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Published: September 22, 2009
To say Warren Buffett has done well for himself
would be an understatement. That's why from time to time, I like
to check in on what the "Oracle of Omaha" is doing with
Berkshire Hathaway's (NYSE: BRK-A) portfolio.
I came across a neat resource the other day. If you also like to
keep tabs on Buffett, CNBC.com has a page that tracks the common
stocks in Berkshire's portfolio in real-time.
You can see it here.
Looking at that page, it's very evident that Warren and I invest
a little differently than each other. He's the most famous value
investor in the world. I'm more than happy to let the dividends
roll in month after month -- even if the checks aren't in the
billions or millions.
So while I understand he isn't on the prowl for high-income
securities, the holdings still left me a little astonished.
Poring over the names, I recognized every stock -- Berkshire
owns some of the most well-known companies in the world.
But I also recognized many stocks
I wouldn't even look at twice for
income. The closest one is
GlaxoSmithKline (NYSE: GSK), which
yields 4.8%.
To its credit, Berkshire does own
some securities throwing off nice
income. It acquired some Goldman
Sachs (NYSE: GS) and General
Electric (NYSE: GE) preferreds in
late 2008 that pay a nice yield of
10%. However, that was a special
deal not available to retail
investors.
Digging a little deeper into
Berkshire's holdings, I found the
roughly 40 common stock holdings
yield an average of only 2.0%. Even
so, thanks the massive size of its
portfolio, Berkshire will rake in an
astonishing $1.2 billion from
dividends alone during the next year
if you project forward the annual
payments of the current holdings.
Certainly $1.2 billion is nothing to
sneeze at.
But Buffett's disinterest in income
is costing Berkshire.
On a whim, I calculated the average
yield of the 21 holdings in my
High-Yield Investing portfolios (I
like to be able to watch my holdings
like a hawk, that's why my portfolio
isn't larger than it is). It comes
out to 8.4% -- more than six full
points above Berkshire's 2.0%
average yield.
In actual dividends paid, the
difference between the yield on my
portfolio and Berkshire's would be
staggering. Berkshire's portfolio
totals $53.9 billion (which is more
than the GDP of Panama, Iceland, and
Bulgaria, among others). If the
entire portfolio earned 8.4% in
dividends annually, payments would
total $4.53 billion -- over $3.3
billion more than it does right now,
and enough to purchase nearly two
dozen Boeing 747s.
Of course, we don't all have the
portfolio of Berkshire Hathaway, and
I think Warren Buffett has done well
with his value focus. But the same
principles that are leaving billions
on the table for Berkshire could be
leaving thousands on the table for
your portfolio if you aren't making
dividends a priority.
-- Carla Pasternak
Editor
High-Yield Investing,
High-Yield International,
Dividend Opportunities |
