Barron's 10 Picks For 2019 Vs. Kiplinger's 12 Forever Stocks Show Target Gains And Losses

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Includes: AAPL, AMGN, AMZN, AWR, BAC, BLK, CAT, CVX, DAL, DDAIF, ET, GOOGL, JNJ, JPM, MMM, MO, O, TOL, UN, UNH, VOD, WM
by: Fredrik Arnold
Summary

The December 17 issue of Barron's featured "10 favorite picks for the year ahead," while Kiplinger Today on December 21 proclaimed "12 Stocks You Should Never Sell."

The top analyst-target-augured NET-GAIN five from Barron's were ET, BAC, AAPL, DAL and CVX. Kiplinger showed AMZN, AAPL, MO, JPM and UNH. AAPL duplicated. Barron's averaged 37%; Kiplinger had 23.3% net.

The top analyst-target-augured PRICE-UPSIDE five of each were: ET, BAC, AAPL, DAL and CAT for Barron's, with AMZN, AAPL, MMM, MO, and AMGN for Kiplinger. Barron's averaged 34.45%; Kiplinger averaged 21.21%.

By YIELD, the following made the Barron's top five: ET, DDAIF, CVX, BLK and CAT. Kiplinger showed MO, O, JPM, UN and AMGN. Barron's ten averaged 3.68% and Kiplinger twelve averaged 3.3% yields.

$5k invested in the lowest-priced five top yield 2019 Barron's list showed 8.05% more net gain than from the same investment in all ten. $5k invested in the lowest-priced five top yield Kiplinger Forever list showed 43.62% LESS net gain than from the same investment in all ten.

2019 Vs. Forever Selections

At year-end, Barron's features a list of 10 top picks for the coming year. The December 17 list caught my dogcatcher eye because all but one were dividend payers. And I had already featured picks by Bloomberg and Fortune in other articles. When Kiplinger Today focused on Forever stocks on December 21, this article was born.

Lately readers and other contributors have questioned the intent, purpose, validity, and usefulness of my various stock lists. Here's a case where a tradition is established to verify that any list of stocks in which most pay dividends is fair game for doggish analysis.

Best, however, are my articles such as this that are able to note significant dividend investment opportunities missed by the mainstream media.

Below are the top ten chosen equities blessed by Barron's on December 17 and the dozen stocks to hold forever advocated by Kiplinger revealed December 21.

Source: YCharts

Source: YCharts

Actionable Conclusions (1-10): Analysts Predicted 20.65% To 79.84% Net for Barron's 10 & 11.15% To 45.14% Net Gains For Top 10 Kiplinger Forever Stocks

The following probable profit-generating trades were identified by projections based on estimated dividend returns from $1k invested in each of the highest yielding stocks. That dividend 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 a lone analyst were not applied.

Barron's five most probable profit-generating trades projected to December 20, 2019 were:

Energy Transfer LP (ET) was projected to net $798.41, based on a median of target estimates from eighteen analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to volatility18% more than the market as a whole.

Bank of America (BAC) netted $417.39 based on dividends plus a median target price estimate from twenty-nine analysts less broker fees. The Beta number showed this estimate subject to volatility 27% more than the market as a whole.

Apple (AAPL) was projected to net $405.66, based on dividends plus the median target price estimate from forty-four analysts, less broker fees. The Beta number showed this estimate subject to volatility 20% above the market as a whole.

Delta Air Lines (NYSE:DAL) was projected to net $373.10, based on target price estimates from twenty-one analysts, plus annual dividends, less broker fees. The Beta number showed this estimate subject to volatility 7% less than the market as a whole.

Chevron (CVX) was projected to net $343.58, based on dividends, plus a median target price estimate from twenty-five analysts, less broker fees. The Beta number showed this estimate subject to volatility 13% over the market as a whole.

Kiplinger five most probable gain-generating 1-yr trades from their hold forever12 list projected to December 21, 2019 were:

Amazon (AMZN) was projected to net $451.43, based on a median of target price estimates from forty-five analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 70% above the market as a whole.

Apple Inc. (AAPL) was projected to net $405.66, based on a median of target price estimates from forty-four analysts, plus the projected annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 20% more than the market as a whole.

Altria Group (MO) netted $336.53 based on the median target price estimate from seventeen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 63% under the market as a whole.

JPMorgan Chase (NYSE:JPM) was projected to net $297.06, based on a median target price from twenty-nine analysts plus next year's dividends, less broker fees. The Beta number showed this estimate subject to volatility 10% over the market as a whole.

UnitedHealth Group (UNH) was projected to net $271.17, based on an estimated target price based on a median target price from twenty-four analysts plus next year's dividends less broker fees. The Beta number showed this estimate subject to volatility 25% less than the market as a whole.

Average net gain in dividend and price was estimated at 37.13% on $10k invested as $1k in each of the ten Barron's stocks. This gain estimate was subject to average volatility 29% over the market as a whole.

Average net gain in dividend and price was estimated at 23.3% on $10k invested as $1k in each of the twelve Kiplinger Forever stocks. This gain estimate was subject to average volatility 1% under the market as a whole.

Source: englishcatsblogspot.com

The Dividend Dogs Rule

The "dog" moniker was earned by stocks exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where (3) yield (dividend/price) grew higher than their peers. So, the highest yielding stocks in any collection have become affectionately known as "dogs." More precisely, these are, in fact, best called, "underdogs."

50 For the Money

Yield (dividend/price) results from YCharts.com verified by Yahoo Finance for Barron's and Kiplinger highlighted stocks as of market closing prices 12/21/18 for 22 equities revealed the actionable conclusions discussed below.

See any Dow 30 article for an explanation of the term "dogs" for stocks reported based on Michael B. O'Higgins' book "Beating The Dow" (HarperCollins, 1991), now named Dogs of the Dow. O'Higgins' system works to find bargains in any collection of dividend paying stocks. Utilizing analysts' price upside estimates expanded the stock universe to include popular growth equities, as desired.

Actionable Conclusions (13-22): Barron's 2019 Watchlist Top Equity, By Yield, Energy Transfer, Led 10 For 2019

Source: YCharts

The Barron's 10 for 2019 sorted by yield calculated as of market close 12/20/18 included 5 of 11 Morningstar sectors.

Of the leading ten by yield, the top Barron's mention was an energy firm, Energy Transfer [1], followed by a consumer cyclical sector firm, Daimler AG (OTCPK:DDAIF) [2]. Another energy firm placed third by yield was Chevron [3].

Two financial services sector representatives placed fourth and sixth: BlackRock (BLK) [4] and Bank of America [6].

In fifth, sixth and ninth places were three industrial representative firms, Caterpillar (CAT) [5], Delta Air Lines [6], and Toll Brothers (TOL) [9].

Finally, the lone technology firm on the ten list finished tenth paying no dividend, Alphabet (GOOGL) (NASDAQ:GOOG) [10] to complete the top 10.

Actionable Conclusions (23-32): The Kiplinger Forever Top Equity, By Yield, Altria Group, Led 12

Source: YCharts

The Kiplinger 12 Forever stocks sorted by yield calculated as of market close 12/21/18 included 8 of 11 Morningstar sectors.

Of those twelve by yield, the top Kiplinger mention was one of two Consumer Defensive firms, Altria Group [1], while the other firm in that sector placed fourth, Unilever (UN) [4].

Second place went to the lone real estate firm, Realty Income Corp. (O) [2], then third place went to a lone financial services firm, JPMorgan Chase.

Three healthcare representative firms placed fifth, seventh, and eleventh, Amgen (AMGN) [5], Johnson & Johnson (JNJ) [7], and UnitedHealth [9].

Then two industrial firms inserted themselves in slots six and eight, 3M (MMM) [6] and Waste Management (WM) [8].

They were followed in ninth by a lone consumer cyclical sector firm, Apple [9], plus a utilities representative in tenth, American States Water Co (AWR) [10] and finally, the non-dividend paying top technology firm in the nation, in twelfth, Amazon [12], to complete the Kiplinger list.

Actionable Conclusions: (33-42) Top 10 2019 Barron's Stocks By Price Upsides Showed 13.57% To 71.34% Gains To December 2019; (43) No Downsiders Here

Source: YCharts

Judged only by price gains, the Barron's list was led by energy and financial services and trailed by industrials and consumer cyclicals.

Actionable Conclusions: (43-53) The 12 Forever Kiplinger List By Price Upsides Showed 0.92% To 46.14% Gains To December 2019, and (54) One -20.23% Downside

Source: YCharts

Judged only by broker-estimated price gains, the Kiplinger Forever list was led by technology and consumer cyclical and trailed by real estate and utilities.

To quantify top dog rankings, analysts' mean price target estimates provided a "market sentiment" gauge of upside potential. Added to the simple high-yield metrics, analysts' median price target estimates became another tool to dig out bargains.

Analyst Targets Predicted An 8.05% Advantage For 5 Highest Yield, Lowest Priced Barron's 2019 Select Stocks To December 2019

10 top 2019 Barron's stocks were culled by yield. Dividend/price results verified by YCharts did the ranking.

Source: YCharts

As noted above, top 10 Barron's 2019 stocks published 12/17/18 showing the highest dividend yields represented the energy (1), consumer cyclical (2), financial services (3), industrial (4), and technology (5) sectors.

Actionable Conclusions: Analysts Expected 5 Lowest-Priced of the Top 10 Highest-Yield 2019 Barron's Picks To (55) Deliver 40.12% Vs. (56) 37.13% Net Gains by All 10 To December 2019

Source: YCharts

$5k invested as $1k in each of the five lowest-priced stocks in the top 10 Barron's 2019 kennel by yield were predicted by analyst one-year targets to deliver 8.05% more net gain than $5k invested in all 10. The very lowest priced Barron's top yield stock, Energy Transfer LP, was projected to deliver the best net gain of 79.94%.

Source: YCharts

The five lowest-priced Barron's 2019 top yield dogs for December 20 were: Energy Transfer, Bank of America, Toll Brothers, Delta Air Lines, Daimler AG, with prices ranging from $12.84 to $52.83 per share.

Five higher-priced of the Barron's 2019 Ten for December 20 were: Chevron, Caterpillar, Apple, BlackRock, and Alphabet, whose prices ranged from $106.00 to $1,028.65.

Analyst Targets Predicted A 43.62% Disadvantage For 5 Highest Yield, Lowest Priced of Top 10 Kiplinger Forever Stocks To December 2019

10 top Kiplinger Forever stocks were culled by yield. Dividend/price results verified by YCharts did the ranking.

Source: YCharts

Top 10 Kiplinger Forever stocks published 12/21/18 showing the highest dividend yields represented the consumer defensive (1), real estate (2), financial services (3), healthcare (4), industrials (5), consumer cyclical (6), and utilities (7) sectors.

Actionable Conclusions: Analysts Expected 5 Lowest-Priced of the Top 10 Highest-Yield Kiplinger Forever Picks To (57) Deliver 9.07% Vs. (58) 16.09% Net Gains by All 10 To December 2019

Source: YCharts

$5k invested as $1k in each of the five lowest-priced stocks in the top 10 Kiplinger Forever kennel by yield were predicted by analyst one-year targets to deliver 53.62% LESS net gain than $5k invested in all 10. The eighth lowest priced Kiplinger top yield stock, Apple Inc., was projected to deliver the best net gain of 40.57%.

Source: YCharts

The five lowest-priced Kiplinger Forever top yield stocks for December 21 were: Altria Group, Unilever, Realty Income, American States Water Co., Waste Management, with prices ranging from $50.50 to $88.06 per share.

Five higher-priced of the Kiplinger Forever Ten for December 21 were: JPMorgan Chase, Johnson & Johnson, Apple, 3M, and Amgen, whose prices ranged from $96.1 to $187.11.

The distinction between five low-priced dividend dogs and the general field of 10 reflected Michael B. O'Higgins' "basic method" for beating the Dow. The scale of projected gains based on analysts' 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 FoFave 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: englishcatsblogspot.com

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.