Your 57 Dividend Aristocrat February Scorecard From Dividend Dogcatcher

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Includes: ABBV, ADM, APD, BEN, CAH, CAT, CINF, CVX, ED, KMB, LEG, PBCT, T, TGT, UTX, XOM
by: Fredrik Arnold
Summary

S&P 500® Dividend Aristocrats consist of S&P 500 companies that have increased dividends every year for the last 25 consecutive years. This is the latest listing updated in January.

The 57 Aristocrats stocks for 2019 represent all eleven Morningstar Sectors. Broker target-top-ten net gains ranged 13.75%-20.96% topped by AbbVie 2/1/19.

By yield, AT&T topped all Aristocrats. Yields from TGT, KMB, LEG, ED, CAH, CVX, PBCT, XOM, ABBV, and T averaged 4.34%.

Aristocrats top ten by broker target price upsides, MCD, APD, TGT, CAH, CVX, T, CAT, ADM, ABBV, and UTX averaged 17.76% estimated gains. Four downsiders averaged -4.38%.

February top-yield ten Aristocrats showed 4.29% more net-gain from from $5k invested in the lowest priced five than the same investment in all ten. Low price little dogs were tops.

Actionable Conclusions (1-10): Analysts Predict 13.75% To 20.96% Aristocrat Net Gains To February 2020

Six of the ten top Aristocrats by yield were identified as being among these top ten gainers for the coming year based on analyst 1-year target prices. (They are tinted gray in the chart below). The number of analysts is listed in the column labeled A's. Thus, our yield-based forecast for Aristocrats graded by Wall St. wizards was 60% accurate.

Source: YCharts.com

Projections based on estimated dividend returns from $1,000 invested in each of the highest yielding stocks and their aggregate one-year analyst median target prices, as reported by YCharts, created the 2019-20 data points. Note: one-year target prices by lone analysts were not applied. Ten probable profit-generating trades projected to February 1, 2020, were:

AbbVie Inc. (ABBV) was projected to net $209.57 based on dividends, plus the median of target price estimates from seventeen analysts, less broker fees. The Beta number showed this estimate subject to volatility 18% more than the market as a whole.

AT&T Inc. (T) was projected to net $204.67, based on a median of target estimates from twenty-nine analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 46% less than the market as a whole.

United Technologies Corp. (UTX) was projected to net $199.03, based on a median target price estimate from twenty analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 17% more than the market as a whole.

Chevron (CVX) was projected to net $170.84, 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% more than the market as a whole.

Archer-Daniels Midland Co. (ADM) was projected to net $170.47, based on the median of target price estimates 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.

Cardinal Health Inc. (CAH) was projected to net $167.78, based on dividends, plus a mean target price estimate from eighteen analysts, less broker fees. The Beta number showed this estimate subject to volatility 16% more than the market as a whole.

Caterpillar Inc. (CAT) was projected to net $165.09 based on dividends, plus the median of target estimates from twenty-six brokers, less transaction fees. The Beta number showed this estimate subject to volatility 46% more than the market as a whole.

Target Corp. (TGT) was projected to net $155.60 based on dividends, plus median target price estimates from twenty-six analysts, less broker fees. The Beta number showed this estimate subject to volatility 28% less than the market as a whole.

Air Products & Chemicals (APD) was projected to net $144.87, based on target price estimates from twenty-two analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 15% less than the market as a whole.

Exxon Mobil Corp. (XOM) netted $137.53 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 10% less than the market as a whole.

The average net gain in dividend and price was estimated to be 17.26% on $10k invested as $1k in each of these ten stocks. This gain estimate was subject to average volatility equal to the market as a whole.

Source: YCharts.com

Actionable Conclusion (11): (Bear Alert) Analysts Predicted Two Dividend Aristocrat Dogs To Lose 3.64% to 6.69% By February 2020

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

Cincinnati Financial Corp. (CINF) projected a $36.43 loss based on dividend plus a median target price estimate from eight analysts, including $20 of broker fees. The Beta number showed this estimate subject to volatility 38% less than the market as a whole.

Franklin Resources Inc. (BEN) projected a $66.91 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 14% more than the market as a whole.

The average net loss in dividend and price was estimated to be 5.17% on $10k invested as $1k in each of these two stocks. This gain estimate was subject to average volatility 12% less than the market as a whole.

Source: pinterest.com

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."

57 Dividend Aristocrats By Yield

Source: us.spindices/YCharts.com

Actionable Conclusions (11-20): Ten Top Stocks By Yield Are Your Dogs of The Dividend Aristocrats

Top ten Aristocrats selected 2/1/19 by yield represented seven of eleven Morningstar sectors. Top yielding stock, AT&T, Inc. [1] was the lone communication services representative in the top ten.

The first of two healthcare representatives placed second, AbbVie [2], while the second health issue in the top ten placed sixth, Cardinal Health [6].

Two energy representatives placed third, and fifth, Exxon Mobil [3], and, Chevron [5], while one financial services firm placed fourth, People's United Financial Inc. (PBCT) [4].

One utilities firm placed seventh, Consolidated Edison (ED) [7], and a lone consumer cyclical firm took the eighth slot, Leggett & Platt Inc. (LEG) [8].

Finally, two consumer defensive sector representatives placed ninth, and tenth, Kimberly-Clark Corp. (KMB) [9], and Target Corp. [10], to complete these S&P Aristocrats top ten by yield for February.

Source: YCharts.com

Actionable Conclusions: (21-30) Ten Aristocrats Showed 11.5% To 19.4% Upsides To February 2020; (31) Downsides Projected From Four Losers Ranged -2.54%. To -8.2%.

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 4.29% Advantage For 5 Highest Yield, Lowest Priced S&P 500 Dividend Aristocrats To February 2020

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 2/1/19 showing the highest dividend yields represented seven of eleven in the Morningstar sector scheme.

Actionable Conclusions: Analysts Estimated The 5 Lowest-Priced Of Ten Highest-Yield Dividend Aristocrats (32) Delivering 11.99% Vs. (33) 11.5% Net Gains by All Ten by February 2019

Source: YCharts.com

$5,000 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 4.29% more gain than $5,000 invested as $.5k in all ten. The eighth lowest priced Aristocrats top yield stock, AbbVie Inc., was projected to deliver the best net gain of 20.96%.

Source: YCharts.com

The five lowest-priced top yield Aristocrats for February 1 were: People's United Financial Inc.; AT&T, Inc.; Leggett & Platt Inc.; Cardinal Health; Target Corp., with prices ranging from $16.58 to $71.17.

Five higher-priced Aristocrats as of February 1 were: Exxon Mobil; Consolidated Edison; AbbVie; Kimberly-Clark; Chevron Corp., whose prices ranged from $75.92 to $118.37.

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 IndexArb; YCharts; Yahoo Finance; analyst mean target price by Thomson/First Call in Yahoo Finance. 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.