG) was projected to net $224.83 based on dividends, plus the median of target estimates from eighteen brokers, less transaction fees. The Beta number showed this estimate subject to risk/volatility 43% more than the market as a whole.
Bristol-Myers Squibb Co. (BMY) was projected to net $208.49, based on estimates from seventeen analysts, less transaction fees. The Beta number showed this estimate subject to risk/volatility 27% less than the market as a whole.
Cigna Corp. (CI) was projected to net $202.07, based on dividends, plus the estimates from six analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 33% under the market as a whole.
Wells Fargo & Co. (WFC) was projected to net $192.24, based on dividends, plus the median of target price estimates from twenty-eight analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 15% greater than the market as a whole.
Extended Stay America Inc. (STAY) was projected to net $158.69 based on the median of target price estimates from thirteen analysts plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 89% greater than the market as a whole.
Mondelez International Inc. (MDLZ) was projected to net $147.38, 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 risk/volatility 47% over the market as a whole.
Tyson Foods Inc. (TSN) was projected to net $144.90, based on dividends, plus the median of target price estimates from fifteen analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 35% less than the market as a whole.
Procter & Gamble Co. (PG) netted $114.55 based on a median of estimates from twenty-three analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 58% less than the market as a whole.
The average net gain in dividend and price was estimated at 24.48% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility 18% more than the market as a whole.
Source: flickr.com
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".
38 Billionaire Holdings Show Broker Target Gains
Source: YCharts.com
29 Billionaire Holdings Show Dividend Yields
Source: YCharts.com
Actionable Conclusions (11-20): Top 10 Billionaire Holdings By Yield
Top ten big billionaire-bought stocks selected by yield 6/2/20 represented five of eleven Morningstar sectors, and one ETF.
One from the consumer cyclical sector placed first, Extended Stay America Inc. [1]. Then a single energy sector representative took second, CVR energy Inc. (CVI) [2].
Third, fifth, sixth, eighth, and tenth places went to financial services representatives: Wells Fargo & Co. [3], American International Group Inc. [5], Citigroup Inc. [6], JPMorgan Chase & Co. (JPM) [8], Morgan Stanley (MS) [10].
In fourth place was a lone communication services representative, ViacomCBS Inc. (VIAC)[4]. The seventh slot was claimed by the lone ETF that popped into sixth place, Vanguard Emerging Markets ETF (VWO) [7].
Finally, a consumer defensive stock placed ninth, Sysco Corp. (SYY) [9] to complete the June billionaire-loved top-yield ten.
Actionable Conclusions: (21-30) Top Ten June Billionaire-Loved Dividend Dogs Showed 9.03%-81.69% Upsides, While (31) Six Lowly Down-siders Slumped -0.68 To -6.52%
Source: YCharts.com
To quantify top dog rankings, the median of analyst 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 27.11% Advantage For 5 Highest Yield, Lowest Priced Of Top-Ten Billionaire-Loved Dividend Stocks For June 2021
Ten top billionaire-loved dividend dogs were culled by yield for this update. Yield (dividend/price) results provided by YCharts did the ranking.
Source: YCharts.com
As noted above, top ten Kiplinger billionaire-held dividend dogs selected 6/2/20 showing the highest dividend yields represented five of eleven Morningstar sectors and one ETF.
Actionable Conclusions: Analysts Predicted 5 Lowest-Priced Of The Top Ten Highest-Yield Billionaire Held Dogs (32) Delivering 14.55% Vs. (33) 11.44% Net Gains by All Ten Come June 2021
Source: YCharts.com
$5000 invested as $1k in each of the five lowest-priced stocks in the top ten dividend billionaire-held kennel by yield were predicted by analyst 1-year targets to deliver 27.11% more gain than $5,000 invested as $.5k in all ten. The eighth lowest priced selection, Citigroup Inc., was projected to deliver the best net gain of 23.39%.
Source: YCharts.com
The five lowest-priced top-yield billionaire holdings as of June 2 were: Extended Stay America Inc.; CVR Energy Inc.; ViacomCBS Inc.; Wells Fargo & Co.; American International Group Inc., with prices ranging from $11.74 to $31.49.
Five higher-priced billionaire holdings as of June 2 were: Vanguard FTSE Emerging Markets ETF; Morgan Stanley; Citigroup Inc.; Sysco Corp.; JPMorgan Chase & Co., whose prices ranged from $39.10 to $98.93.
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.
Stocks Loved and Their Prime Billionaire Benefactors
These were 50 top stock picks by the billionaire class as of May 1, 2020. In all cases, these companies represented major holdings (5% or more) of at least one ultra-wealthy person or large hedge fund, if not several. In many cases, these stocks were owned by multiple billionaires.
For a complete summary of each stock go to 50 Top Stock Picks That Billionaires Love.
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 Holdings 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 www.indexarb; YCharts; finance.yahoo; analyst mean target price by YCharts. Dog photo: flickr.com
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