Foreword
As a supplement to this article, please note that Kiplinger has published an on-line slide show detailing the 64 S&P Dividend Aristocrats (before the RTX merger and spin-offs) and calling out the seven new members for 2020. The article is entitled 64 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, two-thirds of the top ten live up to the idea of showing annual dividends from a $1K investment exceeding their price per share.
In the June market recovery, it was still possible for six (XOM, T, BEN, PBCT, AMCR, and LEG) of the ten highest-yield S&P 500 dividend Aristocrat stocks, to stay fairly priced with their annual yield (from $1K invested) meeting or exceeding their single share prices by year's end. On the downside, Ross Stores (ROST) suspended its dividend payments and departed the list this month.
In the wake of the Ides of March dip, the time to adopt the six top yield Aristocrat dogs is now... unless another big bearish drop in price looms ahead.
Actionable Conclusions (1-10): Analysts Predict 14.44% To 21.23% Aristocrat Net Gains To July 2021
Three of the 10 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 May forecast for Aristocrats (as graded by Brokers) was 30% accurate.
Projections based on estimated dividend returns from $1k 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: One-year target prices by lone analysts were not applied. Ten probable profit-generating trades projected to June 22, 2021 were:
Source: YCharts.com
Raytheon Co. (RTN) was projected to net $212.31, based on the median of target price estimates from 21 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 31% more than the market as a whole.
AT&T Inc. (T) was projected to net $204.90, based on dividends, plus the median of target price estimates from 32 analysts, less broker fees. The Beta number showed this estimate subject to risk 28% less than the market as a whole.
Aflac Inc. (AFL) was projected to net $178.13, based on dividends, plus the median of target price estimates from 13 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 12% less than the market as a whole.
Essex Property Trust (ESS) was projected to net $167.82, based on the median of target price estimates from 24 analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 31% less than the market as a whole.
Archer-Daniels Midland (ADM) was projected to net $166.00 based on dividends, plus the median of target price estimates from 13 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 5% less than the market as a whole.
Coca-Cola Co. (KO) was projected to net $164.95, based on a median of target estimates from 22 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 45% less than the market as a whole.
Consolidated Edison (ED) netted 159.94 based on a median target price estimate from 19 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 79% less than the market as a whole.
Federal Realty Investment Trust (FRT) was projected to net $159.76, based on a median target price estimate from 20 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 8% less than the market as a whole.
Chevron Corp. (CVX) was projected to net $152.97, based on target price estimates from 25 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 30% more than the market as a whole.
Cincinnati Financial Corp. (CINF) was projected to net $144.44 based on dividends, plus the median of target estimates from seven brokers, less transaction fees. The Beta number showed this estimate subject to risk/volatility 50% less than the market as a whole.
The average net gain in dividend and price was estimated to be 17.11% on $10k invested as $1k in each of these 10 stocks. The average Beta showed these estimates subject to risk/volatility 20% under the market as a whole.
Source: flickr.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."
65 Dividend Aristocrats By July 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.
65 Dividend Aristocrats By July Yield
Source: us.spindices/YCharts.com
Actionable Conclusions (12-21): 10 Top Stocks By Yield Are The July Dogs Of The Dividend Aristocrats
Top 10 Aristocrats selected 6/22/20 by yield represented six of 11 Morningstar sectors. Two energy representatives placed first, and fourth, Exxon Mobil (XOM) [1] and Chevron [4]. In second place was AT&T, Inc. [2], the lone communication services representative in the top ten.
Two financial services firms placed third, and fifth, People's United Financial Inc. (PBCT) [3], and Franklin Resources Inc. (BEN) [5]. Following in sixth and ninth were the two real estate representatives, Federal Realty Investment Trust [6], and Realty Income Corp. (O) [9].
One healthcare representative in the top 10 placed seventh, AbbVie (ABBV) [7]. Then, two representing consumer cyclicals placed eighth and tenth, Leggett & Platt Inc. (LEG) [8], and Amcor plc (AMCR) [10], to complete these S&P Dividend Aristocrats top 10 by yield for July.
Source: YCharts.com
Actionable Conclusions: (22-31) 10 Aristocrats Showed 11.6% To 19.3% Upsides To July 2021; (32) Downsides Projected Six -.07%-7.50% Losers
To quantify top-yield rankings, analyst median price target estimates provide 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 33.29% Disadvantage For Five Highest Yield, Lowest Priced of Top 10 Dividend Aristocrats To July 2021
10 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 6/22/20 showing the highest dividend yields represented six of 11 in the Morningstar sector scheme.
Actionable Conclusions: Analysts Estimated The 5 Lowest-Priced Of Ten Highest-Yield Dividend Aristocrats (33) Delivering 6.03% Vs. (34) 9.04% Net Gains by All 10 by July 2021
Source: YCharts.com
$5k invested as $1k in each of the five lowest-priced stocks in the top 10 Dividend Aristocrats kennel by yield were predicted by analyst one-year targets to deliver 33.29% LESS gain than $5k invested as $.5k in all 10. The fourth lowest-priced Aristocrats top yield stock, AT&T Inc., was projected to deliver the best net gain of 20.49%.
Source: YCharts.com
The five lowest-priced top-yield Aristocrats for June 22 were: Amcor plc, People's United Financial Inc., Franklin Resources Inc., AT&T, Inc., Leggett & Platt Inc., with prices ranging from $10.27 to $33.90
The five higher-priced top-yield Aristocrats for June 22 were: Exxon Mobil Corp., Realty Income Corp., Federal Realty Investment Trust, Chevron Corp., AbbVie, whose prices ranged from $46.42 to $97.27.
This distinction between five low-priced dividend dogs and the general field of 10 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.
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.
Graphs and charts were compiled by Rydlun & Co., LLC from data derived from www.indexarb.com, YCharts.com, finance.yahoo.com, analyst mean target price by YCharts. Dog photo: flickr.com
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