5 Stocks That Warren Buffett Would Love: Part II

Yesterday, I wrote about stocks that Warren Buffett would love. 

I introduced five picks that are often mentioned when analysts talk about potential takeover targets by the guru investor from Omaha.

Today I will continue this stock idea spinning by showing you additional companies that fulfill the following criteria:

- Market Capitalization from $15 Billion to $40 Billion

- Capital Expenditures / Net Fixed Assets under 10%

- 5-Year Average Growth in ROIC in Highest 50%

- P/E Ratio Below Average Company Value in Home Market

- Return on Common Equity over 10%

- Excludes Banks, Brokerages, Asset Managers, Technology, Biotechnology Companies

There are a few stocks available on the market that fulfill these restrictions. Some of those stocks are still in his latest portfolio but there are also many fresh ideas as you might have seen in the first part of this article serial.

Additional 5 stocks that Warren Buffett would love are...

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Warren Buffett's Targets Part I: Potential White Elephants Of The Guru Investor

Warren Buffett is one of the most trusted and popular investors on the market. He made from a dozen dollars over USD 58 billion. On this blog, I also cover the activities of the guru investor and publish his trades and thoughts.

There are several speculations on the market what Warren Buffett buys next. He has around USD 15 billion in cash, a number that is growing monthly. Some of Warren Buffett's criteria are:

- Market Capitalization from $15 Billion to $40 Billion

- Capital Expenditures / Net Fixed Assets > 10%

- 5-Year Average Growth in ROIC in Highest 50%

- P/E Ratio < Average Company Value in Home Market

- Return on Common Equity > 10%

- Excludes Banks, Brokerages, Asset Managers, Technology, Biotechnology Companies

By screening the market with the above mentioned criteria, there are popping out a few interesting stocks. Some are often discussed like General Mills or Hershey, W.W. Grainger or FedEx.

Big takeovers make sense for Warren Buffett, also when they are higher valuated. More important are the stable cash flows. The strategy is to buy stocks that have big brands and produce products. They buy commodities and create wonderful things for people all over the world.

5 picks that Warren Buffett would like to consider....

General Mills (NYSE:GIS) has a market capitalization of $30.78 billion. The company employs 41,000 people, generates revenue of $17.774 billion and has a net income of $1.793 billion. General Mills’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3.443 billion. The EBITDA margin is 19.37 percent (the operating margin is 16.04 percent and the net profit margin 10.09 percent).

Financial Analysis: The total debt represents 35.17 percent of General Mills’s assets and the total debt in relation to the equity amounts to 119.44 percent. Due to the financial situation, a return on equity of 28.34 percent was realized by General Mills. Twelve trailing months earnings per share reached a value of $2.69. Last fiscal year, General Mills paid $0.99 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 18.31, the P/S ratio is 1.73 and the P/B ratio is finally 4.73. The dividend yield amounts to 3.08 percent and the beta ratio has a value of 0.20.

Long-Term Stock Price Chart Of General Mills (GIS)

Long-Term Dividend Payment History of General Mills (GIS)

Long-Term Dividend Yield History of General Mills (GIS)

Hershey (NYSE:HSY) has a market capitalization of $21.45 billion. The company employs 12,100 people, generates revenue of $6.644 billion and has a net income of $660.93 million. Hershey’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1.399 billion. The EBITDA margin is 21.07 percent (the operating margin is 16.72 percent and the net profit margin 9.95 percent).

Financial Analysis: The total debt represents 40.10 percent of Hershey’s assets and the total debt in relation to the equity amounts to 183.93 percent. Due to the financial situation, a return on equity of 69.79 percent was realized by Hershey. Twelve trailing months earnings per share reached a value of $3.45. Last fiscal year, Hershey paid $1.56 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 27.80, the P/S ratio is 3.21 and the P/B ratio is finally 20.71. The dividend yield amounts to 2.02 percent and the beta ratio has a value of 0.21.

Long-Term Stock Price Chart Of Hershey (HSY)

Long-Term Dividend Payment History of Hershey (HSY)

Long-Term Dividend Yield History of Hershey (HSY)

W.W. Grainger (NYSE:GWW) has a market capitalization of $17.65 billion. The company employs 21,100 people, generates revenue of $8.950 billion and has a net income of $698.85 million. W.W. Grainger’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1.357 billion. The EBITDA margin is 15.16 percent (the operating margin is 12.64 percent and the net profit margin 7.81 percent).

Financial Analysis: The total debt represents 11.26 percent of W.W. Grainger’s assets and the total debt in relation to the equity amounts to 18.67 percent. Due to the financial situation, a return on equity of 23.97 percent was realized by W.W. Grainger. Twelve trailing months earnings per share reached a value of $11.25. Last fiscal year, W.W. Grainger paid $3.06 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 22.61, the P/S ratio is 1.97 and the P/B ratio is finally 5.84. The dividend yield amounts to 1.46 percent and the beta ratio has a value of 0.92.

Long-Term Stock Price Chart Of W.W. Grainger (GWW)

Long-Term Dividend Payment History of W.W. Grainger (GWW)

Long-Term Dividend Yield History of W.W. Grainger (GWW)

CBS Corporation (NYSE:CBS) has a market capitalization of $37.00 billion. The company employs 20,930 people, generates revenue of $14.089 billion and has a net income of $1.669 billion. CBS Corporation’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3.594 billion. The EBITDA margin is 25.51 percent (the operating margin is 20.95 percent and the net profit margin 11.85 percent).

Financial Analysis: The total debt represents 22.38 percent of CBS Corporation’s assets and the total debt in relation to the equity amounts to 57.98 percent. Due to the financial situation, a return on equity of 16.24 percent was realized by CBS Corporation. Twelve trailing months earnings per share reached a value of $2.94. Last fiscal year, CBS Corporation paid $0.44 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 20.96, the P/S ratio is 2.63 and the P/B ratio is finally 3.80. The dividend yield amounts to 0.78 percent and the beta ratio has a value of 2.27.

Long-Term Stock Price Chart Of CBS Corporation (CBS)

Long-Term Dividend Payment History of CBS Corporation (CBS)

Long-Term Dividend Yield History of CBS Corporation (CBS)

FedEx (NYSE:FDX) has a market capitalization of $44.34 billion. The company employs 112,000 people, generates revenue of $44.287 billion and has a net income of $1.561 billion. FedEx’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $5.538 billion. The EBITDA margin is 12.50 percent (the operating margin is 5.76 percent and the net profit margin 3.52 percent).

Financial Analysis: The total debt represents 8.91 percent of FedEx’s assets and the total debt in relation to the equity amounts to 17.19 percent. Due to the financial situation, a return on equity of 9.72 percent was realized by FedEx. Twelve trailing months earnings per share reached a value of $5.19. Last fiscal year, FedEx paid $0.56 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 27.37, the P/S ratio is 1.00 and the P/B ratio is finally 2.60. The dividend yield amounts to 0.42 percent and the beta ratio has a value of 1.50.

Long-Term Stock Price Chart Of FedEx (FDX)

Long-Term Dividend Payment History of FedEx (FDX)

Long-Term Dividend Yield History of FedEx (FDX)

If you would like to receive more thoughts about Warren Buffett, you should subscribe to my free e-mail list. Alternatively, you can follow me on Facebook or Twitter.

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*I am long GIS. I receive no compensation to write about these specific stocks, sector or theme. I don't plan to increase or decrease positions or obligations within the next 72 hours.

For the other stocks: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.

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6 Stocks With New Billion Share Buyback Announcements

I love dividends, growth and also share buybacks. 

Good companies pay half of its net income via dividends to shareholders and the second half should be invested in own shares in order to increase the share of all investors of the company. It's a very tax-efficent way to create shareholder value if the corporate don't overpay it's own intrinsic value.

Today would like to present you six of the latest stocks with over a billion in refreshed or new share buyback programs. The amounts are limited for the next five years or so.

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5 Great Dividend Paying Stocks With Double-Digit Short-Term Dividend Growth

As dividend investor, I always look for great investment opportunites that pays-off within a decade or so. Only a quick return can ensure a good total performance.

The biggest problem with my desk research is that I ever find tons of stock ideas that have performed very well in the past and have hiked dividends with high rates over decades but over the time, they have weaken and show a slowing dividend growth rate. That's not what I like to see.

Today I would highlight five of the top dividend growth stocks that have kept a strong dividend increasing rate over the short-term. Those stocks have raised their dividend distributions over the past year by more than 10 percent.

These are some great dividend stock ideas with highest short-term dividend growth rate ratios:

Philip Morris International (NYSE:PM) has a market capitalization of $144.11 billion. The company employs 87,100 people, generates revenue of $77.393 billion and has a net income of $9.154 billion. Philip Morris International’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $14.827 billion. The EBITDA margin is 19.16 percent (the operating margin is 17.89 percent and the net profit margin 11.83 percent).

Financial Analysis: The total debt represents 60.63 percent of Philip Morris International’s assets. Twelve trailing months earnings per share reached a value of $5.28. Last fiscal year, Philip Morris International paid $3.24 in the form of dividends to shareholders. Dividend growth rate: 10.4 percent.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 16.99, the P/S ratio is 1.85 and the P/B ratio is finally not calculable. The dividend yield amounts to 4.21 percent and the beta ratio has a value of 0.93.

Long-Term Stock Price Chart Of Philip Morris International (PM)

Long-Term Dividend Payment History of Philip Morris International (PM)

Long-Term Dividend Yield History of Philip Morris International (PM)

Chevron Corporation (NYSE:CVX) has a market capitalization of $233.93 billion. The company employs 62,000 people, generates revenue of $241.909 billion and has a net income of $26.336 billion. Chevron Corporation’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $59.975 billion. The EBITDA margin is 24.79 percent (the operating margin is 19.15 percent and the net profit margin 10.89 percent).

Financial Analysis: The total debt represents 5.23 percent of Chevron Corporation’s assets and the total debt in relation to the equity amounts to 8.93 percent. Due to the financial situation, a return on equity of 20.30 percent was realized by Chevron Corporation. Twelve trailing months earnings per share reached a value of $12.22. Last fiscal year, Chevron Corporation paid $3.51 in the form of dividends to shareholders. Dividend growth rate: 11.1 percent.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 9.90, the P/S ratio is 0.97 and the P/B ratio is finally 1.73. The dividend yield amounts to 3.30 percent and the beta ratio has a value of 0.95.

Long-Term Stock Price Chart Of Chevron Corporation (CVX)

Long-Term Dividend Payment History of Chevron Corporation (CVX)

Long-Term Dividend Yield History of Chevron Corporation (CVX)

Caterpillar (NYSE:CAT) has a market capitalization of $53.55 billion. The company employs 122,402 people, generates revenue of $65.875 billion and has a net income of $5.708 billion. Caterpillar’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $12.167 billion. The EBITDA margin is 18.47 percent (the operating margin is 13.01 percent and the net profit margin 8.66 percent).

Financial Analysis: The total debt represents 44.92 percent of Caterpillar’s assets and the total debt in relation to the equity amounts to 228.97 percent. Due to the financial situation, a return on equity of 37.36 percent was realized by Caterpillar. Twelve trailing months earnings per share reached a value of $5.25. Last fiscal year, Caterpillar paid $2.02 in the form of dividends to shareholders. Dividend growth rate: 14.3 percent.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 16.02, the P/S ratio is 0.81 and the P/B ratio is finally 3.15. The dividend yield amounts to 2.85 percent and the beta ratio has a value of 1.96.

Long-Term Stock Price Chart Of Caterpillar (CAT)

Long-Term Dividend Payment History of Caterpillar (CAT)

Long-Term Dividend Yield History of Caterpillar (CAT)

General Electric (NYSE:GE) has a market capitalization of $273.27 billion. The company employs 305,000 people, generates revenue of $147.359 billion and has a net income of $14.902 billion. General Electric’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $29.339 billion. The EBITDA margin is 19.91 percent (the operating margin is 11.81 percent and the net profit margin 10.11 percent).

Financial Analysis: The total debt represents 60.42 percent of General Electric’s assets and the total debt in relation to the equity amounts to 336.56 percent. Due to the financial situation, a return on equity of 12.24 percent was realized by General Electric. Twelve trailing months earnings per share reached a value of $1.40. Last fiscal year, General Electric paid $0.70 in the form of dividends to shareholders. Dividend growth rate: 11.8 percent.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 19.34, the P/S ratio is 1.86 and the P/B ratio is finally 2.29. The dividend yield amounts to 2.81 percent and the beta ratio has a value of 1.84.

Long-Term Stock Price Chart Of General Electric (GE)

Long-Term Dividend Payment History of General Electric (GE)

Long-Term Dividend Yield History of General Electric (GE)

Costco Wholesale (NASDAQ:COST) has a market capitalization of $53.75 billion. The company employs 103,000 people, generates revenue of $105.156 billion and has a net income of $2.061 billion. Costco Wholesale’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3.999 billion. The EBITDA margin is 3.80 percent (the operating margin is 2.90 percent and the net profit margin 1.96 percent).

Financial Analysis: The total debt represents 16.50 percent of Costco Wholesale’s assets and the total debt in relation to the equity amounts to 46.14 percent. Due to the financial situation, a return on equity of 17.58 percent was realized by Costco Wholesale. Twelve trailing months earnings per share reached a value of $4.63. Last fiscal year, Costco Wholesale paid $8.17 in the form of dividends to shareholders. Dividend growth rate: 13.6 percent.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 26.57, the P/S ratio is 0.51 and the P/B ratio is finally 4.95. The dividend yield amounts to 1.01 percent and the beta ratio has a value of 0.65.

Long-Term Stock Price Chart Of Costco Wholesale (COST)

Long-Term Dividend Payment History of Costco Wholesale (COST)

Long-Term Dividend Yield History of Costco Wholesale (COST)

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Canadian Telecom BCE Joins The Dividend Yield Passive Income Portfolio

On the last trading day of the week, I opened a new position within the telecom sector. I purchased 25 shares of the Canadian telecom and communication company BCE. BCE yields at 5.11 percent and as a low forward P/E of 14.37. The current P/E is also below 15 at 14.80.

Earnings growth of 3.1 percent is predicted for the next five years. I also bought the smaller rival Rogers Communications but the position is still 3.41 percent in the negative area. Behind Rogers and AT&T, it's my third stake withint the telecom sector.

The corporate provides communications solutions to residential, business, and wholesale customers primarily in Canada. The company offers local and long distance telephone services under the Bell Home Phone brand; direct-to-home satellite television (TV) services under the Bell TV name; Internet protocol TV services under the Bell Fibe TV brand; and personal video recorders and online access services. It also provides data services, including Internet access services under the Bell Internet name; Internet protocol based services; and information and communications technology solutions. In addition, the company engages in the rental, sale, and maintenance of business terminal equipment; sale of TV set-top boxes; and provision of network installation and maintenance services for third parties.

Latest Portfolio Transactions (Click to enlarge)

Latest Portfolio I (Click to enlarge)

Latest Portfolio II (Click to enlarge)

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For readers who are new to the matter and my dividend growth philosophy: I funded a virtual portfolio with 100k on October 04, 2012 with the aim to build a passive income stream that doubles each five to ten years. I plan to purchase each week one stock holding until the money is fully invested. The total number of constituents is expected at 50 – 70 companies and the dividend income should be at least at $3,000 per year.

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The position cost $1,111.50 and should bring over $50 bucks in dividends over the year. The full-year estimated dividend income is now at $2,703.40. Only $300 dollars are necessary to hit the goal of $3,000 by the end of this year. With cash of $21,707.22 it is still possible to reach this goal.

Earnings and Dividends of BCE, Inc.

The portfolio holdings are up 10.91 percent since the date of funding and buying in average. Due to the low buying process and high cash value over the past year, the complete portfolio performance is only 10.09 percent.

Latest Portfolio Performance (Click to enlarge)

Here is the income perspective of the portfolio

Sym	Name	P/E Ratio	Dividend Yield	Buy	# Shrs	Income	Value
TRI	Thomson Reuters C	34.29	3.41	28.90	50	$64.75	$1,914.00
LMT	Lockheed Martin C	14.53	3.38	92.72	20	$92.00	$2,762.20
INTC	Intel Corporation	13.01	3.74	21.27	50	$45.00	$1,204.50
MCD	McDonald's Corpor	17.55	3.17	87.33	25	$77.00	$2,425.25
WU	Western Union Com	11.52	2.88	11.95	100	$50.00	$1,721.00
PM	Philip Morris Int	17.08	3.92	89.76	30	$105.87	$2,682.30
JNJ	Johnson & Johnson	20.67	2.74	69.19	20	$50.80	$1,881.00
MO	Altria Group Inc	14.63	4.8	33.48	40	$72.00	$1,502.00
SYY	Sysco Corporation	19.84	3.38	31.65	40	$44.80	$1,325.20
DRI	Darden Restaurant	18.52	4.03	46.66	30	$63.00	$1,564.80
CA	CA Inc.	13.52	3.16	21.86	50	$50.00	$1,596.50
PG	Procter & Gamble	20.92	2.88	68.72	25	$59.20	$2,062.75
KRFT	Kraft Foods Group	17.26	3.79	44.41	40	$80.00	$2,109.20
MAT	Mattel Inc.	18.49	3.14	36.45	40	$55.60	$1,766.80
PEP	Pepsico Inc. Com	20.02	2.59	70.88	20	$44.20	$1,717.00
KMB	Kimberly-Clark Co	22.43	2.94	86.82	15	$47.55	$1,620.45
COP	ConocoPhillips Co	13.52	3.72	61.06	20	$52.80	$1,473.80
GIS	General Mills In	18.88	2.82	42.13	30	$42.60	$1,516.20
UL	Unilever PLC Comm	18.69	3.52	39.65	35	$48.83	$1,387.75
NSRGY	NESTLE SA REG SHR	19.91	3.02	68.69	30	$65.31	$2,159.10
GE	General Electric	20	2.86	23.39	65	$49.40	$1,758.25
ADP	Automatic Data Pr	25.62	2.31	61.65	25	$43.50	$1,900.25
K	Kellogg Company C	23.79	2.87	61.52	25	$44.50	$1,554.75
KO	Coca-Cola Company	20.65	2.75	38.83	40	$43.80	$1,602.00
RTN	Raytheon Company	14.52	2.55	57.04	20	$43.00	$1,707.20
RCI	Rogers Communicat	12.17	3.74	46.5	50	$84.00	$2,246.50
GPC	Genuine Parts Com	17.82	2.65	77.06	20	$42.12	$1,613.80
TSCDY	TESCO PLC SPONS A	N/A	3.93	17.08	110	$75.79	$1,952.50
APD	Air Products and	23.12	2.56	85.71	15	$41.55	$1,641.75
GSK	GlaxoSmithKline P	20.79	4.5	52.16	30	$71.13	$1,594.80
WMT	Wal-Mart Stores	15.09	2.33	79.25	20	$36.16	$1,559.20
BTI	British American	16.76	3.81	111.13	23	$96.14	$2,539.43
CHL	China Mobile Limi	10.22	4.29	55.32	40	$89.52	$2,084.00
MMM	3M Company Common	19.42	1.97	110.27	15	$37.43	$1,919.85
TUP	Tupperware Brands	18.05	2.57	80.98	15	$33.30	$1,297.65
IBM	International Bus	12.47	2.06	193.17	20	$74.00	$3,599.80
HAS	Hasbro Inc.	18.87	3.08	44.09	30	$46.80	$1,514.40
T	AT&T Inc.	25.7	5.13	34.47	30	$54.00	$1,055.10
WAG	Walgreen Co. Comm	23.12	1.46	44.25	30	$25.95	$1,791.00
AFL	AFLAC Incorporate	9.81	1.63	59.39	20	$21.00	$1,315.00
TGT	Target Corporatio	15.62	2.33	68.69	32	$48.32	$2,083.52
CSCO	Cisco Systems In	12.42	2.81	25.12	90	$58.50	$2,115.90
DE	Deere & Company C	9.36	2.44	84.11	15	$29.85	$1,222.50
RGR	Sturm Ruger & Co	15.25	2.14	51.65	20	$30.88	$1,435.60
LO	Lorillard Inc Co	16.05	4.24	42.3	30	$65.00	$1,543.80
UNP	Union Pacific Cor	16.99	1.86	154.75	8	$22.88	$1,240.32
IDA	IDACORP Inc. Com	13.47	3.12	47.94	20	$31.40	$1,010.80
BAX	Baxter Internatio	16.52	2.88	66.38	20	$37.60	$1,302.60
MSFT	Microsoft Corpora	14.04	2.45	33.88	40	$36.80	$1,511.20
ACN	Accenture plc. Cl	15.32	2.3	77.71	20	$34.80	$1,504.80
BCE	BCE Inc. Common	13.36	3.92	44.26	25	$42.98	$1,106.50
						$2,703.40	$88,716.57
						Average Yield	3.05%
						Yield On Cost	3.38%

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