Now that stocks have pulled back from their highs, some investors have moved on to more defensive stock positions. That move often lands some of the top dividend payers as well. 24/7 Wall St. recently identified that utility stocks were the only group rising in the broad sell-off, but one other group of stocks might start to interest buyers as they pull back with the market — Warren Buffett’s top dividend yield stocks from the Berkshire Hathaway Inc. (NYSE: BRK-A) full portfolio of equities.
It turns out that most of the highest yielding Buffett stocks have dividend yields above 3%. These are listed in order of highest to lowest yields. In addition to how much these have sold off from their peak, the valuation against the Thomson Reuters consensus analyst price target has been included. We also have added color on each position.
A preference was given to U.S.-based stocks as well because domestic stocks pay quarterly at set rates. Positions that have been dropped down to a fraction of a percent of the portfolio were excluded as well.
Here are the best dividend yields of the Berkshire Hathaway portfolio of common stocks.
ConocoPhillips (NYSE: COP) and Exxon Mobil Corp. (NYSE: XOM) have been included as one because of recent changes in the portfolio. It turns out that ConocoPhillips is still a decent stake for Buffett and Berkshire Hathaway, but it also keeps getting to be a smaller position as Buffett has moved more cash into rival Exxon Mobil. The stake in ConocoPhillips was 11.079 million shares last quarter, down by over half of the 24.1 million shares in mid-2013. Still, this is worth close to $770 million.
ConocoPhillips yields 3.94%, far higher than Exxon’s dividend yield of 2.7%. The likely view remains that Buffett’s size makes it easier to get large oil and gas exposure in Exxon Mobil. After all, Exxon Mobil’s market cap is more than $420 billion, versus only about $86 billion for ConocoPhillips. The good news is that these dividends will be going up and up in both stocks from here, if history is a guide. ConocoPhillips shares at $70 are down just over 6% from the 52-week high of $74.59, and the consensus price target is above $76 for this position.
General Motors Co. (NYSE: GM) may be suffering from its recall woes, but Warren Buffett raised his stake from 25 million shares to 40 million shares in 2013. He is unlikely to back away, and he may even add more. GM’s dividend is still relatively new, but the drop in the stock price now has its yield just above 3.5%. At $34.15, GM shares are now down more than 18% from their highs. The consensus price target seems high at about $46, but that is often the case when analysts have to try to react to adverse headline risks.
General Electric Co. (NYSE: GE) was recently added as a much larger stake after Berkshire Hathaway’s warrant conversions. At close to $250 million worth of stock, this is not exactly a full-blown commitment by Mr. Buffett. Maybe it is because Berkshire Hathaway and GE are now competitors for investor dollars in conglomerates. At $25.80, GE shares are down more than 8% from the 52-week and multiyear high of $28.09. The consensus price target is also almost $28.75 here. GE’s common stock dividend is just above 3.4%.
Coca-Cola Co. (NYSE: KO) is a long-time holding of Berkshire Hathaway. It fits in with the “Buy and hold forever” strategy for Buffett, although the health concerns over sugary drinks and diet drinks may create less upside than investors might have considered in the past. We have even asked if it and rival PepsiCo should be considered go-to defensive stocks now as a result of the health concerns. Coke’s dividend is 3.15%, and shares have actually been treated well during the sell-off — so maybe it is still defensive. At $38.70, this stock is still down more than 10% from its 52-week high of $43.43. The consensus price target for the stock is also closer to $44.
Procter & Gamble Co. (NYSE: PG) just announced another 7% dividend hike. While this may raise concern of a peak in the dividend cycle, P&G’s new quarterly payout of $0.6436 per common share generates a dividend yield of 3.18%. This is the top consumer products giant in the world, and Buffett has been a long-time holder since he came into it via Gillette. At $80.80, the stock is down almost 6% from its high of $85.82, and the consensus price target is almost $87 for the mega-cap stock.
Wells Fargo & Co. (NYSE: WFC) is Buffett’s favorite bank and is the largest position in the Berkshire Hathaway portfolio. In fact, Buffett keeps buying more shares each and every quarter. Wells Fargo is officially only yielding close to 2.4% now, but the bank already telegraphed that it is raising its quarterly dividend to $0.35 per share from $0.30 for a new dividend yield of 2.87%. At $48.80, the stock is down only 3.3% from its fresh highs. Wells Fargo’s consensus price target from analysts is just over $50.50.
Wal-Mart Stores Inc. (NYSE: WMT) has grown to a stake of nearly 50 million shares. It is among the best dividends of retail stocks in the S&P 500. And it just raised the payout to $0.48 per share from $0.47 per quarter. This generates a new yield of 2.45% for the world’s largest retailer. At $78.15, Walmart shares are down 4% from their recent high of $81.37. The consensus price target from analysts is also closer to $81.30. With so many retail options and a market cap of $252 billion, it is easy to see why Buffett thinks it is much easier to hold Walmart over other retailers.
Sanofi (NYSE: SNY) remains a position of almost 4 million shares for Berkshire Hathaway. This foreign drug giant has not been chopped down in the Buffett portfolio as others have. It remains a small position, but it is far from a small yield. The ADSs trade at $52.64, and the dollarized dividend of $1.862 last year generated a dividend yield of close to 3.5%. The proposed dividend in euros would be closer to 3.7% for the French drug company. The ADSs pay annually, which is different for U.S. investors with their expectation of a quarterly dividend.
As far as Berkshire Hathaway Inc. (NYSE: BRK-B) stock is concerned, it pays no dividend, even if Buffett loves to invest in dividend-paying companies. Berkshire Hathaway’s B-shares peaked this year at $125.91, and its stock price of $122.90 is down only 2.4% from its peak.