GlaxoSmithKline plc (ADR) (GSK), ConocoPhillips (COP): Buffett’s Favorite Yielders

Page 2 of 2

ConocoPhillips (NYSE:COP) scores a 16 on my ratings system, which merits further watching. Part of my disappointment is the freezing of the dividend in 2012, but the EGR is also quite low.

The next company is Gannett Co., Inc. (NYSE:GCI), the media company. The company is currently trading at approximately $22 per share and yields 3.60%. It has raised dividends for only two years, as the company was forced to slash its dividend in 2009. Its five-year DGR is 29%, because now that the economy is doing better, management has increased the dividend to nearly pre-recession levels.

Other metrics include analysts’ five-year annual growth estimate (5.6%), the company’s PE (11.2), and its dividend-payout ratio (41%).

As of Dec. 31, 2012, Buffett owned 1.7 million shares worth $37.4 million, comprising 0.04% of his total holdings

Gannett Co., Inc. (NYSE:GCI) actually scores an 18 on my ratings system, and but its two-year history would keep it out of my portfolio. For someone who is not as rigid in their criteria, it would make an excellent addition to a dividend portfolio.

The next company is General Electric Company (NYSE:GE), which is currently trading at approximately $23 and yields 3.30%. It has raised dividends for only two years, as it also was forced to cut its dividend in 2009. Unlike Gannett Co., Inc. (NYSE:GCI), however, General Electric Company (NYSE:GE)’s management has not aggressively increased the dividend, so its five-year DGR is still negative. The company has returned 24.3% over the past twelve months.

Other metrics include analysts’ five-year annual growth estimate (11.3%), the company’s PE (17), and its dividend-payout ratio (54%).

As of Dec. 31, 2012, Buffett owned only 600,000 shares worth $13.8 million, comprising 0.02% of his total holdings. He has lightened up his holdings significantly, from the 7.7 million shares he owned in 1Q 2012.

General Electric Company (NYSE:GE) scores a 13 on my ratings system, and only two of the 7 metrics are above average.

The last company on Mr. Buffett’s list is General Dynamics Corporation (NYSE:GD), which is currently trading at approximately $76 per share and yields 3%. It has raised dividends for 18 years, its five-year DGR is 11.4%, and the company has returned 16.5% over the past twelve months.

Other metrics include analysts’ five-year annual growth estimate (6.4%), the company’s PE (11), and its dividend-payout ratio (37%).

As of Dec. 31, 2012, Buffett owned 3.9 million shares worth $296 million at today’s price, comprising 0.36% of his total holdings.

General Dynamics Corporation (NYSE:GD) also scores an 18 on my ratings system, and I have considered it very closely in the past for inclusion in my portfolio. I am not adding companies at this time, but I would think very seriously about this one if I were.

I’ve created a chart to show how each company scores on each of my criteria.

Years Yield DGR EGR Payout Total Return PE TOTAL
COP 0 4 3 0 3 3 3 16
GCI 0 3 4 1 3 4 3 18
GE 0 2 0 3 2 4 2 13
GD 2 2 3 1 4 3 3 18

I like two of Mr. Buffett’s companies, but I like my ten better.

The article Top 5 Dividend Companies of Warren Buffett originally appeared on Fool.com is written by Karin Hernandez.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Page 2 of 2