Dan Burrows in Kiplinger Investing says:
“They say on Wall Street that if you want to make a small fortune, start by investing a large one.
No, you can’t become a billionaire solely by copying their every move, but it’s always interesting – and often constructive – to know what the “smart money” is up to.”
Any collection of stocks is more clearly understood when subjected to yield-based (dog catcher) analysis, this billionaire dividend holdings list is perfect for the dogcatcher process.
Priced To Buy
For those dedicated dividend collectors who adhere to and promote the author’s ideal of finding stocks whose annual dividends from a $1K investment exceed their single share price, it must be noted that seven billionaire holdings currently qualify: STAY, CVI, WFC, AIG, VIAC, AMX, and ADT. To learn which of these seven are ‘safer’ dividend dogs, click here after July 5.
A complete alphabetical listing by stock ticker including the names of prime billionaire benefactors can be found in the afterword at the end of this article.
Below are the June 28 data for 29 dividend-paying stocks and funds in the Kiplinger collection of 50 stocks billionaires currently love.
Actionable Conclusions (1-10): Analysts Estimated 23.36% To 75.81% Net Gains For Top 10 Billionaire Holdings Come July 2021
Six of 10 big billionaire-held top dividend stocks by yield were also among the top 10 gainers for the coming year based on analyst one-year target prices. (They are tinted gray in the chart below.) Thus, this July yield-based forecast for these big billionaire dogs was graded by Wall St. Wizards as 60% accurate.
Projections were based on estimated dividends from $1k invested in each of the highest-yielding stocks and the median of their one-year analyst-estimated target prices, as reported by YCharts. Note: One-year target prices by lone analysts were not applied. 10 probable profit-generating trades projected to June 28, 2021 were:
The Brink’s Co. (BCO) was projected to net $758.09, based on the median of target price estimates from five analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 24% greater than the market as a whole.
CVR Energy Inc. (CVI) netted $366.02 based on a median of estimates from five analysts, plus dividends. The Beta number showed this estimate subject to risk/volatility 91% greater than the market as a whole.
Cigna Corp. (CI) was projected to net $316.80, based on dividends, plus the 26 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 33% under the market as a whole.
American International Group (AIG) was projected to net $316.17 based on dividends, plus the median of target estimates from 18 brokers, less transaction fees. The Beta number showed this estimate subject to risk/volatility 43% above the market as a whole.
Wells Fargo & Co. (WFC) was projected to net $309.65, based on dividends, plus the median of target price estimates from 28 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 15% greater than the market as a whole.
Citigroup Inc. (C) was projected to net $307.82, based on the median of target price estimates from 25 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 80% more than the market as a whole.
Extended Stay America Inc. (STAY) was projected to net $272.26 based on the median of target price estimates from 13 analysts plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 89% greater than the market as a whole.
America Movil SAB de CV (AMX) was projected to net $265.03, 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 29% under the market as a whole.
Bristol-Myers Squibb Co. (BMY) was projected to net $256.96, based on estimates from 17 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 27% less than the market as a whole.
Tyson Foods Inc. (TSN) was projected to net $233.62, based on dividends, plus the median of target price estimates from 15 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 35% less than the market as a whole.
The average net gain in dividend and price was estimated at 34.02% on $10k invested as $1k in each of these 10 stocks. These gain estimates were subject to average risk/volatility 22% more than 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.”
43 Billionaire Holdings Show Broker Target Gains
29 Billionaire Holdings Show Dividend Yields
Actionable Conclusions (11-20): Top 10 Billionaire Holdings By Yield
Top 10 big billionaire-bought stocks selected by yield 6/28/20 represented six of 11 Morningstar sectors, and one ETF.
One from the consumer cyclical sector placed first, Extended Stay America Inc. . Then a single energy sector representative took second, CVR energy Inc. .
Third, fourth, sixth, and seventh places went to financial services representatives: Wells Fargo & Co. , American International Group Inc. , Citigroup Inc. , JPMorgan Chase & Co. (JPM) .
One rascally ETF popped into ninth place, the Vanguard Emerging Markets ETF (VWO) . Finally, a healthcare representative placed tenth, Bristol-Myers Squibb Co., to complete the July billionaire-loved top-yield ten.
Actionable Conclusions: (21-30) Top 10 July Billionaire-Loved Dividend Dogs Showed 19.63%-75.44% Upsides, While (31) One Downsider Slumped -1.39%
To quantify top dog rankings, the median of analyst 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 21.33% Advantage For Five Highest Yield, Lowest Priced Of Top 10 Billionaire-Loved Dividend Stocks For July 2021
10 top billionaire-loved dividend dogs were culled by yield for this update. Yield (dividend/price) results provided by YCharts did the ranking.
As noted above, top 10 Kiplinger billionaire-held dividend dogs selected 6/28/20 showing the highest dividend yields represented six of 11 Morningstar sectors and one ETF.
Actionable Conclusions: Analysts Predicted 5 Lowest-Priced Of The Top Ten Highest-Yield Billionaire Held Dogs (32) Delivering 27.98% Vs. (33) 23.07% Net Gains by All 10 Come July 2021
$5k invested as $1k in each of the five lowest-priced stocks in the top 10 dividend billionaire-held kennel by yield were predicted by analyst one-year targets to deliver 21.33% more gain than $5k invested as $.5k in all 10. The second lowest-priced selection, CVR Energy Inc., was projected to deliver the best net gain of 36.6%.
The five lowest-priced top-yield billionaire holdings as of June 28 were: Extended Stay America Inc., CVR Energy Inc., ViacomCBS Inc., Wells Fargo & Co., American International Group Inc., with prices ranging from $10.70 to $29.71.
Five higher-priced billionaire holdings as of June 28 were: Vanguard FTSE Emerging Markets ETF, Citigroup Inc., Sysco Corp., Bristol-Myers Squibb, JPMorgan Chase & Co., whose prices ranged from $39.55 to $92.59.
The distinction between five low-priced dividend dogs and the general field of 10 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 20% to 80% accurate on the direction of change and just 0% to 20% accurate on the degree of change.
Stocks They Love and Their Prime Billionaire Benefactors
These were 50 top stock picks by the billionaire class as of May 1, 2020. In all cases, these companies represented major holdings (5% or more) of at least one ultra-wealthy person or large hedge fund, if not several. In many cases, these stocks were owned by multiple billionaires. For a complete summary of each stock go to 50 Top Stock Picks That Billionaires Love.
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 Kiplinger Billionaire Holdings stock purchase or sale research process. These were not recommendations.
Graphs and charts were compiled by Rydlun & Co., LLC from data derived from www.indexarb, YCharts, finance.yahoo, analyst mean target price by YCharts. Dog photo: huffingtonpost.co.uk.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any 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.
Additional disclosure: 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.