Seeking Alpha

These 27 Fortune 500 Dividend Stocks Made The Best Total Returns To Investors

|
Includes: AAP, AAPL, ABT, AES, ANTM, AVGO, CTAS, DAN, EXPE, HCA, HUM, KDP, LLY, MRK, MSFT, MSI, NRG, NVDA, UNH
by: Fredrik Arnold
Summary

27 Fortune 500 companies showed the best 1, 5, and 10-year total returns that included dividends. These, therefore, are the best dividend investments on the 2019 Fortune 500 list.

These best Fortune 500 dividend investments represent 8 of 11 Morningstar Sectors. Broker target top-ten net gains ranged 16.65%-39.75% topped by Dana Inc. 6/7/19.

By yield, Broadcom topped all the Fortune 500 Best Dividend Investments. Top ten yields from MSFT, ABT, AAPL,UNH, KDP, LLY, DAN, MRK, AES, and AVGO averaged 2.29%.

Fortune 500 Best Dividend Investments by broker target price upsides, UNH, AVGO, HCA, ANTM, EXPE, AAP, NVDA, HUM, NRG, and DAN averaged 24.3% in estimated gains.

$5k invested in the lowest-priced five June top-yield Fortune 500 Best Dividend Investments showed 2.28% LESS net gain than from $5k invested in all ten. High price big stocks lead the Fortune 500 Best Dividend Investments.

Actionable Conclusions (1-10): Brokers Predict 16.65% To 39.75% Net Gains To June 2020

Three of the ten top Fortune 500 Best Dividend Investments 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 below). Thus, our yield-based forecast for Fortune 500 Best Dividend Investments graded by Wall St. wizards was 30% accurate.

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 June 7, 2019, were:

Source: YCharts.com

Dana Inc. (DAN) was projected to net $397.51 based on dividends, plus a mean target price estimate from ten analysts, less broker fees. The Beta number showed this estimate subject to risk 100% above the market as a whole.

NRG Energy Inc. (NRG) was projected to net $312.24, based on the median of target price estimates from twelve analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 13% less than the market as a whole.

Humana Inc. (HUM) was projected to net $276.98, based on dividends, plus a mean target price estimate from twenty-three analysts, less broker fees. The Beta number showed this estimate subject to risk 15% less than the market as a whole.

NVIDIA Corp. (NVDA) was projected to net $242.51, based on dividends, plus a mean target price estimate from forty-two analysts, less broker fees. The Beta number showed this estimate subject to risk 103% more than the market as a whole.

Advance Auto Parts Inc. (AAP) was projected to net $238.36 based on dividends, plus median target price estimates from twenty-two analysts, less broker fees. The Beta number showed this estimate subject to risk 2% less than the market as a whole.

Expedia Group Inc. (EXPE) was projected to net $224.71, based on a median of target estimates from thirty-four analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 1% more than the market as a whole.

Anthem Inc. (ANTM) was projected to net $215.68, based on a median target price estimate from twenty-four 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.

Broadcom Inc. (AVGO) was projected to net $199.34, based on target price estimates from thirty-five analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk 63% less than the market as a whole.

HCA Healthcare Inc. (HCA) netted $189.32 based on a median target price estimate from twenty-seven analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 24% less than the market as a whole.

UnitedHealth Group Inc. (UNH) was projected to net $166.47 based on dividends, plus a median target estimate from twenty-six brokers, less transaction fees. The Beta number showed this estimate subject to risk 34% less than the market as a whole.

The average net gain in dividend and price was estimated to be 24.63% on $10k invested as $1k in each of these ten stocks. This gain estimate was subject to average volatility 3% more than the market as a whole.

Actionable Conclusion (11): (Bear Alert) Analysts Predicted Two Fortune 500 Dividend Dogs To Lose 3.8% and 9.7% By June 2020

The probable losing trades revealed by YCharts for 2020 were:

Source: YCharts.com

Motorola Solutions Inc. (MSI) projected a $38.16 loss based on dividend plus a median target price estimate from fourteen analysts, including $10 of broker fees. The Beta number showed this estimate subject to risk 48% less than the market as a whole.

Cintas Corp. (CTAS) projected a $97.15 loss based on dividend plus the median of target price estimates from sixteen analysts including $10 of broker fees. The Beta number showed this estimate subject to risk equal to the market as a whole.

The average net loss in dividend and price was estimated to be 6.77% on $2k invested as $1k in each of these two stocks. This gain estimate was subject to average volatility 14% less than the market as a whole.

Source: businessinsider.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 the Fortune 500 fortunate.

27 Best Investment Fortune 500 Dividend Dogs By Broker Targets

Source: YCharts

This scale of broker estimated upside (or downside) for stock prices provides a scale of market popularity. Note: no broker coverage or 1 broker coverage produced a zero score on the above scale. It can be taken as an emotional component as opposed to the strictly monetary and objective dividend/price yield-driven report below.

27 Best Investment Fortune 500 Dividend Dogs By Yield

Source: YCharts

Actionable Conclusions (11-20): 10 Top Investment Fortune 500 Dividend Dogs By Yield

Top ten Fortune 500 Best Dividend Investments selected 6/7/19 by yield represented five of eleven Morningstar sectors. Top yielding stock, Broadcom Inc. (AVGO) [1] was the first of three technology sector firms in the top ten. The other two techno firms placed eighth, and tenth: Apple Inc. (AAPL) [8], and Microsoft Corp. (MSFT) [10].

One utilities sector stock placed second, The AES Corp. (AES) [2]. However, four healthcare sector representatives placed third, fifth, seventh, and ninth: Merck & Co Inc. (MRK) [3], Eli Lilly and Co. (LLY) [5], UnitedHealth Group Inc. (UNH) [7], and Abbott Laboratories (ABT) [10].

A lone consumer cyclical stock placed fourth among the top ten Fortune 500 Best Dividend Investments, Dana Inc. (DAN) [4]. Finally, one consumer defensive representative placed sixth, Keurig Dr Pepper Inc. (KDP) [6], to complete the top ten Fortune 500 Best Dividend Investments by yield for June.

Source: YCharts.com

Actionable Conclusions: (21-30) Ten Fortune 500 Best Div Investments For 2019 Showed 15.9% To 38.29% Upsides To June 2020; (31) Downsides Projected From Five Losers Ranged -0.49%. To -9.6%

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 2.28% Disadvantage For 5 Highest Yield, Lowest Priced Fortune 500 Best Dividend Investments To March 2020

Ten top Fortune 500 Best Dividend Investments 2019 were culled by yield 6/7/19. Yield (dividend/price) results verified by YCharts did the ranking.

Source: YCharts.com

As noted above, top ten Fortune 500 Best Dividend Investments 2019 selected 6/7/19 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 Fortune 500 Best Dividend Investments (32) Delivering 12.54% Vs. (33) 12.83% Net Gains by All Ten by June 2020

Source: YCharts.com

$5,000 invested as $1k in each of the five lowest-priced stocks in the top ten Fortune 500 Best Dividend Investments by yield were predicted by analyst 1-year targets to deliver 2.28% LESS gain than $5,000 invested as $.5k in all ten. The very lowest priced Fortune 500 Best Dividend Investments top yield stock, Dana Inc., was projected to deliver the best net gain of 39.75%.

Source: YCharts.com

The five lowest-priced top yield Fortune 500 Best Dividend Investments for June 7 were: Dana Inc.; The AES Corp.; Keurig Dr Pepper Inc.; Abbott Laboratories; Merck & Co. Inc., with prices ranging from $16.27 to $82.46

Five higher-priced Fortune 500 Best Dividend Investments as of June 7 were: Eli Lilly and Co.; Microsoft Corp.; Apple Inc.; UnitedHealth Group, and Broadcom Inc., whose prices ranged from $118.35 to $274.87.

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 Fortune 500 Best Dividend Investment stock purchase or sale research process. These were not recommendations.

Graphs and charts were compiled by Rydlun & Co., LLC from data derived from IndexArb.com; YCharts.com; Yahoo Finance; analyst mean target price by YCharts.com. Dog photo: businessinsider.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.

Additional disclosure: 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.