4 Buyable Berkshire DiviDogs For March

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 are the March 25 data for 25 dividend paying stocks in the Kiplinger-documented collection of 41 now 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 May.

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 March 2024 update shows that the following three of the top ten dogs of Berkshire stocks by yield now live up to the dogcatcher ideal of paying annual dividends (from a $1K investment) exceeding their single share prices: The Kraft Heinz Co (KHC); HP Inc (HPQ); Sirius XM (SIRI). One more outside the top ten is also ideal, Paramount Global (PARA).

Five more in the top ten by yield are within $16.36 or 27.09% of the ideal, Ally Financial (ALLY) is $4.79 over-priced, Bank of America (BAC) is just $5.88 high, Jeffries Financial Group Inc (JEF) is $10.62 removed, Citigroup (C) is $15.12 away, and Coca-Cola (KO) needs to shed that $16.36 in bloated price to be ideal.

To run-down the “safer” dividends of Buffett’s BKH March pack of dogs, check-out the Dividend Dog Catcher investing group site (by clicking on the last summary bullet above) after April 3.

Actionable Conclusions (1-10): Analysts Estimated 8.68% To 32.85% Net Gains For Ten Top BKH-Held Dividend Stocks Come March, 2025

Seven 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 Buffett dogs was graded by Wall St. Wizards as 70% accurate.

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 25, 2025 were:

Sirius XM Holdings Inc was projected to net $328.45 based on dividends, plus the median of target price estimates from 12 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 5% greater than the market as a whole.

T-Mobile US Inc (TMUS) was projected to net $169.24 based on a median of target price estimates from 28 analysts, plus dividends, less broker fees. The Beta number showed this estimate, subject to risk/volatility 51% under the market as a whole.

Apple Inc (AAPL) was projected to net $169.14, based on the median of target price estimates from 43 analysts plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 29% over the market as a whole.

Paramount Global netted $160.34 based on the median of estimates from 26 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 77% greater than the market as a whole.

Chevron Corp (CVX) netted $155.88 based on the median of estimates from 22 analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 12% greater than the market as a whole.

The Kraft Heinz Co was projected to net $148.08, 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 33% less than the market as a whole.

Coca-Cola Co. was projected to net $114.82 based on a median of target price estimates from 23 analysts, plus dividends, less broker fees. The Beta number showed this estimate, subject to risk/volatility 41% under the market as a whole.

Jefferies Financial Group Inc was projected to net $99.13, based on the median of target estimates from 3 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 35% greater than the market as a whole.

HP Inc was projected to net $87.81, based on dividends, plus the median of target price estimates from 16 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 5% over the market as a whole.

Diageo PLC (DEO) was projected to net $86.75 based on dividends, plus the median of target price estimates from 8 analysts, less broker fees. The Beta number showed this estimate, subject to risk/volatility 34% under the market as a whole.

The average net gain in dividend and price was estimated at 15.2% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility equal to 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.”

41 BKH Holdings By Target Gains

25 BKH Picks By Yield

Actionable Conclusions (11-20): 10 Top BKH-Held Stocks By Yield Are The March Dogs of Berkshire-Hathaway

Top ten Buffett-held stocks selected 3/25/24 by yield represented five of eleven Morningstar sectors.

In first place was one of three consumer defensive sector representatives The Kraft Heinz Co [1]. The other two placed fifth and seventh: Coca-Cola Co [5]; Diageo PLC [7].

Then, in second place was the lone energy sector member, Chevron Corp [2]. Next, one from the technology sector, placed third, HP Inc [3],

Four from the financial services sector placed fourth, sixth, ninth, and tenth: Citigroup Inc [4], Ally Financial Inc [6], Jefferies Financial Group Inc [9], and Bank of America [10].

Finally, a lone communication services representative placed eighth, Sirius XM Holdings [8], to complete the March Buffett/BKH top ten dividend dogs.

Actionable Conclusions: (21-30) Top-Ten March BKH/Buffett Dogs Showed 6.84%-31.11% Price Upsides, While (31) Two -6.76% & -7.76% Financial Services Downsiders Trailed

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 12.44% Advantage For 5 Highest Yield, Lowest Priced, Of 10 Top Buffett-Collected Dividend Stocks To March, 2025

Ten-top Buffett/Berkshire dividend dogs were culled by yield for this update. Yield (dividend/price) results provided by YCharts did the ranking.

As noted above, top ten Buffett-chosen dividend dogs screened 3/25/24 showing the highest dividend yields represented five of eleven Morningstar sectors.

Actionable Conclusions: Analysts Projected 5 Lowest-Priced Of The Top Ten Highest-Yield Buffett-Held Dogs (31) Delivering 13.28% Vs. (32) 11.81% Average Net Gains by All Ten Come March 25, 2025

$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 12.44% more gain than $5,000 invested as $.5k in all ten. The very lowest-priced selection, Sirius XM Holdings, was projected to deliver the best analyst-estimated net gain of 32.85%.

The five lowest-priced top-yield BKB stocks March 25 were: Sirius XM Holdings; HP Inc; The Kraft Heinz Co; Bank of America Corp; Ally Financial Inc, with prices ranging from $3.89 to $39.43.

Five higher-priced Berkshire-backed dividend dogs as of March 25 were: Jefferies Financial Group Inc; Coca-Cola Co; Citigroup Inc; Diageo PLC; Chevron Corp, whose prices ranged from $45.26 to $156.47.

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 four stocks ready for pick-up, and the six emerging ideal picks at the start of the article, here is a reprise of the list at the end:

This March 2024 update shows that the following four 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.

One more is within $1.66 or 4.61% of the ideal, Ally Financial Inc. That stock shows the smallest price decrease that would pay dividends at the current payout level from $1k invested equal to its single share price.

To run-down all the “safer” dividends of Buffett’s February pack of dogs, check-out the Dividend Dog Catcher investing group site (by clicking on the last summary bullet above) after March 5.

Price Drops or Dividend Increases Could Get All Ten Dogs of Buffett Back to “Fair Price” Rates For Investors

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 three fair priced dogs in the top ten, plus seven out-of-bounds-priced stocks. The outliers need to trim prices between $5 and $82.40 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 57% 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.