Category Archives: Watchlist

Warren Buffett’s Top Dividend Stocks Priced at a Value

Are you looking for top dividend stocks for your portfolio? Why not look at what the Oracle of Omaha holds and see which ones are priced at a value? Well, I’ve done the work for you already. They include American Express Company (NYSE:AXP) and International Business Machines Corp. (NYSE:IBM). I will outline why they’re good values for a dividend portfolio today.

Here are Warren Buffett’s top dividend stocks that are priced at a value, when I cross-referenced with a couple fundamental analysis sources.

Is American Express Company Your Dividend Stock?

American Express Company is Berkshire Hathaway’s fifth largest holding worth over $11.6 billion that equates to 15% ownership in the company.

Business Overview

American Express is a global services company. Its main products include charge and credit cards, and travel services that are enjoyed by consumers and businesses around the world. As of March 1, 2015, American Express brought in annual revenue of $34.3 billion and net income of $5.9 billion.


At $77 per share, American Express is priced roughly at a multiple of 12.6 with estimated earnings growth of 13%. Using a multiple of 15, American Express shares would be worth roughly $94. This implies American Express is priced at a discount of 18%. This margin of safety is more conservative than Morningstar’s fair value estimation of $95.

American Express Company fundamental analysis graph Read More

Canadian Dividend Stocks I Bought in the Last Three Months

In the last three months, it would have cost Canadians 28% to 34% more to convert Canadian dollars to U.S. dollars. Today, it costs around 30% more still. That’s why in the past three months, I bought Canadian dividend stocks instead of U.S. dividend stocks. Specifically, I bought shares in these Canadian dividend stocks that are still priced at a good value today.

Canadian Dividend Stocks for a Solid Portfolio: Banks

The big five Canadian banks are known for their solid performance in the last recession. During the financial crisis, they managed to keep a strong position, and maintained their dividends.

In the last three months, I managed to buy some shares in two of the big five Canadian banks, Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Bank of Nova Scotia (TSX:BNS)(NYSE:BNS). They’re the second and third largest banks in Canada.

Toronto-Dominion Bank hadividendss a meaningful presence in the United States. In 2014, 21% of its earnings were from the U.S.

Whenever it reaches a 4% yield or higher, it’s a good buy. Today, Toronto-Dominion Bank costs $53 per share with a 3.9% yield.

Based on a historical normal multiple of 12.6, the shares should trade  closer to $58. So, the bank shares are slightly undervalued with roughly an 8% discount.

Bank of Nova Scotia is an international bank with operations in North America, Latin America, the Caribbean and Central America, and parts of Asia. Around $60 today, it yields 4.6%. Typically, when it yields 4.5% or higher, it’s a good buy. Based on a historical normal multiple of 12.4, it should trade closer to $70. So, the bank shares has a margin of safety of over 14%.

Today, Bank of Nova Scotia stands out from the two because it is cheaper and has a higher yield.
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Which Utilities to Buy On The Utilities Dip?

I notice some utilities have dipped as much as 20% from their 52-week highs. The dip maybe a rotation of funds out of the typically slower growth utilities sector for the purpose of profit-taking, or maybe investors are worried that interest rate hikes will cause the typical high-yielding utilities to dip further.

Because of the dip, I reviewed the 30 utilities in The Utilities Select Sector SPDR Fund (NYSEARCA:XLU) to see if there are treasures to be found. I filtered down to one utility that has had stable, growing earnings for more than a decade.

Southern Co, a Stable Utility with 5% Yield

Here, I present Southern Co (NYSE:SO), which has a S&P Credit Rating of A, sustainable debt levels, and is trading close to a price-to-earnings ratio (P/E) of 15 priced around $43 per share today.

Southern Co. fundamental analysis graph

I believe it’s fairly priced today, hitting the orange earnings line. The blue normal P/E line indicates that it has historically traded at a P/E of 16.

Since 2005, the company has increased dividends by 3-4% per year. I’d say that’s keeping pace with inflation. With a juicy yield of 5%, and growing say at 3% going forward, it should keep pace with general market returns of 7%.

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