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Top 'Safer' Dividend Aristocrats Are Leggett For Gains, And Procter & Gamble For Yield Per May Data

May 04, 2018 11:15 AM ETABBV, APD, CINF, CLX, CVX, DOV, GPC, ITW, JNJ, KMB, LEG, LOW, MCD, PEP, PG, PNR, WMT2 Comments


  • 41 of 53 S&P 500 Dividend Aristocrats stocks were deemed "safer" for dividends because they showed positive one-year returns and free cash flow yields greater than their dividend yields 5/2/18.
  • Broker 1-yr.-estimated May top-ten 'safer' dividend gains in price and dividends less broker fees ranged 16.3%-30.8% and were topped by Leggett & Platt.
  • Top 10 "safer" Dividend Aristocrats yields ranged 3.04%-4.04% from CINF; PNR; GPC; CLX; PEP; LEG; CVX; ABBV; KMB; PG. Their free cash flow yields ranged 4.21%-9.13%.
  • Besides safety margin, Dividend Aristocrats  also reported payout ratios (lower is better), total annual returns, dividend growth, and p/e ratios to better document their dividend support. Total annual returns narrowed the "Safer"  Dividend Aristocrats  list of 53 to 46 by eliminating those showing negative returns.
  • Analyst one-year target estimates revealed that ten highest yield 'safer' Dividend Aristocrats stocks would produce 3.42% more gain from $5k invested in the lowest priced five than from $5K invested in all ten. Low priced little dogs ruled in May.

Actionable Conclusions (1-10): Brokers Project Top Ten 'Safer' Dividend Aristocrats Stocks to Net 16.34% to 30.83% Gains To May, 2019

Three of ten top yield "safer" Dividend Aristocrats (tinted in the chart above) were also in the Top ten gainers for the coming year based on analyst 1 year target prices. Thus the yield selection strategy for this group as graded by analyst estimates proved 30% 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 May 2, 2019 were:

Leggett & Platt (LEG) netted $308.26, based on dividends plus a target price estimate from eight analysts, minus broker fees. The Beta number showed this estimate subject to volatility 11% less than the market as a whole.

Lowe's Companies (LOW) netted $247.39 based on a median target price set by thirty-three analysts, plus estimated dividends less broker fees. The Beta number showed this estimate subject to volatility 33% more than the market as a whole.

PepsiCo (PEP) netted $220.87 based on a median target estimate from twenty-six analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 33% less than the market as a whole.

Walmart (WMT) netted $215.58 based on a mean target estimate from thirty-seven analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 46% less than the market as a whole.

Illinois Tool Works (ITW) netted $188.30 based on mean target price estimates from seventeen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 25% more than the market as a

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This article was written by

Fredrik Arnold profile picture
Fredrik Arnold is my pen name. In 2012 I retired from doing quality service analysis in Boston and moved to North Carolina in 2013, thence to Central Oregon in 2018. My fascination with capital preservation, long-term investments, and trading systems keeps me blogging for Seeking Alpha. My articles focus on dividend yields, analyst median 1 yr targets, free cash flow yields, and one-year total returns as stock trading indicators. These are essential tools for catching the most valuable dividend dogs. My dividend dogcatcher premium site in the Seeking Alpha Marketplace shows annual real-time trading results since 2015.

Analyst’s 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (2)

Agreed. I recently sold LEG after 2 years of seeing the price go down, while the market went up. Put the money into other dividend stocks that pay a good dividend, but also have better prospects for growth.
I don't doubt that the numbers crunch correctly. I do wonder about the validity of whether stocks have safer dividends based on this system. Systems, intrinsically have both strengths and flaws derived due to their rigid arbitrary natures. Is Chevron a safer dividend than Exxon? As a cyclical, the answer would be it depends when you ask. If you asked in 2016 the answer would have been - "NO" - yet now Chevron prevails despite the cyclical nature of Chevron remaining.

Leggett and Platt is pretty close to the top of the list. Thanks to a 20+% decline in share prices over the past year and another 10% recently, 'LEG' scores well. But is it deserved? After the share price demonstrated 'Technical' weakness over the past year my perception has warned against taking the plunge. So what does the exercise demonstrate.
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