While 2023 has gotten off to a somewhat decent start, investors that were hammered last year are just now getting December and full-year statements, and they are not pretty. With the Nasdaq down 34% and the S&P 500 almost 20%, most investors had a miserable year. The first half of this year may not be so great either.

Earnings reports for the fourth quarter begin on Friday with the big banks stepping into the spotlight. The onslaught from the S&P 500 will start next week. Many across Wall Street are worried that the results for the quarter will be lousy and the forward guidance could be worse. That is why a good place to look for ideas may be Warren Buffett’s Berkshire Hathaway holdings.

If any investor has stood the test of time, it is Warren Buffett. For years the “Oracle of Omaha” has had a rock-star-like presence in the investing world. His annual Berkshire Hathaway shareholders meeting draws literally thousands of loyal fans who are investors. Known for his long buy-and-hold strategies and his massive portfolio of public and private holdings, Buffett remains one of the preeminent investors in the entire world.

We screened the Berkshire Hathaway portfolio for the six stocks with the highest dividend yields. In a world where total return may be the best plan of action for 2023, these top companies all look well positioned for what could be a difficult first half as the Federal Reserve winds down interest rate increases and earnings likely decline. While these stocks are Buy rated across Wall Street, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Ally Financial

The bank with no buildings may be poised to have a strong fourth quarter and 2023. Ally Financial Inc. (NYSE: ALLY) is a digital financial services company that provides various digital financial products and services to consumer, commercial and corporate customers primarily in the United States and Canada. It was formerly known as GMAC and changed its name in May 2010.

Its Automotive Finance Operations segment offers automotive financing services, including providing retail installment sales contracts, loans and operating leases, term loans to dealers, financing dealer floor plans and other lines of credit to dealers, warehouse lines to automotive retailers and fleet financing. It also provides financing services to companies and municipalities for the purchase or lease of vehicles and vehicle-remarketing services.

The Insurance Operations segment offers consumer finance protection and insurance products through the automotive dealer channel and commercial insurance products directly to dealers. This segment provides vehicle service and maintenance contracts and guaranteed asset protection products, and it underwrites commercial insurance coverages, which primarily insure dealers’ vehicle inventory.
The Mortgage Finance Operations segment manages consumer mortgage loan portfolio that includes bulk purchases of jumbo and low-to-moderate income mortgage loans originated by third parties, as well as direct-to-consumer mortgage offerings.

The Corporate Finance Operations segment provides senior secured leveraged cash flow and asset-based loans to middle market companies, leveraged loans and commercial real estate products to serve companies in the health care industry. The company also offers commercial banking products and services. In addition, it provides securities brokerage and investment advisory services.

Ally Financial stock investors receive a 4.91% dividend. Citigroup has a $34 target price, and the consensus target is $30.95. The stock closed on Monday at $26.20.

Chevron

This integrated giant is a safer way for investors looking to get positioned in the energy sector, and shares have backed up nicely. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide.

The Upstream segment is involved in the exploration, development, production and transportation of crude oil and natural gas; processing, liquefaction, transportation and regasification associated with LNG; transportation of crude oil through pipelines; and transportation, storage and marketing of natural gas, as well as operating a gas-to-liquids plant.

The Downstream segment engages in refining crude oil into petroleum products; marketing crude oil, refined products and lubricants; manufacturing and marketing of renewable fuels; transporting crude oil and refined products by pipeline, marine vessel, motor equipment and rail car; and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives. It is also involved in cash management and debt financing activities, insurance operations, real estate activities and technology businesses.

Chevron posted huge second-quarter results and remains one of the best ways to play energy safely.

Shareholders receive a 3.25% dividend. Chevron stock has a $212 target price at Barclays. The consensus target is $192.44, and shares closed on Monday at $175.18.

Citigroup

This top bank stock also has bounced nicely off the lows, and Warren Buffett bought a massive $2.5 billion worth of shares last summer. Citigroup Inc. (NYSE: C) is a leading global diversified financial service company that provides consumers, corporations and governments a broad range of financial products and services.
Citigroup offers services such as consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management. It operates and does business in more than 160 countries and jurisdictions in North America, Latin America, Asia and elsewhere.

Trading at a still very cheap 7.6 times estimated 2023 earnings, this one looks very reasonable in what remains a volatile stock market and in a sector that has dramatically lagged.

Here, the dividend yield is 4.36%. Oppenheimer’s $87 price target is a Wall Street high. The consensus target is $56.88, and Citigroup stock closed on Monday at $47.54.

HP

Buffett stunned Wall Street last year when Berkshire Hathaway reported a purchase of 121 million shares of this venerable tech giant. HP Inc. (NYSE: HPQ) provides personal computing and other access devices, imaging and printing products and related technologies, solutions and services in the United States and internationally. It serves individual consumers, small and medium-sized businesses and large enterprises, including customers in the government, health and education sectors.

HP’s Personal Systems segment offers commercial and consumer desktop and notebook personal computers, workstations, thin clients, commercial mobility devices, retail point-of-sale systems, displays and other related accessories, software, support and services. The Printing segment provides consumer and commercial printer hardware, supplies, solutions and services, as well as scanning devices. And the Corporate Investments segment includes HP Labs and business incubation projects.

HP stock comes with a 3.70% dividend. The $30 Bernstein target price is a bit higher than the consensus target. Monday’s close was at $28.64.

Jefferies Financial

This broker-dealer is a new holding for Buffett and is a very solid idea for those looking for financials other than money center banks. Jefferies Financial Group Inc. (NYSE: JEF) engages in the investment banking and capital markets and in asset management businesses in the Americas, Europe, Asia and elsewhere.

The company operates via its Investment Banking and Capital Markets, Asset Management, Merchant Banking, and Corporate segments. It provides investment banking, advisory services with respect to mergers or acquisitions, restructurings or recapitalizations and private capital advisory transactions, as well as equity and debt underwriting and corporate lending.
Jefferies also offers financing, securities lending, and other prime brokerage services; equities research and finance; and wealth management services. It provides clients with sales and trading of investment-grade corporate bonds, U.S. and European government and agency securities, municipal bonds, mortgage-backed and asset-backed securities, leveraged loans, consumer loans, high-yield and distressed securities, emerging markets debt, interest rate, and credit derivative products, as well as foreign exchange trade execution and securitization. It manages, invests in and provides services to a diverse group of alternative asset management platforms across a spectrum of investment strategies and asset classes.

Investors receive a 3.50% dividend. Oppenheimer has set a $46 target price. The consensus target for Jefferies Financial stock is $38.50, and shares closed on Monday at $37.75.

Kraft Heinz

Even in bad times, everybody has to eat, and this company always stands to benefit. Kraft Heinz Co. (NASDAQ: KHC) was formed via the merger of H.J. Heinz and Kraft Foods. The company is a leading global food company, with $29 billion in annual revenues generated by such well-known brands as Kraft, Heinz, Oscar Meyer and Maxwell House. Buffett holds a big position in the stock at Berkshire Hathaway.

It is the third-largest food and beverage manufacturer in North America, deriving 76% of revenues from that market and 24% internationally. Additional brands include Oscar Meyer, Maxwell House, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.

Shareholders receive a 3.80% dividend. Deutsche Bank’s $49 price target is higher than the $42.52 consensus target. Kraft Heinz stock closed at $42.20 on Monday.

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With financials and tech in the mix (both of which did poorly in 2022), there may be some big value at play for investors, in addition to the dependable dividends these top companies pay. It makes sense, with the banks coming in Friday with results, to either buy partial positions or wait until they report and then add shares.

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