7 March Buffett Dividend Dogs To Buy And One To Watch
Summary
- This Buffett holdings list from Kiplinger first appeared 2/14/23 on line. YCharts and Dogs of The Dow both track this Buffett/Berkshire batch. Here is your update from 3/23/23 YCharts data.
- 33 of 49 current Berkshire-Hathaway-owned-stocks pay dividends. As of 3/23/23, the top-ten ranged 3.42%-5.48% by annual-yield and 47 of 49 ranged -1.94% to 90.81% per broker-estimated target-price-upsides.
- Analyst-augured top-ten net-gains for Buffett’s March dividend dogs ranged 25.21%-57.93% from MCK, CVX, JEF, BK, C, CE, BAC, GM ALLY, and top pick, USB per YCharts data.
- $5k invested in the lowest-priced five top-yield Buffett/Berkshire-held March dividend dogs showed 12.29% more net-gain than from $5k invested in all ten. Little (lower-priced) Berkshire-collected dogs led Buffett’s March dividend payers.
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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 (dog catcher) analysis, this Buffett/Berkshire batch is perfect for the dogcatcher process. Here is the March 23 data for 33 dividend paying stocks in the Kiplinger-documented collection of 49 owned by Buffett through his Berkshire-Hathaway firm as of 2/14/23.
Another resource consulted for this article was dogsofthedow.com which also keeps an ongoing spreadsheet of the Buffett/Berkshire stocks updated quarterly per BRK SEC filings, the next of which reports in May.
A rapid market recovery, after the Ides of March 2020 plunge, made the possibility of owning productive dividend shares reflecting this collection out of reach for first-time investors.
This March 2023 update shows that the following seven 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: U.S. Bancorp (USB); Ally Financial Inc. (ALLY); Citigroup Inc. (C); Paramount Global (PARA); Kraft Heinz Co (KHC); Jefferies Financial Group Inc. (JEF); HP Inc. (HPQ).
One more is within $5.00 or 12% of the ideal: Bank of New York Mellon Corp (BK). That stock shows a potential small price decrease that would pay dividends at the current payout level from $1k invested equal to its single share price.
Actionable Conclusions (1-10): Analysts Estimated 25.21% To 57.93% Net Gains For Ten Top Buffett-Held Dividend Stocks Come March 2024
Six 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 60% accurate.
Source: YCharts.com
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 March 23, 2024, were:
U.S. Bancorp was projected to net $579.31, based on a median of target price estimates from 24 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 2% below the market as a whole.
Ally Financial Inc. was projected to net $501.89 based on dividends, plus the median of target price estimates from 18 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 37% over the market as a whole.
General Motors Co (GM) netted $500.40 based on the median of estimates from 22 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 37% greater than the market as a whole.
Bank of America Corp (BAC) was projected to net $496.83, based on the median of target price estimates from 24 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 40% greater than the market as a whole.
Celanese Corp (CE) was projected to net $336.03 based on dividends, plus the median of target price estimates from 21 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 31% greater than the market as a whole.
Citigroup Inc. netted $335.04 based on the median of estimates from 23 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 60% more than the market as a whole.
Bank of New York Mellon Corp was projected to net $330.86, based on dividends, plus the median of target price estimates from 17 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 11% greater than the market as a whole.
Jefferies Financial Group Inc. was projected to net $295.26, based on the median of target estimates from 4 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 42% higher than the market as a whole.
Chevron Corp (CVX) was projected to net $267.77, based on the median of target price estimates from 28 analysts plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 16% over the market as a whole.
McKesson Corp (MCK) was projected to net $252.09 based on a median of target price estimates from 14 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 38.96% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility 23% greater than the market as a whole.
Source: Open source dog art from dividenddogcatcher.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
33 Buffett Picks By Yield
Source: YCharts.com
Actionable Conclusions (11-20): 10 Top Buffett-Held Stocks By Yield Are The Dogs of Berkshire-Hathaway
Top ten Buffett-held stocks selected 3/23/23 by yield represented six of eleven Morningstar sectors.
The first three places went to three dogs from the financial services sector, U.S. Bancorp [1], Ally Financial Inc. [2], and Citigroup Inc. [3]. The other two financials placed sixth, and tenth, Jefferies Financial Group Inc. [6], and Bank of New York Mellon Corp [10].
Next, the lone communication services company placed fourth, Paramount Global [4]. Then, the consumer defensive sector representative placed fifth, The Kraft Heinz Co [5].
Taking seventh, was one from the energy sector, Chevron Corp [7]. One from the technology sector, placed eighth, HP Inc. [8].
Finally, the lone industrials member of rhetor ten placed ninth, United Parcel Service (UPS) [9], to complete the March Buffett/Berkshire top ten dividend dogs.
Actionable Conclusions: (21-30) Top-Ten March Berkshire/Buffett Dogs Showed 23.87%-53.45% Price Upsides, While (31) No Downsides Showed
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 median price target estimates became another tool to dig out bargains.
Analysts Forecast A 12.29% Disadvantage For 5 Highest Yield, Lowest Priced, Of 10 Top Buffett-Collected Dividend Stocks To March 2024
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 Buffett-chosen dividend dogs screened 3/23/23 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 (31) Delivering 30.86% Vs. (32) 27.48% Average Net Gains by All Ten Come March 23, 2024
Source: YCharts.com
$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 12.29% more gain than $5,000 invested as $.5k in all ten. The second lowest-priced selection, Ally Financial Inc., was projected to deliver the best analyst-estimated net gain of 50.19%.
Source: YCharts.com
The five lowest-priced top-yield Buffett-backed dividend dogs as of March 23 were: Paramount Global; Ally Financial Inc.; HP Inc.; Jefferies Financial Group Inc.; US Bancorp, with prices ranging from $20.74 to $35.06.
Five higher-priced Berkshire-picked dividend dogs as of February 23 were: The Kraft Heinz Co; Bank of New York Mellon Corp; Citigroup Inc.; Chevron Corp; United Parcel Service, whose prices ranged from $37.42 to $185.29.
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 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 four stocks ready for pick-up, and the emerging ideal picks at the start of the article, here is a reprise of the list at the end:
This March 2023 update shows that the following seven 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: US Bancorp; Ally Financial Inc.; Citigroup Inc.; Paramount Global; Kraft Heinz Co; Jefferies Financial Group; HP Inc.
One more is within $5 or 12% of the ideal: Bank of New York Mellon Corp. That one shows how a potential small price decrease could pay dividends at current payout levels from $1k invested equalling its single share price.
Price Drops or Dividend Increases Could Get All Ten Dogs of Buffett Back to "Fair Price" Rates For Investors
Source: YCharts.com
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 seven fair priced dogs in the top ten, plus three six out-of-bounds-priced stocks. The three outliers need to trim prices between $5 and $105 to realize the 50/50 goal for share prices equalling dividend pay-outs 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, and inflationary times.
Market action is the key. Mr. Market needs to drop up to 56.6% 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.
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. Open source dog art from dividenddogcatcher.com
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