Foreword
James Brumley says 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."
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's the January 6 data for 31 dividend paying stocks in the Kiplinger-documented collection of 49 now owned by Buffett's Berkshire-Hathaway firm.
Another resource consulted for this article was dogsofthedow.com. They also keep an ongoing spreadsheet of the Buffett/Berkshire stocks updated quarterly per BRK SEC filings.
The Ides of March plunge in the stock market took its toll on Buffett's batch but made the possibility of owning productive dividend shares reflecting his collection more viable for first-time investors. This January update shows the following five stocks live up to the ideal of having their annual dividends from a $1K investment exceed their single share price: The Kraft Heinz Co (KHC), STORE Capital Group (STOR), Pfizer Inc (PFE), Suncor Energy Inc (SU), and Sirius XM Holdings Inc (SIRI).
Actionable Conclusions (1-10): Analysts Estimated 9.9% To 31.08% Net Gains For Ten Top Buffett-Held Dividend Stocks Come January 2022
Six of these 10 Buffett-held top dividend stocks by yield were also among the top 10 gainers for the coming year based on analyst one-year target prices. (They are tinted gray in the chart below). Thus, this yield-based forecast for these Buffett dogs was graded by Wall Street Wizards as 60% accurate.
Source: YCharts.com
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 January 6, 2022 were:
Barrick Gold Corp (GOLD) was projected to net $310.82 based on a median of target price estimates from twenty-three analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 2% opposite the market as a whole.
Bristol-Myers Squibb (BMY) was projected to net $235.74, based on dividends, plus the median of target price estimates from nineteen analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 33% less than the market as a whole.
Merck & Co Inc (MRK) was projected to net $197.86, based on the median of target price estimates from twenty-two analysts plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 57% under the market as a whole.
Pfizer Inc was projected to net $168.73, based on dividends, plus a mean target price estimate from twenty-one analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 29% under the market as a whole.
Coca-Cola Co (KO) was projected to net $154.72, based on a median of target price estimate from twenty-two analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 42% under the market as a whole.
AbbVie Inc (ABBV) was projected to net $136.10, based on a median of target price estimate from twenty-two analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 16% less than the market as a whole.
Wells Fargo & Co (WFC) was projected to net $124.31, based on the median of target estimates from 20 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 1% less than the market as a whole.
Mondelez International Inc (MDLZ) was projected to net $117.73, based on the median of target price estimates from twenty-one analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 39% less than the market as a whole.
Moody's Corp (MCO) netted $100.54 based on a median of estimates from fifteen analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 18% more than the market as a whole.
The Kroger Co (KR) was projected to net $99.02, 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 risk/volatility 64% less than the market as a whole.
The average net gain in dividend and price was estimated at 16.46% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility 36% less than the market as a whole.
Actionable Conclusion (11): (Bear Alert) Analysts Predicted One Buffett-Held Dividend Stock To Show A 5.29% Loss to January, 2022
The probable losing trade revealed by Y-Charts to 2022 was:
Source: YCharts.com
PNC Financial Services Group Inc (PNC) projected a loss of $52.86 based on dividend and a median of the target price estimates from twenty-two analysts including broker fees. The Beta number showed this estimate subject to risks 38% greater than the market as a whole.
Source:pintetest.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."
49 Buffett Holdings By Target Gains
Source: YCharts.com
31 Buffett Picks By Yield
Source: YCharts.com
Actionable Conclusions (12-21): 10 Top Buffett-Held Stocks By Yield
Top ten Buffett-held stocks selected 1/6/21 by yield represented six of eleven Morningstar sectors.
First place went to the first of four dogs from the healthcare sector, AbbVie Inc [1]. The second healthcare representative placed fourth, Pfizer [4]. The last two healthcare representatives placed eight and ninth, Bristol-Myers Squibb Co [8], and Merck & Co Inc [9].
Two consumer defensive sector representatives, placed second, and seventh, The Kraft Heinz Co [2], and Coca-Cola Co [7]. A lone real estate sector member was third on the list, STORE Capital Corp [3]. Then one from the energy sector placed fifth, Suncor Energy Inc [5]
Finally, two financial services representatives placed sixth and tenth, they were: U.S. Bancorp (USB) [6], followed by M&T Bank Corp (MTB) [10], to complete the January Buffett/Berkshire top ten batch of top dividend dogs, by yield.
Actionable Conclusions: (22-31) Top Ten January Buffett/Berkshire Dogs Showed 8.72%-30.61% Upsides And (32) Six Down-Siders Emerged at -0.07%-7.23%
Source: YCharts.com
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 mean price target estimates became another tool to dig out bargains.
Analysts Forecast A 20.58% Disadvantage For 5 Highest Yield, Lowest Priced Of 10 Top Buffett-Collected Dividend Stocks To January, 2022
Ten top Buffett/Berkshire 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 Buffet-chosen dividend dogs screened 1/6/21 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 (33) Delivering 6.03% Vs. (34) 6.14% Average Net Gains by All Ten Come January 6, 2022
Source: YCharts.com
$5000 invested as $1k in each of the five lowest-priced stocks in the top 10 dividend Buffett-selected kennel by yield were predicted by analyst 1-year targets to deliver 68.48% more gain than $5,000 invested as $.5k in all ten. The seventh lowest priced selection, Merck & Co Inc , was projected to deliver the best analyst-estimated net gain of 17.48%.
Source: YCharts.com
The five lowest-priced top-yield Buffett-Picked dividend dogs as of January 6 were: Suncor Energy Inc; STORE Capital Corp; The Kraft Heinz Co; Pfizer Inc; US Bancorp, with prices ranging from $18.53 to $49.01.
Five higher-priced Buffett-picked dividend dogs as of January 6 were, Coca-Cola Co; Bristol-Myers Squibb Co; Merck & Co Inc; AbbVie Inc; M&T Bank Corp, whose prices ranged from $50.52 to $139.81.
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.
Afterword
If somehow you missed the suggestion of four stocks ready for pick-up at the start of the article, here's a reprise of the list at the end:
This January update shows the following five stocks live up to the ideal of having their annual dividends from a $1K investment exceed their single share price: The Kraft Heinz Co; STORE Capital Group; Pfizer Inc; Suncor Energy Inc; Sirius XM Holdings Inc.
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.
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 source: pintetest.com.
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