NEW YORK (Stockpickr) -- At Stockpickr, we track the top holdings of a variety of high-profile investors, such as George Soros and Carl Icahn.
It should come as no surprise that the most popular of these portfolios is that of renowned investor Warren Buffett, CEO of Berkshire Hathaway (BRK.B) and one of the richest people in the world.
In his annual letter to shareholders, released on Feb. 28, Buffett said that 2014 was a "a good year for Berkshire on all major fronts except one," referring to the performance of Berkshire's BNSF Railways, the second-largest freight railway network in North America. Buffett is sticking by the acquisition, made in 2009, for the long term.
In the fourth quarter, Berkshire earned $4.16 billion, compared with $5 billion in the fourth quarter of 2013. Earnings for the full year were also up, to $19.9 billion from $19.5 billion in 2013.
In the fourth quarter, Berkshire earned $4.16 billion, compared with $5 billion in the fourth quarter of 2013. Earnings for the full year were also up, to $19.9 billion from $19.5 billion in 2013.
Buffett wrote that a "motherlode of opportunities runs through America." Today we're taking a closer look at some of those opportunities in the form of 10 dividend-paying stocks from Berkshire Hathaway's portfolio, according to the firm's most recent 13F filing that reflects holdings as of Dec. 31, 2014. These stocks are all among the top 30 Berkshire Hathaway stocks that Stockpickr tracks and have current dividend yields of 2.5% and higher. They are listed by size of dividend yield.
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10. Phillips 66
Phillips 66 (PSX) has a current yield of 2.5%, paying a quarterly dividend of 50 cents a share.
Phillips 66 comprises 0.4% of the Berkshire Hathaway portfolio as of Dec. 31. In the most recently reported quarter, Buffett increased his stake in the stock by 5.9% to 6.6 million shares.
TheStreet Ratings team rates Phillips 66 as a buy with a ratings score of B. TheStreet Ratings team has this to say about its recommendation:
"We rate Phillips 66 (PSX) a buy. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, notable return on equity and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 38.9% when compared to the same quarter one year prior, rising from $826.00 million to $1,147.00 million.
- The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.12, which illustrates the ability to avoid short-term cash problems.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, PHILLIPS 66 has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- PHILLIPS 66 reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PHILLIPS 66 increased its bottom line by earning $7.12 versus $5.91 in the prior year. For the next year, the market is expecting a contraction of 2.4% in earnings ($6.95 versus $7.12).
You can view the full analysis from the report here: PSX Ratings Report
9. Wells Fargo
Wells Fargo (WFC - Get Report) has a current yield of 2.5%, paying a quarterly dividend of 35 cents a share.
Wells Fargo is Buffett's top holding, comprising 23.2% of the Berkshire Hathaway portfolio as of Dec. 31. In the most recently reported quarter, Buffett maintained a 463.5 million-share position in the stock.
TheStreet Ratings team rates Wells Fargo as a buy with a ratings score of A. TheStreet Ratings team has this to say about its recommendation:
"We rate Wells Fargo (WFC) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
"We rate Wells Fargo (WFC) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- WFC's revenue growth has slightly outpaced the industry average of 2.3%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Wells Fargo's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Wells Fargo increased its bottom line by earning $4.10 versus $3.89 in the prior year. This year, the market expects an improvement in earnings ($4.17 versus $4.10).
- The gross profit margin for Wells Fargo is currently very high, coming in at 93.37%. Regardless of WFC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WFC's net profit margin of 25.43% significantly outperformed against the industry.
- The net income growth from the same quarter one year ago has exceeded that of the Commercial Banks industry average, but is less than that of the S&P 500. The net income increased by 1.8% when compared to the same quarter one year prior, going from $5,610.00 million to $5,709.00 million.
You can view the full analysis from the report here: WFC Ratings Report
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8. Deere
Deere (DE) has a current yield of 2.6%, paying a quarterly dividend of 60 cents a share.
TheStreet Ratings team rates Deere as a buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate Deere (DE) a buy. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
"We rate Deere (DE) a buy. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has increased to -$510.10 million or 31.64% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -12.75%.
- DE, with its decline in revenue, underperformed when compared the industry average of 1.4%. Since the same quarter one year prior, revenues fell by 16.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- In its most recent trading session, DE has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Machinery industry and the overall market, Deere's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for Deere is currently lower than what is desirable, coming in at 32.63%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.05% trails that of the industry average.
You can view the full analysis from the report here: DE Ratings Report
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7. IBM
IBM (IBM) has a current yield of 2.7%, paying a quarterly dividend of $1.10 a share.
IBM is Buffett's fourth-largest holding, comprising 11.3% of the Berkshire Hathaway portfolio as of Dec. 31. In the most recently reported quarter, Buffett increased his position in the stock to 77 million shares.
TheStreet Ratings team rates International Business Machines as a hold with a ratings score of C+. TheStreet Ratings team has this to say about its recommendation:
"We rate IBM (IBM) a hold. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
"We rate IBM (IBM) a hold. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the IT Services industry and the overall market, IBM's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for IBM is rather high; currently it is at 58.23%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.73% is above that of the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 19.9%. Since the same quarter one year prior, revenues fell by 11.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has declined marginally to $6,059.00 million or 7.18% when compared to the same quarter last year. Despite a decrease in cash flow of 7.18%, IBM is in line with the industry average cash flow growth rate of -16.33%.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, IBM has underperformed the S&P 500 Index, declining 13.49% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
You can view the full analysis from the report here: IBM Ratings Report
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6. Procter & Gamble
Procter & Gamble (PG - Get Report) has a current yield of 3%, paying a quarterly dividend of 64.25 cents a share.
Procter & Gamble is Buffett's sixth-largest holding, comprising 4.4% of the Berkshire Hathaway portfolio as of Dec. 31. In the most recently reported quarter, Buffett maintained a 52.8 million-share position in the stock.
TheStreet Ratings team rates Procter & Gamble as a buy with a ratings score of A-. TheStreet Ratings team has this to say about its recommendation:
"We rate Procter & Gamble (PG) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
"We rate Procter & Gamble (PG) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has slightly increased to $3,435.00 million or 4.12% when compared to the same quarter last year. In addition, Procter & Gamble has also modestly surpassed the industry average cash flow growth rate of 1.44%.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Procter & Gamble's earnings per share declined by 8.9% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, Procter & Gamble increased its bottom line by earning $3.88 versus $3.87 in the prior year. This year, the market expects an improvement in earnings ($4.01 versus $3.88).
- The current debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that PG's debt-to-equity ratio is low, the quick ratio, which is currently 0.53, displays a potential problem in covering short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Household Products industry and the overall market on the basis of return on equity, Procter & Gamble has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
You can view the full analysis from the report here: PG Ratings Report
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5. General Motors
General Motors (GM - Get Report) has a current yield of 3.1%, paying a quarterly dividend of 30 cents a share.
General Motors comprises 1.3% of the Berkshire Hathaway portfolio as of Dec. 31. In the most recently reported quarter, Buffett increased his stake in the stock by 2.5% to 41 million shares.
TheStreet Ratings team rates General Motors as a buy with a ratings score of B. TheStreet Ratings team has this to say about its recommendation:
"We rate General Motors (GM) a buy. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations, increase in stock price during the past year, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
"We rate General Motors (GM) a buy. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, good cash flow from operations, increase in stock price during the past year, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Automobiles industry. The net income increased by 91.0% when compared to the same quarter one year prior, rising from $1,040.00 million to $1,987.00 million.
- Net operating cash flow has slightly increased to $3,164.00 million or 3.46% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -24.41%.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- General Motors has improved earnings per share by 15.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, General Motors reported lower earnings of $1.64 versus $2.35 in the prior year. This year, the market expects an improvement in earnings ($4.59 versus $1.64).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.1%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
You can view the full analysis from the report here: GM Ratings Report
By Stockpickr Staff
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