The Buffett List: 5 Dividend Buys For September
Summary
- This Buffett holdings-list from Kiplinger first appeared 8/21/23 on line. Kiplinger, YCharts and Dogs of The Dow all track this Buffett/Berkshire batch. Here is your update from 9/20/23 YCharts data.
- 32 of 48 current Berkshire-Hathaway-owned-stocks pay dividends. As of 9/20/23 the top-ten ranged 2.87%-4.87% by annual-yield and 45 of 48 ranged -1.55% to 60.2% per broker-estimated target-price-upsides.
- Analyst-augured top-ten net-gains from Buffett’s September dividend dogs ranged 21.35%-55.8% from UPS, KO, ALLY, BAC, KHC, LPX, DHI, C, PARA, and top pick GM per YCharts data.
- $5k invested in the lowest-priced five top-yield Buffett/Berkshire-held September dividend dogs showed 2.93% Less net-gain than from $5k invested in all ten. Big higher-priced) Berkshire-collected dogs led Buffett’s September dividend payers.
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CasarsaGuru
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 (dogcatcher) analysis, this Buffett/Berkshire batch is perfect for the dogcatcher process. Here is the September 20 data for 32 dividend paying stocks in the Kiplinger-documented collection of 48 owned by Buffett through his Berkshire-Hathaway firm.
Another resource consulted for this article was Dogs of the Dow which also keeps an ongoing spreadsheet of the Buffett/Berkshire stocks updated quarterly per BRK SEC filings, the next of which reports in November.
A rapid market recovery, following the Ides of March 2020 plunge, made the possibility of owning productive dividend shares reflecting the Buffett collection out of reach for first-time investors.
This September 2023 update shows that the following five 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: Citigroup Inc (C); The Kraft Heinz Co (KHC); Ally Financial Inc (ALLY); HP Inc (HPQ); Bank of America Corp (BAC).
Two more in the top ten by yield are within $16.00 or 27% of the ideal, Jefferies Financial Group (JEF), and Coca-Cola Co (KO). The other three stocks show $77 to $97 potential price decreases that would result in dividends at the current payout level from $1k invested equaling their single share prices.
To run-down the "safer" dividends of Buffett’s September pack of dogs, check-out the Dividend Dog Catcher investing group site (by clicking on the last summary bullet above) after September 29.
Actionable Conclusions (1-10): Analysts Estimated 21.35% To 55.8% Net Gains For Ten Top Buffett-Held Dividend Stocks Come September, 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 September 20, 2024 were:
General Motors Co (GM) netted $558.03 based on the median of estimates from 23 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 40% greater than the market as a whole.
Paramount Global (PARA) was projected to net $402.38 based on a median of target price estimates from 15 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 67% greater than the market as a whole.
Citigroup Inc netted $286.93 based on the median of estimates from 22 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 57% more than the market as a whole.
D.R. Horton, Inc (DHI) was projected to net $281.49 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 55% greater than the market as a whole.
Louisiana-Pacific Corp (LPX) was projected to net $277.44, based on dividends, plus the median of target price estimates from 9 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 72% over the market as a whole.
The Kraft Heinz Co was projected to net $248.93, based on the median of target price estimates from 21 analysts plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 32% under the market as a whole.
Bank of America Corp was projected to net $239.01, based on the median of target price estimates from 22 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 37% greater than the market as a whole.
Ally Financial Inc was projected to net $214.23 based on dividends, plus the median of target price estimates from 19 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 35% over the market as a whole.
Coca-Cola Co was projected to net $214.18, based on the median of target estimates from 23 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 45% greater than the market as a whole.
United Parcel Service (UPS) was projected to net $213.54 based on a median of target price estimates from 29 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 9% over the market as a whole.
The average net gain in dividend and price was estimated at 29.36% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility 30% 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."
45 Buffett Holdings By Target Gains
Source: YCharts.com
32 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 9/20/23 by yield represented six of eleven Morningstar sectors.
In first place was one of four from the financial services sector, Citigroup Inc [1]. The other three placed third, seventh and eighth, Ally Financial Inc [3], Bank of America [7], and Jefferies Financial Group Inc [8].
Next, two consumer defensive sector representatives placed second and ninth, The Kraft Heinz Co [2], and Coca-Cola Co [9]. Thereafter, the lone industrials member of the top ten placed fourth, United Parcel Service [4].
One from the technology sector, placed fifth, HP Inc [5]. Then, in sixth place was the energy sector member, Chevron Corp (CVX) [6].
Finally, from healthcare placed tenth, Johnson & Johnson (JNJ) [10], to complete the September Buffett/Berkshire top ten dividend dogs.
Actionable Conclusions: (21-30) Top-Ten September Berkshire/Buffett Dogs Showed 18.07%-55.72% Price Upsides, While (31) One -1.56% Downsider Trailed the Pack
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 2.93% Disadvantage For 5 Highest Yield, Lowest Priced, Of 10 Top Buffett-Collected Dividend Stocks To September, 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 9/20/23 showing the highest dividend yields represented six of eleven Morningstar sectors.
Actionable Conclusions: Analysts Projected 5 Lowest-Priced Of The Top Ten Highest-Yield Buffett-Held Dogs (31) Delivering 18.48% Vs. (32) 19.02% Average Net Gains by All Ten Come September 20, 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 2.93% LESS gain than $5,000 invested as $.5k in all ten. The sixth lowest-priced selection, Citigroup Inc, was projected to deliver the best analyst-estimated net gain of 28.69%.
Source: YCharts.com
The five lowest-priced top-yield Buffett-backed dividend dogs as of September 20 were: HP Inc; Ally Financial Inc; Bank of America Corp; The Kraft Heinz Co; Jefferies Financial Group Inc, with prices ranging from $27.06 to $37.93.
Five higher-priced Berkshire-backed dividend dogs as of September 20 were: Citigroup Inc; Coca-Cola Co; United Parcel Service Inc; Johnson & Johnson Inc; Chevron Corp, whose prices ranged from $42.30 to $166.69.
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 15% 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 five stocks ready for pick-up, and the four emerging ideal picks at the start of the article, here is a reprise of the list at the end:
This August 2023 update shows that the following five 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.
Source: YCharts.com
Two more are within $16.00 or 27% of the ideal: Jefferies Financial Group and Coca-Cola Co. Those stocks show the smallest ($3.31 and $15.54) price decrease that would pay dividends at the current payout level from $1k invested equal to their single share prices.
To run-down the "safer" dividends of Buffett’s September pack of dogs, check-out the Dividend Dog Catcher investing group site (by clicking on the last summary bullet above) after September 29.
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 five fair priced dogs in the top ten, plus five out-of- bounds-priced stocks. The five outliers need to trim prices between $3.31 and $97.00 to realize the 50/50 goal for share prices equaling dividend payouts 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, inflationary, and pre-recession times.
Market action is the key. Mr. Market needs to drop up to 58.43% 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.
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This article was written by
Fredrik Arnold is a retired quality service analyst sharing investment ideas with a primary focus on dividend yields by utilizing free cash flow and one-year total returns as trading indicators.
He is the leader of the investing group The Dividend Dog Catcher, where he shares a minimum of one new dividend stock idea per week with focus on yield or extraordinary financial circumstances. All ideas are archived and available after weekly announcement. Learn more.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such 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.
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; Yahoo Finance - Stock Market Live, Quotes, Business & Finance News; analyst mean target price by YCharts. Open source dog art from dividenddogcatcher.com.
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