65 S&P 500 Dividend Aristocrats Bust Out 4 June Buys

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Foreword

As a supplement to this article, please note that Kiplinger has published an online slide show detailing the latest 2022 65 S&P Dividend Aristocrats. The article, entitled 65 Best Dividend Stocks You Can Count On, is by Dan Burrows, a contributing editor.

Most of this collection of 65 S&P 500 Dividend Aristocrats is too pricey to justify their skinny dividends. However, three of the top ten, live up to the dogcatcher ideal of paying annual dividends (from a $1K investment), exceeding their single share prices and one more outside the top ten does too. April’s fourth fair-priced member, People’s United Financial Inc (PBCT), was merged with M&T Bank (MTB) after protracted courtship.

The three remaining top ten Aristos show annual yields (from $1K invested) meeting or exceeding their single-share prices at this time. They are Leggett & Platt, Inc. (LEG), Walgreens Boots Alliance (WBA), Franklin Resources, Inc. (BEN). Then, one more outside the top ten, Amcor plc (AMCR) keeps the average up.

As we are now almost three months beyond two years removed from the anniversary of the 2020 Ides of March dip, the time to snap up those four lingering top yield Aristocrat dogs is at hand… unless another big bearish drop in price looms ahead. (At which time your strategy would be to add to your position in any of those you then hold.)

Actionable Conclusions (1-10): Analysts Predict 14.15% To 36.5% Top Ten Aristocrat Net Gains To June 2023

Five of the ten top Aristocrats by yield were verified as being among the top ten gainers for the coming year based on analyst 1-year target prices. (They are tinted gray in the chart below.) Thus, this yield-based June 2 forecast for Aristocrats (as graded by Brokers) was 50% accurate.

Estimated dividend returns from $1000 invested in each of these highest-yielding stocks and their aggregate one-year analyst median target prices, as reported by YCharts, produced the 2022-23 data points for the projections below. Note: target prices from lone analysts were not used. Ten probable profit-generating trades projected to June 2, 2023, were:

YCharts.com

Stanley Black & Decker, Inc. (SWK) was projected to net $365.04, based on the median of target price estimates from fifteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 38% greater than the market as a whole.

Federal Realty Investment Trust (FRT) was projected to net $228.26, based on a median of target estimates from twenty-three analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 25% less than the market as a whole.

T. Rowe Price Group, Inc. (TROW) was projected to net $186.77, based on the median of target price estimates from eighteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 21% less than the market as a whole.

Medtronic plc (MDT) netted $180.04 based on a median target price estimate from twenty-one analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 26% less than the market as a whole.

Air Products and Chemicals (APD) was projected to net $171.62, based on dividends, plus the median of target price estimates from twenty-one analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 13% less than the market as a whole.

Essex Property Trust, Inc. (ESS) was projected to net $163.11 based on target price estimates from twenty-seven analysts, plus annual dividend, less broker fees. The Beta number showed this estimate is subject to risk/volatility 14% greater than the market as a whole.

V.F. Corp (VFC) was projected to net $152.88, based on dividends, plus the median of target price estimates from twenty-one analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 38% greater than the market as a whole.

Leggett & Platt, Inc. was projected to net $148.56, based on dividends, plus the median of target price estimates from three analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 29% greater than the market as a whole.

Procter & Gamble Co. (PG) was projected to net $143.12, 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 60% less than the market as a whole.

Walgreens Boots Alliance was projected to net $141.53 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 45% less than the market as a whole.

The average net gain in dividend and price was estimated to be 18.81% on $10k invested as $1k in each of these ten stocks. The average Beta ranking showed these estimates subject to risk/volatility 7% less than the market as a whole.

Open source dog art from dividenddogcatcher.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

YCharts.com

This scale of broker-estimated upside (or downside) for stock prices provides a measure of market popularity. Note: no broker coverage or single broker coverage produced a zero score on the above scale. These broker estimates can be seen as the emotional component (as opposed to the strictly monetary and objective dividend/price yield-driven report below). As noted above, these scores may also be regarded as contrarian.

Top 50 Dividend Aristocrats By Yield

Source: us.spindices/YCharts.com

YCharts.com

Actionable Conclusions (11-20): Ten Top Stocks By Yield Are The June Dogs of The Dividend Aristocrats

Top ten Aristocrats selected 6/2/22 by yield represented six of eleven Morningstar sectors. In first place was the technology sector Aristocrat, International Business Machines Corp. (IBM) [1].

Two consumer cyclical representatives took the second, seventh places, Leggett & Platt, Inc. [2], and V.F. Corp. [7].

Thereafter, two healthcare representatives in the top ten were placed third and eighth, Walgreens Boots Alliance [3], and AbbVie Inc. (ABBV) [8].

Two real estate representatives took the fourth and tenth slots, Realty Income Corp. (O) [4], and Federal Realty Investment Trust [10]. Financial services firms placed fifth and ninth, Franklin Resources, Inc. [5] and T. Rowe Price Group, Inc. [9].

Finally, one industrials representative placed sixth, 3M Co. (MMM) [6]. This completed the pre-June S&P 500 Dividend Aristocrats top-ten, by yield.

YCharts.com

Actionable Conclusions: (21-30) Ten Aristocrats Showed 10.75% To 34.79% Upsides To June 2023; (31) On The Downside Were Five -0.14% to -10.83% Losers

To quantify top-yield rankings, analyst median price target estimates provided a “market sentiment” measure 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 1.2% Disadvantage For 5 Highest-Yield, Lowest-Priced, of Top Ten Dividend Aristocrats To June 2023

Ten top Aristocrats were culled by yield for their monthly update. Yield (dividend/price) results, verified by YCharts, did the ranking.

YCharts.com

As noted above, top ten Aristocrats selected 6/2/22 represented six of eleven sectors in the Morningstar sector scheme.

Actionable Conclusions: Analysts Estimated 5 Lowest-Priced Of Ten Highest-Yield Dividend Aristocrats (32) Delivering 12.89% Vs. (33) 13.05% Net Gains by All Ten, Come June 2023

YCharts.com

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Dividend Aristocrats kennel by yield were predicted (by analyst 1-year targets) to deliver 1.2% LESS gain than $5,000 invested as $.5k in all ten. The sixth lowest-priced Aristocrats top-yield stock, Federal Realty Investment Trust, was projected to deliver the best net gain of 21.10%.

YCharts.com

The five lowest-priced top-yield Aristocrats as of June 2 were: Franklin Resources; Leggett & Platt, Inc.; Walgreens Boots Alliance, Inc.; V.F. Corp.; Realty Income Corp., with prices ranging from $26.86 to $68.44.

The five higher-priced top-yield Aristocrats as of June 2 were: Federal Realty Investment Trust, T. Rowe Price Group, Inc., International Business Machines Corp., AbbVie Inc., 3M Co., whose prices ranged from $113.91 to $148.18.

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, however, since analysts are historically only 20% to 90% accurate on the direction of change and just 0% to 15% accurate on the degree of change.

Afterword

If somehow you missed the suggestion of the four stocks ripe for picking at the start of the article, here is a repeat of the list at the end:

The following 4 (as of 6/2/22) realized the ideal of offering annual dividends from a $1K investment exceeding their single share prices: Franklin Resources, Inc., Leggett & Platt, Inc., Walgreens Boots Alliance, and Amcor plc.

Price Drops or Dividend Increases Could Get All Ten Top Aristocrat Dogs Back to “Fair Price” Rates For Investors

YCharts.com

Since three of the top ten Aristocrats shares are now priced less than the annual dividends paid out from a $1K investment, the following charts compare those three plus seven at current prices. Fair pricing, when all ten top dogs conform to the ideal, is displayed in the middle chart. Finally, the dollar and percentage differences between current and fair prices are documented in the bottom chart.

S&P 500 Aristocrats Alphabetically by Ticker Symbol

S&P Dow Jones Indices

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.

Disclaimer: This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation, or endorsement to buy or sell any security. Prices and returns on equities in this article except as noted are listed without consideration of fees, commissions, taxes, penalties, or interest payable due to purchasing, holding, or selling same.

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 art: Open source dog art from dividenddogcatcher.com.

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