Warren Buffett, Chairman of Berkshire Hathaway Inc., is widely regarded as the most respected and successful investor in history. Often referred to as "The Oracle of Omaha," it is no secret that he favors high dividend yield stocks without ever paying a dividend on his own stock. This investment strategy allows him to continually reinvest his earnings in order to grow Berkshire Hathaway.
Buffett, who studied under the legendary value investor Benjamin Graham at Columbia, began sculpting his own investment strategy after working for Graham for two years in the 1950’s. Along with Berkshire Vice-Chairman Charles Munger, Buffett began focusing on the way a company was managed, how it worked, and why it was better than its competitors. This was in addition to the company being available at an attractive price. From the beginning of Berkshire Hathaway through 2009, the famous fund has seen a compounded annual gain of 20.3%.
Today Berkshire Hathaway is a major corporation with more than 50 subsidiary companies and a market cap in excess of $202 billion. Buffett invests in multiple industries to spread his risk and believes in the idea of holding onto a stock forever. Berkshire Hathaway’s most prominent industries include insurance, jewelers, retail furniture, apparel and food.
Below are the top five highest yield holdings for Berkshire Hathaway as of 09/30/10. A great deal of analysis goes into stocks that Buffett would or wouldn’t buy based on their dividend yields. As a value investor, Buffett considers the wide moat he refers to as a company that stands apart from the rest and is fundamentally sound. And when Buffett is successful at purchasing stock in these companies, he makes returns that are reinvested in the company.
Top five highest yielding holdings as of latest 13-F filing with the SEC (Q3 2010)
|No. 1: GlaxoSmithKline PLC (GSK)||5.10%||0.10%|
|No. 2: Kraft Foods Inc. (KFT)||3.70%||6.70%|
|No. 3: Johnson & Johnson (JNJ)||3.50%||5.40%|
|No. 4: Sanofi-Aventis (SNY)||3.30%||0.30%|
|No. 5: ConocoPhillips (COP)||3.20%||3.40%|
GlaxoSmithKline PLC is a global healthcare group engaged in the creation and discovery, development, manufacturing and marketing of pharmaceutical products including vaccines, over-the-counter medicines and health-related consumer products. GlaxoSmithKline has a market cap of $96.92 billion with a dividend yield of 5.10% (10/27/10).
In recent news, GlaxoSmithKline revealed on January 18, 2011, that it will record a $3.4 billion fourth-quarter charge because of legal costs related to its Avandia diabetes drug. "We recognize that this is a significant charge, but we believe the approach we are taking to resolve long-standing legal matters is in the company's best interests," said PD Villarreal, Glaxo's Senior Vice President of Global Litigation, in a company news release Monday.
Warren Buffett owns 1,510,500 shares as of 09/30/2010 with a current market price of $38.14/share. This represents no change from the previous quarter. This position accounts for 0.12% of the $48.56 billion fund of Berkshire Hathaway, Inc.
Kraft Foods Inc.
Kraft Foods Inc., together with its subsidiaries, manufactures and markets snacks, confectionery, and quick meal products worldwide. It sells its products to supermarket chains, wholesalers, super centers, club stores, mass merchandisers, distributors, convenience stores, gasoline stations, drug stores, value stores, and other retail food outlets.
Kraft Foods Inc. has a market cap of $54.15 billion with a P/E ratio of 11.98 and a P/S ratio of 1.15. The dividend yield is 3.7%.
Warren Buffett owns 105,214,584 shares as of 09/30/2010, with no change from the previous quarter. This position accounts for 6.02% of the $48.56 billion fund of Berkshire Hathaway, Inc.
Johnson & Johnson
Johnson & Johnson is engaged in the manufacture and sale of a broad range of products in the health care field in many countries of the world. Johnson & Johnson's primary interest, both historically and currently, has been in products related to health and well-being.
Johnson & Johnson will host an analyst meeting at 8:30 a.m. (Eastern Time) on Tuesday, Jan. 25, to discuss fourth-quarter and full-year 2010 financial results.
Johnson & Johnson has a market cap of $171.78 billion with a P/E ratio of 12.26 and a P/S ratio of 2.75. The latest dividend is .54 with a dividend yield of 3.45%.
Warren Buffett owns 42,624,563 shares as of 09/30/2010, which is a +3.16% change in position from the previous quarter. This position accounts for 1.55% of the $48.56 billion fund of Berkshire Hathaway, Inc.
Sanofi-Aventis, a healthcare company, engages in the discovery, development, and distribution of therapeutic solutions to improve the lives of everyone. It offers a range of healthcare assets, including a broad-based product portfolio in prescription drugs, OTC/OTX, generics, vaccines, and animal health.
Sanofi-Aventis has scheduled their earnings announcement for February 9, 2011.
Sanofi-Aventis has a market cap of $88.88 billion with a P/E ratio of 10.66 and a P/S ratio of 2.10. The latest dividend is 1.10 (5/17/10) with a dividend yield of 3.20%.
Warren Buffett owns 4,063,675 shares as of 09/30/2010, with no change from the previous quarter. This position accounts for 0.16% of the $48.56 billion fund of Berkshire Hathaway, Inc.
ConocoPhillips operates as an integrated energy company worldwide. It operates through six segments: Exploration and Production (E&P), Midstream, Refining and Marketing (R&M), LUKOIL Investment, Chemicals, and Emerging Businesses.
ConocoPhillips has a market cap of $100.04 billion with a P/E ratio of 9.24 and a P/S ratio of .60. The dividend yield is 3.2%. ConocoPhillips has scheduled their Q4 earnings call for January 26, 2011.
Warren Buffett owns 29,109,637 shares as of 09/30/2010, with no change from the previous quarter. This position accounts for 1.98% of the $48.56 billion fund of Berkshire Hathaway, Inc.
Written by A. Hamilton
January 18, 2011