Wisdom from the Vault — Plus a High-Yield Stock Warren Buffett Might Love

low risk high yield

Today, I’m recommending a high-yield stock Warren Buffett might love. But first, in these tumultuous times, when we’re all trying to maintain personal equilibrium while consuming massive amounts of information and maintaining social distance, I thought it might be helpful to start this column with a few timeless quotations from wise people.

The first comes from Raymond Chandler, who was a heck of a writer back in the ‘50s, creating characters that were ably brought to life by Humphrey Bogart. Like me, he preferred reading to television, a medium that was in its infancy then. Consider this quotation.

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“Television’s perfect. You turn a few knobs, a few of those mechanical adjustments at which the higher apes are so proficient, and lean back and drain your mind of all thought. And there you are watching the bubbles in the primeval ooze. You don’t have to concentrate. You don’t have to react. You don’t have to remember. You don’t miss your brain because you don’t need it. Your heart and liver and lungs continue to function normally. Apart from that, all is peace and quiet. You are in the man’s nirvana. And if some poor nasty minded person comes along and says you look like a fly on a can of garbage, pay him no mind. He probably hasn’t got the price of a television set.”

On the same topic, here’s a quotation from Steve Jobs, the man responsible for the iPhone and much, much more.

“The most corrosive piece of technology that I’ve ever seen is called television — but then, again, television, at its best, is magnificent.”

A lot of people today don’t know that Steve Jobs, who co-founded Apple (AAPL), was actually pushed out of the company in 1985 after a power struggle with then-CEO John Sculley, who had done very well at Pepsi-Cola and been brought on board to manage Apple. The thinking then was that Jobs was too much of an oddball, and that Apple needed a more corporate touch to prevail as it tried to expand beyond its identity as the computer for creative people. Eventually sanity prevailed and 12 years later, Jobs was CEO of Apple.

Which brings me to this quotation from Stephen Hawking.

“The thing about smart people is that they seem like crazy people to dumb people.”

On that note, consider this quotation from Nikola Tesla, back in 1919.

“My project was retarded by the laws of nature. The world was not prepared for it. It was too far ahead of time. But the same laws will prevail in the end and make it a triumphal success.”

And then there’s the man who named his company after Mr. Tesla, Elon Musk.

“My vision is for a fully reusable rocket transport system between Earth and Mars that is able to re-fuel on Mars – this is very important – so you don’t have to carry the return fuel when you go there.”

I have no doubt that vision will be achieved—and probably in Musk’s lifetime—but to some people, that may seem crazy (note the quote by Stephen Hawking above).

Admittedly, Musk is famously inept at the politics of business, but one scientist who did understand people very well was Carl Sagan, whose quotation follows.

“When you realize that no one really knows what they are doing and that everyone is doing the best they can according to their own level of consciousness, life gets a lot easier.”

Okay, that’s it for scientists. The last quotation comes from today’s most respected investor, the 89-year-old Warren Buffett, who wrote:

“Mr. Market is kind of a drunken psycho. Some days he gets very enthused, some days he gets very depressed. And when he gets really enthused… you sell to him, and if he gets depressed, you buy from him.”

A High-Yield Stock Warren Buffett Might Love

Obviously, Warren is looking around these days, as Mr. Market has become very depressed. So here’s a well-known company and high-yield stock he might be looking at that you should consider, too, especially if you like dividends.

Dow Inc. (DOW – yield 11.0%) is a commodity chemicals company with manufacturing facilities in 31 countries. Dow derives roughly 50% of profits from its polyethylene business. Management is focused on cost-cutting, debt repayment and returning cash to shareholders. The consensus earnings outlook came down in March due to business disruptions associated with the coronavirus. Analysts now expect full-year EPS of $3.09 and $3.75 in 2020 and 2021, reflecting (11.5%) and 21.4% annual growth. But the stock is down, too, so the P/E is a low 8.3. For investors seeking dividends, the 11.0% dividend yield is compelling.

Despite this chart, Dow Inc. (DOW) is a great high-yield stock.For more information on this stock, as well as other undervalued stocks, I recommend Crista Huff’s Cabot Undervalued Stocks Advisor.

To learn more, click here.


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