Top 10 Of 53 Dividend Aristocrats Yield 3.4%-6.2% In July Update

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Includes: ABBV, APD, CAH, CVX, DOV, ED, JNJ, KMB, KO, MCD, PEP, PG, T, WBA, XOM
by: Fredrik Arnold
Summary

The 53 Aristocrats stocks represent all 11 Morningstar sectors. Broker target top 10 net gains ranged from 12.8% to 20.6%.

By yield, AT&T remained the top Aristocrat of 10. Their yields averaged 3.96%.

Aristocrats top 10 firms by broker target price upsides averaged 15.2% estimated one-year price gains.

$5k invested in the lowest-priced five July top-yield Aristocrats showed 6.7% more net gains than from $5k invested in all ten.

Actionable Conclusions (1-10): Analysts Cast 16% To 29.2% Net Gains To June 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 was graded by Wall St. wizards as 50% accurate.

Projections based on estimated dividend returns from $1000 invested in each of 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 July 9, 2019 were:

AT&T Inc. (T) was projected to net $205.51, based on a median of target estimates from thirty-one analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 58% less than the market as a whole.

Cardinal Health (CAH) was projected to net $199.76 based on dividends, plus a median target estimate from nineteen brokers, less transaction fees. The Beta number showed this estimate subject to volatility 1% more than the market as a whole.

Air Products & Chemicals (APD) was projected to net $189.07, based on target price estimates from twenty analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 20% more than the market as a whole.

AbbVie (ABBV) was projected to net $184.04, based on dividends, plus median target price estimates from twenty-three analysts, less broker fees. The Beta number showed this estimate subject to volatility 62% more than the market as a whole.

Dover (DOV) netted $174.84 based on a median target price estimate from eighteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 25% more than the market as a whole.

McDonald's (MCD) was projected to net $170.28, based on dividends, plus a mean target price estimate from thirty-three analysts, less broker fees. The Beta number showed this estimate subject to volatility 35% less than the market as a whole.

Chevron (CVX) was projected to net $141.04 based on dividends, plus a mean target price estimate from twenty-four analysts, less broker fees. The Beta number showed this estimate subject to volatility 13% more than the market as a whole.

Walgreens Boots Alliance (WBA) was projected to net $137.38, based on a median target price estimate from twenty-seven analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 12% more than the market as a whole.

Johnson & Johnson (JNJ) was projected to net $133.51, based on dividends, plus a mean target price estimate from twenty-four analysts, less broker fees. The Beta number showed this estimate subject to volatility 26% less than the market as a whole.

Coca-Cola (KO) was projected to net $127.75, based on a median target price estimate from twenty-eight analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 26% less than the market as a whole.

The average net gain in dividend and price was estimated to be 16.63% on $10k invested as $1k in each of these ten stocks. This gain estimate was subject to average volatility 1% 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 7/9/18 by yield represented five of eleven Morningstar sectors. Top yielding stock, AT&T, Inc. (T) [1] was the lone communication services representative in the top ten.

Two Healthcare representatives placed second, and fifth, AbbVie (NYSE:ABBV) [2], and Cardinal Health (CAH) [5], while two energy representatives placed third, and eighth, Exxon Mobil (XOM) [3], and, Chevron (CVX) [8].

Four consumer defensive sector representatives placed fourth, seventh, ninth, and tenth: Kimberly-Clark (KMB) [4]; Procter & Gamble (PG) [7]; Coca-Cola (KO) [9]; PepsiCo (PEP) [10].

Finally, one utilities firm placed sixth, Consolidated Edison (ED) [6], to complete these Aristocratic top ten by yield for Junly.

Actionable Conclusions: (21-30) Ten Aristocrats Showed 11.3% To 18.2% Upsides To July 2019; (31) Downsides Projected From Two Losers Were 1.88% and 10.42%

To quantify top yield rankings, analyst mean 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 6.70% Advantage For 5 Highest Yield, Lowest Priced S&P Dividend Aristocrats To July 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 7/9/18 showing the highest dividend yields represented five 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 12.16% Vs. (33) 11.4% Net Gains by All Ten by July 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 6.7% more gain than $5,000 invested as $.5k in all ten. The very lowest priced Aristocrats top yield dog, AT&T, Inc.(T), was projected to deliver the best net gain of 20.6%.

The five lowest-priced top yield Aristocrats for July 9 were: AT&T, Inc. (T); Coca-Cola Co. (KO); Cardinal Health (CAH); Consolidated Edison (ED); Procter & Gamble (PG), with prices ranging from $32.15 to $77.86.

Five higher-priced Aristocrats as of July 9 were: Exxon Mobil (XOM); AbbVie (ABBV); Kimberly-Clark (KMB); PepsiCo (PEP); Chevron (CVX), whose prices ranged from $82.90 to $125.99.

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 Indexarb, YCharts, Yahoo Finance; analyst mean target price by Thomson/First Call from Yahoo Finance. Dog photo taken from sevasevol.blogspot.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.