Tuesday, February 16, 2021

Warren Buffett's Latest Three New Investments

Warren Buffett does not need any introduction. He is a very successful investor who is in charge of Berkshire Hathaway. He has an impressive track record investing in the stock market and in businesses.

Because of his success, his every move is followed very closely. For example, his holding company Berkshire Hathaway is required to file a report with the SEC once per quarter that shows a listing of its portfolio holdings. You can find the most recent report by clicking on this link to the SEC filing.

It looks like Buffett initiated a position in three dividend growth companies. These are Chevron (CVX), Verizon (VZ) and Marsh & McLennan (MMC). I wanted to provide a brief overview of each company, from the perspective of a dividend growth investor below:

Chevron Corporation (CVX) engages in integrated energy, chemicals, and petroleum operations worldwide. The company operates in two segments, Upstream and Downstream. 

Chevron is a dividend aristocrat with a 33 year track record of annual dividend increases. Over the past decade, it has managed to grow dividends at an annualized rate of 6.20%.

The stock is selling for 26.63 times forward earnings and yields 5.58%. I do not believe that the annual dividend of $5.16/share is safe, based on forward earnings of $3.48/share. If oil prices rebound however, it is likely that earnings would grow as well, making Buffett's investment in Chevron smart in hindsight.

Marsh & McLennan Companies, Inc. (MMC) is a professional services company that provides advice and solutions to clients in the areas of risk, strategy, and people worldwide. It operates in two segments, Risk and Insurance Services, and Consulting. 

This dividend achiever has managed to increase dividends for 11 years in a row. Marsh & McLennan has managed to grow dividends at an annualized rate of 8.60%/year over the past decade.

The stock is selling for 21.24 times forward earnings and yields 1.65%. The annual dividend of $1.86/share seems adequately covered from forward earnings of $5.31/share.

Verizon Communications Inc. (VZ) offers communications, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide. This dividend achiever has managed to increase dividends for 16 years in a row. Over the past decade, Verizon has managed to grow dividends at an annualized rate of 2.60%.

The stock is selling for 10.69 times forward earnings and yields 4.63%.

Buffett's company also made other moves, including the complete exit from the following positions (meaning he sold all the shares that his holding company owned)

- Pfizer (PFE)

- M&T Bank Corp (MTB)

- PNC Financial Services (PNC)

- JPMorgan Chase & Co (JPM)

- Barrick Gold Corp (GOLD)

You can view a complete listing of the changes below:




Source: Dataroma

I am interested in the fact that he is adding to Abbvie (ABBV), Bristol Myers Squibb (BMY) and Merck (MRK), which are attractive values in today's market. 

Abbvie (ABBV) is a dividend aristocrat with a 48 year track record of annual dividend increases. It has managed to grow dividends at an annualized rate of 18.50% during the past five years. Abbvie sells for 12.38 times forward earnings and yields 4.98%. Check my analysis of Abbvie for more information about the company.

Bristol-Myers Squibb (BMY) is a dividend achiever with a 12 year track record of annual dividend increases. Over the past decade, it has managed to grow dividends at an annualized rate of 3.50%, but this rate has been accelerating in recent years. The stock sells for 8.04 times forward earnings and a dividend yield of 3.27%. Check my analysis of Bristol-Myers Squibb for more information about the company.

Merck (MRK) has a ten year history of raising dividends and a ten year dividend growth rate of 4.80%. The stock sells for 11.63 times forward earnings and a dividend yield of 3.47%.

I also like the fact that he is buying more Kroger (KR), which in my opinion is a company that is working on transitioning itself to better compete in this new environment. I believe that it has what it takes to survive and thrive in the future. I also believe it offers a good value today as well.  Kroger sells for 10.21 times forward earnings and yields 2.12%. The company is a dividend aristocrat with a 15 year track record of annual dividend increases, and a 13.30% rate of annualized dividend growth over the past decade. Check my analysis of Kroger for more information about the company. 

I have not analyzed RH in detail before, so I do not have much to say about it. I do understand T-Mobile (TMUS), and think that it is a very competitive telecom company in the US telecom sector. While it has not paid a dividend since going public earlier last decade, it has outmaneuvered its competitors, acquired Sprint, and is positioned very well to benefit from an increasingly concentrated oligopoly.


Relevant Articles:

- How to find companies for my dividend portfolio

Dividend Stock Analysis of Kroger (KR)


4 comments:

  1. The trades appear to be opportunistic and not long term oriented

    ReplyDelete
  2. He's selling a lot of bank, investment stuff. Also Gold. Fascinating as to why.

    ReplyDelete
  3. I'm really surprised Buffett sold all of his Barrick holdings, considering he added to his Barrick position late last year. It would be good to know why he changed his sentiment towards gold miners.

    ReplyDelete
  4. Today M&T (Yield of approx 2.9% at best) announced the aquisition of PBCT (a Dividend Aristrocrat) (Yield of 5,57%) in an all stock Deal.
    Will (or not) this be a good Dividend stock transaction or should the M&T stock better be sold. (like Warren Buffett did).
    Thanks Carl.

    ReplyDelete

Questions or comments? You can reach out to me at my website address name at gmail dot com.

Popular Posts