Something odd has taken place over in the offices of Berkshire Hathaway Inc. (NYSE: BRK-A) in late 2016 and into 2017. The 2017 full list of Buffett’s stock picks included larger portfolio changes than investors may have ever seen. Another issue is that Buffett’s portfolio managers sure seem to be getting much more autonomy, with larger and larger positions.
24/7 Wall St. has already reviewed the 2017 Dogs of the Dow, which are quite simply the 10 highest yielding Dow Jones Industrial Average stocks. After looking through the massive changes in Warren Buffett’s stocks in mid-February, it turns out that the yield of the top six modified stock holdings of Berkshire Hathaway do not exactly stack up against the Dogs of the Dow for dividend investors.
Buffett’s top six modified stock holdings have an average yield of about 3.25%. The Dogs of the Dow came into 2017 with an average yield of almost 3.6%. Buffett’s top six dividend holdings also have returned less than 2% (about 1.65%) so far in 2017, versus a total return of 4.6% for the average gain in the Dogs of the Dow year to date.
At the start of 2017, the average yield of the Dogs of the Dow was almost 3.6%. That yield was down slightly from 2016 but closer to 2015’s Dogs. Also at the start of 2017, there was a yield of 2.44% for the 10-year Treasury and 3.06% for the 30-year Treasury.
To look at the top Buffett stocks in dividend yields, a modified approach was taken. If Buffett and Berkshire Hathaway have trimmed these down sharply (as with Verizon and Wal-Mart), they were not counted in order to keep the review pertinent. American depositary shares of international issuers also were not counted due to annual dividend fluctuations around currencies.
General Motors Co. (NYSE: GM) currently has the top dividend yield of Berkshire Hathaway’s public stock holdings. Its market cap is $55.6 billion and its dividend yield was last seen at 4.08%. Buffett’s stake of 50 million shares would be worth more than $1.5 billion in current dollars, generating about $62 million per year for now in dividends received by Buffett.
GM shares were last trading at $37.81, within a 52-week range of $27.34 to $38.38 and with a consensus analyst price target of $39.38.
Coca-Cola Co. (NYSE: KO) has the second highest yield of the modified Berkshire Hathaway stocks. It has a market cap of over $177 billion and yields 3.40%. Buffett’s same never-ending stake of 400 million shares would be worth about $16.5 billion in current dollars. That means that he now collects about $562 million in dividend payments from Coca-Cola.
Shares of Coca-Cola most recently closed at $41.46. The stock has a 52-week trading range of $39.88 to $47.13 and a consensus price target of $43.79.
Phillips 66 (NYSE: PSX) is the third largest dividend stake, and Berkshire Hathaway owns almost 80.7 million shares, worth some $6.4 billion in current dollars, compared with a full market cap of $41 billion. Phillips 66 gives investors today a yield of 3.15%, which means that Buffett and Berkshire Hathaway are collecting about $205 million in annualized dividend payments from the company.
Shares of Phillips 66 were last seen at $79.03, with a consensus price target of $90.87 and a 52-week range of $73.67 to $90.87.
General Electric Co. (NYSE: GE) is not a huge stake for Buffett, at almost 10.6 million shares worth over $320 million in current dollars, but he has held on to this stake since his investment during the recession. GE’s market cap was just over $266 billion on last look, and its dividend yield was 3.17%.
GE closed at $30.52 a share. The consensus price target is $34.00, and the 52-week range is $28.19 to $33.00.
International Business Machines Corp. (NYSE: IBM) is actually back to being a profitable position for Buffett. His first jump into a big tech stock was painful for quite some time, but now Buffett’s 81.2 million share stake is worth some $14.6 billion, versus IBM’s total market cap of about $170 billion. With a 3.10% dividend at the start of 2017, that means that IBM pays close to $5.25 billion per year in dividends, and Buffett himself is receiving about $450 million per year in dividends from it.
Big Blue shares were last changing hands at $180.26, in a 52-week range of $129.68 to $182.79. The consensus analyst target is $165.55.
Wells Fargo & Co. (NYSE: WFC) is technically ninth on the list of ranked dividend holdings, but Sanofi is foreign, the Procter & Gamble stake has been chopped to almost nothing and Wal-Mart has been greatly reduced to a tiny fraction of its old size. Buffett has added and added Wells Fargo shares over the years, but not during the recent account-opening scandal. His stake is a massive 479,704,270 shares worth some $27.9 billion. The bank’s 2.6% yield also means that Buffett is getting close to $725 million in annual dividend payments today.
Wells Fargo recently closed at $58.25 per share. Its consensus price target is $58.42, and the 52-week range is $43.55 to $59.01.
While it might sound easy to take out the yields and performance of the top Berkshire Hathaway stocks versus the Dogs of the Dow for 2017, it’s important to realize that Buffett keeps a very long-term view. It should also be noted that the actual Berkshire Hathaway shares were last seen up about 3.7% so far in 2017.