While Berkshire Hathaway Inc. (NYSE: BRK-B) doesn’t own most of the 30 equities in the Dow Jones Industrial Average, more than half of the eight Dow stocks that Warren Buffett and Berkshire do own are trading down year to date.
Buffett acquired his first stake in Apple Inc. (NASDAQ: AAPL) in the first quarter of 2016, when the stock traded at around $25 (adjusted for a 4-for-one stock split in August 2018). Since then, the share price has risen by around 420%. Buffett owns 887.1 million shares of Apple stock valued at $117.4 billion. To date in 2021, Apple trades down about 0.3%, but the dividend yield of 0.67% gives shareholders a slightly positive return for the year.
Shares of The Coca-Cola Co. (NYSE: KO) are trading down about 0.9% so far in 2021. Buffett is the largest shareholder in the company with 400 million shares (thanks to two stock splits) valued at around $21.7 billion. Berkshire acquired its first position in Coca-Cola in 1988 and has never sold a single share. The share price has increased by more than 4,800% since Buffett’s first purchase of the stock.
Berkshire acquired 22.4 million shares of Merck & Co. Inc. (NYSE: MRK) in the third quarter of last year and added another 6.3 million in the fourth quarter. The Oracle of Omaha opened new positions in two other pharmaceuticals makers at the same time (Bristol-Myers Squibb and AbbVie) and added to his holdings of Pfizer, betting on rising share prices as the drugmakers chased COVID-19 vaccines. Buffet reduced Berkshire’s stake in Merck to 17.9 million shares at the end of March 2021. Merck has traded down by about 0.5% since the end of September 2020, and the stock is down by about 1.6% so far in 2021. Merck’s dividend yield of 3.39% eases the pain. At Monday’s closing price, the value of Buffett’s stake in Merck is about $1.4 billion.
Verizon Communications Inc. (NYSE: VZ) stock is down about 4% year to date. Berkshire owns 158.8 million shares of the company worth nearly $9 billion. Buffett took a new position in Verizon in the first quarter of 2014 and really loaded up in the fourth quarter of last year by adding 147 million shares after selling about 15 million in two earlier transactions. Since his first acquisition of the stock, Verizon shares have added almost 64%. As with the other stocks in this group, a dividend yield of 4.5% makes up for a variety of sins.
Procter & Gamble Inc. (NYSE: PG) is the poorest performing of the Dow stocks in Buffett’s portfolio, trading down about 4.4% for the year. Buffett opened a new position in the stock in the first quarter of 2005 with a buy of 630,000 shares. Following nearly 20 transactions, Berkshire’s stake at the end of the first quarter of this year was 315,000 shares, exactly half the original stake. P&G’s stock has added nearly 300% since Buffett’s first buy, but even the dividend yield of 2.61% is not attractive enough to persuade him to add to his stake. The stock is likely to strike Buffet as too expensive.