S&P 500 Dividend Aristocrats AT&T, Chevron, Con Ed, Exxon And Federal Show Top Yields

|
Includes: APD, BEN, CVX, ED, FRT, KMB, KO, LEG, MCD, MDT, NUE, PG, T, TGT, XOM
by: Fredrik Arnold

Summary

"S&P 500® Dividend Aristocrats measure the performance S&P 500 companies that have increased dividends every year for the last 25 consecutive years."---us.spindices.com.

The 53 Aristocrats stocks represent all eleven Morningstar Sectors. Broker target-top-ten net gains ranged 8.9%-23.6% (up 6% from December) topped by LEG 2/2/18.

By yield, AT&T returned as top Aristocrat of ten, KO, LEG, PG, TGT, KMB, FRT, XOM, ED, CVX, & T. They averaged 3.63%.

Aristocrats top ten firms by broker target price upsides, JNJ, BEN, MDT, MCD, CVX, NUE, APD, PG, FRT, & LEG averaged 12.66% estimated 1 yr. price gains.

$5k invested in the lowest-priced five January/February top-yield Aristocrats showed 10.12% less net-gain than from $5k invested in all ten.  High price big stocks topped this Aristocracy.

Actionable Conclusions (1-10): Analysts Projected 8.86% To 23.59% Net Gains To February, 2019

Five of 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 above). Thus, our yield-based forecast for Aristocrats dogs was graded by Wall St. wizards as 50% accurate.

Projections based on estimated dividend returns from $1000 invested in the thirty highest yielding stocks and their aggregate one year analyst median target prices, as reported by YCharts, created the 2018-19 data points. Note: one year target prices by lone analysts were not applied. Ten probable profit-generating trades projected to February 2, 2019 were:

Leggett & Platt (LEG) was projected to net $235.94, based on target price estimates from eight analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 8% less than the market as a whole.

Federal Realty Investment (FRT) was projected to net $22459, based on dividends, plus a mean target price estimate from eighteen analysts, less broker fees. The Beta number showed this estimate subject to volatility 76% less than the market as a whole.

Chevron (CVX) was projected to net $135.17, based on dividends, plus a mean target price estimate from twenty-six analysts, less broker fees. The Beta number showed this estimate subject to volatility 15% more than the market as a whole.

Procter & Gamble (PG) netted $133.22based on a median target price estimate from twenty-four analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 49% less than the market as a whole.

Air Products & Chemicals (APD) was projected to net $127.14, based on dividends, plus a mean target price estimate from twenty-one analysts, less broker fees. The Beta number showed this estimate subject to volatility 22% more than the market as a whole.

Nucor (NUE) was projected to net $122.90 based on dividends, plus a median target estimate from fifteen brokers, less transaction fees. The Beta number showed this estimate subject to volatility 56% more than the market as a whole.

McDonald's (MCD) was projected to net $117.32, based on a median target estimates from thirty-six analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 41% less than the market as a whole.

AT&T, Inc. (T) was projected to net $10162, based on a median target price estimate from thirty-one analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 63% less than the market as a whole.

Medtronic (MDT) was projected to net $90.01, based on a median target price estimate from twenty-six analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 7% less than the market as a whole.

Franklin Resources (BEN) was projected to net $88.61, based on dividends, plus median target price estimates from fourteen analysts, less broker fees. The Beta number showed this estimate subject to volatility 63% more than the market as a whole.

The average net gain in dividend and price was estimated to be 13.77% on $10k invested as $1k in each of these ten stocks. This gain estimate was subject to average volatility 9% less than the market as a whole.

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."

53 Dividend Aristocrats By Yield

Actionable Conclusions (11-20): Ten Top Dividend Aristocrats Stocks By Yield

Top ten Aristocrats selected 2/2/18 by yield represented six of eleven Morningstar sectors. Top yielding stock, AT&T, Inc. (T) [1] was the lone communication services representative in the top ten.

Two energy representatives placed second, and fourth, Chevron (CVX) [2], and Exxon Mobil (XOM) [4]. A lone utilities sector firm placed third, Consolidated Edison (ED) [3].

A single real estate representative found fifth place, Federal Realty Investment (FRT). Meanwhile, four consumer defensive sector firms placed sixth, through eighth, and tenth: Kimberly-Clark (KMB) [6], Target (TGT) [7], Procter & Gamble (PG) [8], and Coca-Cola Co. (KO) [10].

One consumer cyclical firm placed ninth, Leggett & Platt (LEG) [9], to complete these Aristocratic ten by yield from January/February.

Actionable Conclusions: (21-30) Ten Aristocrats Showed 7.8% To 22.4% Upsides To February, 2018; (31) Downside Projected From The Biggest of Three Losers Was -3.22%.

To quantify top yield rankings, analyst mean 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 Estimate A 10.12% Disadvantage For 5 Highest Yield, Lowest Priced S&P 500 Dividend Aristocrats To February, 2019

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

As noted above, top ten Aristocrats selected 2/2/18 showing the highest dividend yields represented six of eleven in the Morningstar sector scheme.

Actionable Conclusions: Analysts Projected The 5 Lowest-Priced of the Top Ten Highest-Yield Aristocrats Dogs (32) Delivering 9.72% Vs. (33) 10.81% Net Gains by All Ten by February, 2019

$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 10.12% LESS gain than $5,000 invested as $.5k in all ten. The second lowest priced Aristocrats top yield dog, Leggett & Platt (LEG), was projected to deliver the best net gain of 23.59%.

The five lowest-priced top yield Aristocrats for February 2 were: AT&T, Inc. (T); Leggett & Platt (LEG); Coca-Cola Co. (KO); Target (TGT); Consolidated Edison (ED), with prices ranging from $38.07 to $77.96.

Five higher-priced Aristocrats as of December 29 were: Procter & Gamble (PG); Exxon Mobil (XOM); Federal Realty Investment (FRT); Kimberly-Clark (KMB); Chevron (CVX), whose prices ranged from $84.25 to $118.58.

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.

See my instablog for specific instructions about how to best apply the dividend dog data featured in this article, this glossary instablog to interpret my abbreviated headings, and this instablog to aid your safe investing. --Fredrik Arnold

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 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 Thomson/First Call in YahooFinance. Dog photo: pinterest.com

Disclosure: I am/we are long T.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.