46 Fortune Most Admired Public Co's By Yield & Target Gains For February 2020

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Includes: AHT, BMWYY, CAT, CVS, GS, IBM, JPM, JWN, KO, MSFT, PEP, SCHW, TGT, TOYOF, UN, UPS, XOM
by: Fredrik Arnold
Summary

Fortune's annual survey of the most admired companies turned up 46 publicly owned all-stars. Here's another list to test our dividend dog metrics.

Top net-gainers XOM, JPM, KO, CAT, SCHW, MSFT, GS, JWN, DAL & CVS ranged 14.27%-32.5% 2/14/19. The 46 Stars by gains and yield represented 8 of 11 Morningstar sectors.

Fortune most admired (FMA) by yield ranged 0%-6.22%. Top ten, UN, UPS, PEP, JWN, KO, TGT, TOYOF, XOM, IBM, & BMWYY, averaged 3.90% yield.

46 FMA by target gains ranged -7.48%-31.54%. Top ten, JWN, BRK.B, FB, MSFT, GOOGL, GS, BABA, DAL, AMZN, & CVS, averaged 21.74% price target upside.

$5k invested in the lowest-priced five February top-yield most admired public stocks showed 1.01% more net gain than that from $5k invested in all ten.  Little low-price stars led the February most admired 46.

Actionable Conclusions (1-10): Analysts Estimated 14.27% To 32.5% Net Gains By Ten Fortune Most-Admired (FMA) Stars Come February, 2020

Three of ten top dividend-yielding FMA stocks found their way into the top ten gainers for the coming year based on analyst 1-year target prices. (They are tinted gray in the chart below). Thus, our yield-based forecast for Real Estate sector stocks was certified 30% accurate by broker target forecasts.

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 2019-20 data points. Note: one-year target prices from one analyst were not applied (n/a). Ten probable profit-generating trades projected by brokers to February, 2020 were:

CVS Health Corp (CVS) was projected to net $324.95, based on dividends plus a median target estimate from twenty-five brokers, less broker fees. The Beta number showed this estimate subject to volatility 3% more than the market as a whole.

Delta Air Lines Inc (AHT) was projected to net $269.62, based on dividends, plus mean target price estimates from twenty-one analysts, less broker fees. The Beta number showed this estimate subject to volatility 10% more than the market as a whole.

Nordstrom Inc (JWN) netted $186.83 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 44% less than the market as a whole.

Goldman Sachs Group Inc (GS) was found to net $184.23 based on the median target price estimate from twenty-eight analysts plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 22% more than the market as a whole.

Microsoft Corp (MSFT) was projected to net $175.60, based on dividends, plus a median target price estimate from thirty-four analysts, less broker fees. The Beta number showed this estimate subject to volatility 17% over the market as a whole.

Charles Schwab Corp (SCHW) was projected to net $152.00, based on target price estimates from twenty-one analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 37% more than the market as a whole.

Caterpillar Inc (CAT) was projected to net $149.66 based on dividends, plus the median target price from estimates by twenty-seven analysts, less broker fees. The Beta number showed this estimate's volatility 50% above the market as a whole.

Coca-Cola Co (KO) was projected to net $148.60, based on dividends, plus target price estimates from twenty-four analysts, less broker fees. The Beta number showed this estimate subject to volatility 37% less than the market as a whole.

JPMorgan Chase & Co (JPM) was projected to net $144.81, based on a median target estimate from twenty-six analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 11% more than the market as a whole.

Exxon Mobil Corp (XOM) finished the list with a projected net gain of $142.71, based on the median target price estimate from twenty-four analysts, plus their estimated annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 10% under the market as a whole.

The average net gain in dividend and price was estimated at 18.79% on $10k invested as $1k in each of these ten stocks. This gain estimate was subject to average volatility 5% over 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".

46 Fortune Most-Admired (FMA) Stars For February, 2020 By Target Gains

Source: YCharts

46 Fortune Most-Admired (FMA) Stars For February, 2020 By Yield

Source: YCharts

Actionable Conclusions (11-20) Yield Metrics Ranked 10 Top Fortune Most Admired Public Co's

Top ten most admired companies selected 2/14/19 by yield represented five of eleven Morningstar sectors.

The first of three consumer cyclical sector representatives in the top ten took the top spot, Bayerische Motoren Werke AG (OTCPK:BMWYY) [1]. The other two consumer cyclical members placed fourth, and seventh: Toyota Motor Corp (OTCPK:TOYOF) [4], and Nordstrom Inc (JWN) [7].

A single technology representative placed second, International Business Machines Corp (IBM) [2], followed by an Energy Sector representative in the third spot, Exxon Mobil Corp (XOM) [3].

The top of four consumer defensive representatives placed fifth, Target Corp (TGT) [5]. The others followed in sixth, eighth, and tenth slots, Coca-Cola Co (KO) [6], PepsiCo Inc (PEP) [8], and Unilever NV (UN) [10].

To complete the top ten February most admired companies by yield, an industrials sector representative placed ninth, United Parcel Service Inc (UPS) [9].

Actionable Conclusion: (21) Top Ten Fortune Most Admired Public Co's Showed 13.35% To 31.54% Price Upsides To February, 2020; (22) Two Downsides Were Noted

Source: YCharts

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

Analysts Estimated A 1.01% Advantage For 5 Highest Yield, Lowest Priced Fortune Most Admired Public Co's To February, 2020

Ten top Fortune Most Admired Public Co's were culled by yield for their monthly update. Yield (dividend / price) results verified by YCharts did the ranking.

Source: YCharts

As noted above, top ten Fortune Most Admired Public Co'sselected 2/14/19 showing the highest dividend yields represented five of eleven Morninstar business sectors.

Actionable Conclusions: Analysts Charted 5 Lowest-Priced Of Ten Highest-Yield Most Admired Firms (23) Delivering 9.32% Vs. (24) 9.23% Net Gains by All Ten, Come February 2020

Source: YCharts

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Dividend most admired kennel by yield were predicted by analyst 1-year targets to deliver 1.01% more gain than $5,000 invested as $.5k in all ten. The second lowest priced Fortune most admired top yield equity, Nordstrom Inc (JWN), was projected to gain 18.68%.

Source: YCharts

The five lowest-priced Fortune Most Admired Public Co's as of February 14 were: Bayerische Motoren Werke AG (OTCPK:BMWYY); Nordstrom Inc (JWN); Coca-Cola Co (KO); Unilever NV (UN); Toyota Motor Corp (OTCPK:TOYOF), with prices ranging from $26.17 to $59.58.

Five higher-priced Fortune Most Admired Public Co's as of February 14 were: Target Corp (TGT); Exxon Mobil Corp (XOM); United Parcel Service Inc (UPS); PepsiCo Inc (PEP); International Business Machines Corp (IBM), whose prices ranged from $72.18 to $136.48.

The distinction between five low-priced dividend stocks 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 Most Admired WallStar 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. Star dog photo: listingdoor.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.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.