Foreword
As supplement to this article, please note that Kiplinger has published an online slideshow detailing the 65 S&P Dividend Aristocrats for 2020. The article is entitled 65 Best Dividend Stocks You Can Count On in 2020. You will find it written here by Dan Burrows, a contributing editor.
While more than half this collection of now 65 S&P 500 Dividend Aristocrats are too pricey to justify their skinny dividends, 60% of the top 10 by yield live up to the ideal of offering annual dividends (from a $1K investment) exceeding their price per share.
In the autumn market advance, it is now possible for six - Exxon Mobil Corp. (XOM), AT&T Inc. (T), People's United Financial (PBCT), Franklin Resources, Inc. (BEN), Walgreens Boots Alliance (WBA), and Amcor PLC (AMCR) of 11 highest-yield S&P 500 dividend Aristocrat stocks - to stay fair-priced with their annual yield (from $1K invested) meeting or exceeding their single share prices by year's end.
In the wake of the Ides of March dip, the time to snap up those six top yield Aristocrat dogs is now... unless another big bearish drop in price looms ahead. (At which time your strategy would be to add to your position in any of the six you then hold).
Actionable Conclusions (1-10): Analysts Predict 11.07% To 20.10% Top Ten Aristocrat Net Gains To December 2021
Four of the ten top Aristocrats by yield were verified as being among these top 10 gainers for the coming year based on analyst one-year target prices. (They are tinted gray in the chart below). Thus, this yield-based October forecast for Aristocrats (as graded by Brokers) was 40% accurate.
Projections based on estimated dividend returns from $1,000 invested in each of the highest-yielding stocks and their aggregate one year-analyst median target prices, as reported by YCharts, created the 2020-21 data points. Note: Target prices by lone analysts were not applied. Ten probable profit-generating trades projected to December 17, 2021, were:
Source: YCharts.com
Chevron Corp. (CVX) was projected to net $200.98, based on target price estimates from twenty-six analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 35% more than the market as a whole.
Exxon Mobil Corp. was projected to net $176.56 based on dividends, plus the median of target price estimates from twenty-five analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 36% more than the market as a whole.
Cardinal Health Inc. (CAH) was projected to net $171.13, based on a median of target estimates from nineteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 3% more than the market as a whole.
Realty Income Corp. (O) netted $160.14 based on a median target price estimate from twenty analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 38% less than the market as a whole.
Leggett & Platt Inc (LEG) was projected to net $159.61, based on dividends, plus the median of target price estimates from four analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 43% more than the market as a whole.
Kimberly Clark Corp (KMB) was projected to net $138.62, based on dividends, plus the median of target price estimates from sixteen analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 51% less than the market as a whole.
Raytheon Technologies Corp (RTX) was projected to net $138.08, based on the median of target price estimates from nineteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 43% more than the market as a whole.
AbbVie Inc (ABBV) was projected to net $136.94, based on the median of target price estimates from twenty-two analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 16% less than the market as a whole.
McDonald's Corp (MCD) was projected to net $131.95, based on a median target price estimate from thirty-three analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 42% less than the market as a whole.
Archer-Daniels Midland Co (ADM) was projected to net $110.74, based on dividends, plus the median of target price estimates from fourteen analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 14% less than the market as a whole.
The average net gain in dividend and price was estimated to be 15.27% on $10k invested as $1k in each of these 10 stocks. The average Beta showed these estimates subject to risk/volatility 1% under the market as a whole.
Actionable Conclusion (11): (Bear Alert) Analysts Predicted Two Dividend Aristocrats To Lose 6.1% & 8.71% By December 2021
The probable losing trades revealed by Y-Charts to 2021 were:
Nucor Corp (NUE) lost $61.05 net per the median of target estimates from twelve analysts, including dividends, and broker fees. The Beta number showed this estimate subject to risk/volatility 33% more than the market as a whole.
Franklin Resources lost $87.12 net per the median of target estimates from fifteen analysts, including dividends, and broker fees. The Beta number showed this estimate subject to risk/volatility 24% over the market as a whole.
The average net loss in dividend and price was estimated to be 7.41% on $2k invested as $1k in each of these two stocks. The average Beta showed these estimates subject to risk/volatility 29% over the market as a whole.
Pinterest.com
The Dividend Dogs Rule
Stocks earned the "dog" moniker by exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where (3) yield (dividend/price) grew higher than their peers. Thus, the highest-yielding stocks in any collection became known as "dogs." More precisely, these are in fact best called "underdogs" even if they are "Aristocrats."
Top 50 Dividend Aristocrats By Broker Targets
Source: us.spindices/YCharts.com
This scale of broker-estimated upside (or downside) for stock prices provides a scale of market popularity. Note: No broker coverage or one broker coverage produced a zero score on the above scale. This scale can be taken as an emotional component as opposed to the strictly monetary and objective dividend/price yield-driven report below. As noted above, these scores may also be taken as contrarian.
Top 50 Dividend Aristocrats By Yield
Source: us.spindices/YCharts.com
Actionable Conclusions (12-21): Ten 10 Stocks By Yield Are The December Dogs of The Dividend Aristocrats
Top 10 Aristocrats selected 12/17/20 by yield represented six of eleven Morningstar sectors. Two energy representatives placed first, and third, Exxon Mobil [1], and Chevron [3].
In second place was AT&T, Inc. [2], the lone communication services representative listed.
Following in fourth and ninth were the two financial services representatives, People's United Financial Inc [4], and Franklin Resources Inc [9].
Two healthcare representatives in the top ten placed fifth, and eighth, AbbVie [5], and Walgreens Boots Alliance [8].
Then, two real estate firms placed sixth and seventh, Federal Real Estate Investment Trust (FRT) [6], and Realty Income Corp [7].
Finally, one utilities firm placed tenth, Consolidated Edison (ED) [10], and completed these S&P Dividend Aristocrats top 10 by yield for December.
Source: YCharts.com
Actionable Conclusions: (22-31) Ten Aristocrats Showed 16.23% To 36.49% Upsides To December 2021; (32) On The Downside Were Seven -0.14%-12.16% Losers
To quantify top-yield rankings, analyst median price target estimates provided a "market sentiment" gauge of upside potential. Added to the simple high-yield metrics, analyst median price target estimates became another tool to dig-out bargains.
Analysts Estimated A 28.43% Disadvantage For Five Highest Yield, Lowest Priced of Top Ten Dividend Aristocrats To December 2021
Ten top Aristocrats were culled by yield for their monthly update. Yield (dividend/price) results verified by YCharts did the ranking.
Source: YCharts.com
As noted above, top 10 Aristocrats selected 12/17/20 showing the highest dividend yields represented six of eleven in the Morningstar sector scheme.
Actionable Conclusions: Analysts Estimated The Five Lowest-Priced Of Ten Highest-Yield Dividend Aristocrats (33) Delivering 6.31% Vs. (34) 8.81% Net Gains by All Ten by December 17, 2021
Source: YCharts.com
$5,000 invested as $1k in each of the five lowest-priced stocks in the top ten Dividend Aristocrats kennel by yield were predicted by analyst one-year targets to deliver 28.43% LESS gain than $5,000 invested as $.5k in all 10. The seventh lowest priced Aristocrats top yield stock, Chevron Corp., was projected to deliver the best net gain of 20.10%.
Source: YCharts.com
The five lowest-priced top-yield Aristocrats for December 17 were: People's United Financial Inc., Franklin Resources Inc., AT&T, Inc., Walgreens Boots Alliance, and Exxon Mobil Corp, with prices ranging from $12.89 to $43.48
The five higher-priced top-yield Aristocrats for December 17 were: Realty Income Corp, Consolidated Edison Inc., Chevron Corp., Federal Realty Investment Trust, and AbbVie Inc, whose prices ranged from $61.03 to $104.89.
This distinction between five low-priced dividend dogs and the general field of ten reflected Michael B. O'Higgins' "basic method" for beating the Dow. The scale of projected gains based on analyst targets added a unique element of "market sentiment" gauging upside potential. It provided a here-and-now equivalent of waiting a year to find out what might happen in the market. Caution is advised, since analysts are historically only 20% to 80% accurate on the direction of change and just 0% to 20% accurate on the degree of change.
Afterword
If somehow you missed the suggestion of the six stocks ripe for picking at the start of the article, here is a repeat of the list at the end:
The following six (as of 12/17/20) realized the ideal of offering annual dividends from a $1K investment exceeding their single share prices: Exxon Mobil Corp, AT&T Inc, People's United Financial, Franklin Resources Inc, Walgreens Boots Alliance, and Amcor PLC.
Since six of the top Aristocrats shares are now priced less than the annual dividends paid out from a $1K investment, the following chart compares five of those six with the ideal of all ten top dogs priced to that ideal.
Source: YCharts.com
S&P 500 Aristocrats Alphabetical by Ticker Symbol
Source: YCharts.com
The net gain/loss estimates above did not factor in any foreign or domestic tax problems resulting from distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.
Stocks listed above were suggested only as possible reference points for your Dividend Aristocrats dog stock purchase or sale research process. These were not recommendations.
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