Warren Buffett is selling more stocks than he's buying these days. In the second quarter of 2023, his Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) was a net seller of stocks by nearly $8 billion.
The legendary investor did initiate three new positions in Q2. He added to Berkshire's stake in two other stocks. However, he trimmed the conglomerate's position in five stocks.
Buffett also just dumped these three dividend stocks. Should you?
1. McKesson
Buffett first bought shares of healthcare services company McKesson(NYSE: MCK) in the first quarter of 2022. He increased Berkshire's stake in the stock in the subsequent quarter to around 3.2 million shares.
It didn't take long for the attraction to fade, though. In the fourth quarter of 2022, Buffett sold around 10.7% of Berkshire's position in McKesson. In Q1 of 2023, he reduced the conglomerate's stake by another 19.8%. The final sale came in Q2, with Berkshire completely exiting its position in the company.
Although he didn't own McKesson stock for a long period, Buffett raked in a tidy profit. Shares of the healthcare company jumped more than 70% between the beginning of 2022 and the end of Q2 2023. Buffett also made a little extra from McKesson's dividend, which currently yields 0.59%.
2. Marsh & McLennan
It was a similar story for Buffett with Marsh & McLennan(NYSE: MMC). He first bought shares of the professional services firm for Berkshire's portfolio in the fourth quarter of 2020. The next quarter, he scooped up more of the stock and increased Berkshire's stake to nearly 4.3 million shares.
However, by Q2 of 2021, Buffett had begun to curtail Berkshire's position in the company. The selling continued into the third and fourth quarters. Berkshire didn't make any trades in the stock throughout 2022. In the second quarter of this year, though, Buffett threw in the towel on Marsh & McLennan completely.
Again, the Oracle of Omaha came out on top with this investment. Marsh & McLennan's shares jumped close to 65% between the beginning of 2020 Q4 and the end of 2023 Q2. The professional services firm's dividend, which currently yields 1.5%, added to Berkshire's profits.
3. Vitesse Energy
Vitesse Energy(NYSE: VTS) is an outlier for Buffett in several ways. First, Berkshire's position resulted from Jefferies' spin-off of the oil company in January 2023. The conglomerate has owned shares of Jefferies since the third quarter of 2022.
Second, Buffett treated Vitesse Energy stock like a hot potato. He completely exited Berkshire's position within a few months.
Third, Vitesse ranked as one of the few ultra-high-yield dividend stocks in Berkshire's portfolio. Its dividend yield currently stands at nearly 8.4%.
However, Vitesse Energy could have still made Buffett at least a little profit during his short time holding the stock. In addition to the juicy dividends, Vitesse shares rose nearly 9% during the first quarter of 2023 and ended the first half of the year up 28%.
Follow the leader?
Should you follow in Buffett's footsteps by selling these three dividend stocks? Not necessarily.
McKesson has a rock-solid business. Over 90% of the company's total revenue is generated by its U.S. pharmaceuticals distribution segment, which should perform well, regardless of macroeconomic factors. McKesson stock is also reasonably valued, with shares trading at a forward price-to-earnings ratio of 16x. Those are attributes that could be appealing to many long-term investors.
Marsh & McLennan's business is performing well, with adjusted earnings per share jumping 16% year over year in Q2. However, the stock is a little pricey, with a forward earnings multiple of 24.7x. My view is that there are better picks in today's market.
That leaves Vitesse Energy. I think that income investors still have plenty of reasons to like this stock, with that super-high yield at the top of the list. Vitesse's share price will likely be somewhat volatile, though, since its fortunes hinge largely on oil prices.
10 stocks we like better than Vitesse Energy
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Vitesse Energy wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of August 21, 2023
Keith Speights has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway and Vitesse Energy. The Motley Fool recommends McKesson. The Motley Fool has a disclosure policy.
