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.”
“You can’t get rich by simply copying a billionaire’s every move. However, it’s always interesting – and often constructive – to know what the “smart money” is up to.
The billionaires, hedge funds and big-time asset management firms below all have fortunes of various sizes. And studying which stock picks they’re chasing with their capital (or which stocks the billionaires are selling off, for that matter) isn’t a half-bad idea.
There’s a reason the rich get richer, after all. Their resources for research, as well as their intimate connections to insiders and others, can give them a unique insight into their stock picks.”
Any collection of stocks is more clearly understood when subjected to yield-based (dog catcher) analysis; these 50 Top Stock Picks That Billionaires Love list is perfect for the dogcatcher process.
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 just one of these billionaire holdings currently qualifies: ADT. The ‘safer’ survey of these billionaire stocks will be posted later this week in my Dividend Dog Catcher realm on the Seeking Alpha marketplace site.
A complete alphabetical listing by stock ticker (including the names of prime billionaire or hedge-fund benefactors) is found in the afterword at the tail of this article.
Below are the November 11 data for 27 dividend paying stocks and funds in the Kiplinger collection of 50 stocks billionaire-owners currently love.
Actionable Conclusions (1-10): Analysts Estimated 15% To 57.33% Net Gains For Top Ten Billionaire Holdings Come November 2021
Five of ten billionaire-held top dividend stocks by yield were also among the leading ten gainers for the coming year based on analyst 1-year target prices. (They are tinted gray in the chart below). Thus, this November yield-based forecast for billionaire dividend dogs was graded by Wall St. Wizards as 50% accurate.
Projections were based on estimated dividends from $1,000 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. Ten probable profit-generating trades projected to November 11, 2021 were:
ADT Inc. (ADT) netted $573.31 based on a median of estimates from nine analysts, plus dividends. A Beta number was not available for ADT.
Citigroup Inc. (C) was projected to net $304.95, based on the median of target price estimates from twenty-five analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 81% more than the market as a whole.
Barrick Gold Corp. (GOLD) was projected to net $295.20, based on dividends, plus the median of target price estimates from twenty-three analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 85% under the market as a whole.
Extended Stay America Inc. (STAY) was projected to net $187.84, based on dividends, plus the median of target price estimates from eleven analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 89% greater than the market as a whole.
Goldman Sachs Group Inc. (GS) was projected to net $182.36 based on the median of target price estimates from twenty-six analysts plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 41% greater than the market as a whole.
Bristol-Myers Squibb Co. (BMY) was projected to net $178.92, based on estimates from twenty analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 33% less than the market as a whole.
Lowe’s Companies Inc. (LOW) was projected to net $175.45 based on dividends, plus the median of target estimates from thirty-one brokers, less transaction fees. The Beta number showed this estimate subject to risk/volatility 52% over the market as a whole.
AbbVie Inc. (ABBV) was projected to net $167.61, based on dividends, plus the median of target price estimates from nineteen analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 28% less than the market as a whole.
Raytheon Technologies Corp. (RTX) was projected to net $166.96, based on dividends, plus the median of target price estimates from nineteen analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 26% over the market as a whole.
Baxter International Inc. (BAX) was projected to net $150.01, based on the median of target price estimates from eighteen analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 27% less than the market as a whole.
The average net gain in dividend and price was estimated at 23.83% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility 13% more than the market as a whole.
Actionable Conclusion (11): (Bear Alert) Analysts Predicted One Billionaire Holding To Show A 7.73% Loss to November 2021
The probable losing trade revealed by YCharts to 2021 was:
American Water Works Co. Inc. (AWK) projected a loss of $77.33 based on dividend and a median of the target price estimates from sixteen analysts including broker fees. The Beta number showed this estimate subject to risks 80% less 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”.
49 Billionaire Holdings Show Broker Target Gains
27 Billionaire Holdings Show Dividend Yields
Actionable Conclusions (11-20): Top 10 Billionaire Holdings By Yield
Top ten big billionaire-bought dividend stocks selected by yield 11/11/20 represented four of eleven Morningstar sectors.
The first slot was claimed by the first of two healthcare representatives, AbbVie Inc. , the other healthcare rep placed eighth, Bristol-Myers Squibb Co. .
Second through fourth, and ninth places went to financial services representatives: Citigroup Inc. , American International Group Inc. (AIG) , JPMorgan Chase & Co. (JPM) , and Goldman Sachs Group Inc. .
In fifth and seventh places were two industrials sector representatives, General Dynamics Corp. (GD) , and Raytheon Technologies Corp. .
Actionable Conclusions: (21-30) Top Ten October Billionaire-Loved Dividend Dogs Showed 19.86%-69.06% Upsides
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 30.04% Advantage For 5 Highest Yield, Lowest Priced Of Top-Ten Billionaire-Loved Dividend Stocks For November 2021
Ten 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 ten Kiplinger billionaire-held dividend dogs selected 11/11/20 showing the highest dividend yields represented four of eleven Morningstar sectors.
Actionable Conclusions: Analysts Predicted 5 Lowest-Priced Of Top Ten Highest-Yield Billionaire Held Dogs (32) Delivering 17.99% Vs. (33) 15.58% As Of November 2021
$5,000 invested as $1k in each of the five lowest-priced stocks in the top ten dividend billionaire-held kennel by yield were predicted by analyst 1-year targets to deliver 15.47% more gain than $5,000 invested as $.5k in all ten. The fourth lowest priced selection, Citigroup Inc, was projected to deliver the best net gain of 30.49%.
The five lowest-priced top-yield billionaire holdings as of November 9 were: The Kroger Co., American International Group Inc., Campbell Soup Co., Citigroup Inc., Bristol-Myers Squibb, with prices ranging from $32.09 to $61.82.
Five higher-priced billionaire holdings as of November 11 were: Raytheon Technologies Corp., AbbVie Inc., JPMorgan Chase & Co., General Dynamics Corp., Goldman Sachs Group Inc., whose prices ranged from $65.85 to $218.05.
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 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 and hedge-fund class as of September 16, 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.
For those seeking stocks whose annual dividends from a $1k investment exceed their single share price, it must be noted that just one of these November billionaire holdings currently qualifies: ADT.
My ‘safer’ survey of these billionaire holdings will be posted later this week in my Dividend Dogcatcher realm on the Seeking Alpha marketplace site.
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.
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.
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: pinterest.com
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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.