Ten Top Dividend Aristocrats Net Large Gains Per Broker December Targets

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Includes: ABBV, ADM, APD, BEN, CAH, CINF, CLX, CVX, ED, EMR, KMB, LEG, NUE, PEP, 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 14.45%-23.03% topped by Chevron 12/5/18.

By yield, AT&T topped all Aristocrats. Ten yields from PEP, CAH, ED, KMB, TGT, CVX, LEG, XOM, ABBV, & T, averaged 4.05%.

Aristocrats top ten firms by broker target price upsides, XOM, TROW, T, APD, ADM, TGT, CVX, EMR, NUE, & VFC averaged 17.76% estimated gains.

$5k invested in the lowest-priced five December top-yield Aristocrats showed 38.88% more net-gain than from $5k invested in all ten. Low price little dogs came back to lead the S&P Dividend Aristocrats.

Source: YCharts.com

Actionable Conclusions (1-10): Analysts Predicted 14.46% To 23.03% Net Gains To December, 2019

Five of the 10 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 graded by Wall St. wizards was 50% accurate.

Projections based on estimated dividend returns from $1000 invested in each of the 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 December 5, 2019 were:

Chevron (CVX) was projected to net $230.26 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.

Nucor Corp (NUE) was projected to net $227.07, based on a median target price estimate from sixteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 47% more than the market as a whole.

VF Corp (VF) was projected to net $226.45, based on dividends, plus a mean target price estimate from twenty-five analysts, less broker fees. The Beta number showed this estimate subject to volatility 2% less than the market as a whole.

Emerson Electric Co (EMR) was projected to net $222.35, 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 21% more than the market as a whole.

Target Corp (TGT) was projected to net $213.01 based on dividends, plus median target price estimates from twenty-six analysts, less broker fees. The Beta number showed this estimate subject to volatility 30% less than the market as a whole.

AT&T Inc. (T) was projected to net $190.54, based on a median of target estimates from thirty analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 56% less than the market as a whole.

Archer-Daniels Midland Co (ADM) was projected to net $169.21, based on a median target price estimate from fourteen analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 2% less than the market as a whole.

Air Products & Chemicals (APD) was projected to net $158.01, based on target price estimates from twenty-two analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 10% more than the market as a whole.

Exxon Mobil Corp (XOM) netted $149.33 based on a median target price estimate from twenty-four analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 16% less than the market as a whole.

Leggett & Platt Inc (LEG) was projected to net $144.58 based on dividends, plus a median target estimate from seven brokers, less transaction fees. The Beta number showed this estimate subject to volatility 7% more than the market as a whole.

The average net gain in dividend and price was estimated to be 19.3% 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.

Source: YCharts.com

Actionable Conclusion (11): (Bear Alert) Analysts Predicted Five Achiever Dividend Dogs To Lose 3.22% to 10.98% By December, 2019

The five probable losing trades revealed by YCharts for 2019 were:

Procter & Gamble Co (P&G) projected a $32.23 loss based on dividend plus a median target price estimate from twenty-four analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 63% less than the market as a whole.

Consolidated Edison Inc (ED) projected a $35.00 loss based on dividend plus the median of target price estimates from eighteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 96% less than the market as a whole.

Cincinnati Financial Corp (CINF) projected a $43.19 loss based on dividend plus a median target price estimate from seven analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 31% less than the market as a whole.

Franklin Resources Inc (BEN) projected a $87.63 loss based on dividend plus a median target price estimate from fourteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 30% more than the market as a whole.

Clorox (CLX) projected a $109.78 loss based on dividend plus a median target price estimate from eighteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 70% less than the market as a whole.

The average net loss in dividend and price was estimated to be 19.3% 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.

Source: pets4homes.co.uk

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

Source: YCharts.com

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

Top ten Aristocrats selected 12/5/18 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.

The first of two healthcare representatives placed second, AbbVie (ABBV) [2], while the second health issue in the top ten placed ninth, Cardinal Health (CAH) [9].

Two energy representatives placed third, and fifth, Exxon Mobil (XOM) [3], and, Chevron (CVX) [5], while one consumer cyclical firm placed fourth, Leggett & Platt Inc (LEG) [4].

Three consumer defensive sector representatives placed sixth, seventh, and tenth,Target Corp (TGT) [6], Kimberly-Clark Corp (KMB) [7], and PepsiCo Inc (PEP) [10].

Finally, One utilities firm placed eighth, Consolidated Edison (ED) [8], to complete these S&P Aristocrats top ten by yield for December.

Source: YCharts.com

Actionable Conclusions: (21-30) Ten Aristocrats Showed 12.8% To 22.1% Upsides To December, 2019; (31) Downsides Projected From Six Losers Ranged -0.59%. To -11,32%.

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 36.88% Advantage For 5 Highest Yield, Lowest Priced S&P Dividend Aristocrats To December, 2019

Ten 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 ten Aristocrats selected 12/5/18 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 15.67% Vs. (33) 11.45% Net Gains by All 10 by December, 2019

Source: 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 36.88% more gain than $5,000 invested as $.5k in all ten. The eighth lowest priced Aristocrats top yield stock, Chevron Corp (CVX), was projected to deliver the best net gain of 23.03%.

Source: YCharts.com

The five lowest-priced top yield Aristocrats for December 5 were: AT&T, Inc. (T); Leggett & Platt Inc. (LEG); Cardinal Health (CAH); Target Corp (TGT); Exxon Mobil (XOM), with prices ranging from $30.73 to $79.43

Five higher-priced Aristocrats as of October 25 were: Consolidated Edison (ED); AbbVie (ABBV); Kimberly-Clark (KMB); Chevron Corp (CVX); PepsiCo Inc (PEP), whose prices ranged from $81.99 to $117.80.

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.

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: pets4homes.co.uk

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.