A 57 Dividend Aristocrat June/July Update From The Dogcatcher

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Includes: ABBV, ADM, ATT, BEN, CAH, CAT, CLX, CVX, EMR, GD, KMB, LEG, MMM, PBCT, T, UTX, WBA, 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."

he 57 Aristocrats stocks for June/July 2019 represent all eleven Morningstar Sectors. Broker target-top-ten net gains ranged 15.82%-24.77% topped by ADM 6/19/19.

By yield, AT&T topped all Aristocrats. Yields from WBA, MMM, ADM; CVX, CAH, LEG, CAH, PBCT, XOM, ABBV, & T averaged 4.32%.

Aristocrats top ten by broker target price upsides, CVX, XOM, CAT, ABBV, GD, EMR, CAH, UTX, LEG, UGX, & ADM averaged 17.23% estimated gains. Eight down-siders averaged -2.75%.

$5k invested in June 19 top-yield Aristocrats showed 5.58% more net-gain than from $5k invested in all ten. Low price little dogs extended their Dividend Aristocrats lead.

Actionable Conclusions (1-10): Analysts Predict 15.82% To 24.77% Aristocrat Net Gains To June/July, 2020

Six of the ten top Aristocrats by yield were verified 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). Thus, this yield-based forecast for Aristocrats graded by Wall St. wizards was 60% 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 2019-20 data points. Note: one year target prices by lone analysts were not applied. Ten probable profit-generating trades projected to June 19, 2020 were:

Source: YCharts.com

Archer-Daniels Midland Co (ADM) was projected to net $247.69, 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 risk 3% less than the market as a whole.

Leggett & Platt Inc (LEG) was projected to net $220.38, based on a median target price estimate from six analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 7% more than the market as a whole.

United Technologies Corp (UTX) was projected to net $215.47 based on dividends, plus the median of target estimates from fifteen brokers, less transaction fees. The Beta number showed this estimate subject to risk 27% more than the market as a whole.

Cardinal Health Inc (CAH) was projected to net $211.65, based on dividends, plus a mean target price estimate from nineteen analysts, less broker fees. The Beta number showed this estimate subject to risk 20% more than the market as a whole.

AbbVie Inc (ABBV) was projected to net $206.03 based on dividends, plus the median of target price estimates from seventeen analysts, less broker fees. The Beta number showed this estimate subject to risk 10% more than the market as a whole.

Emerson Electric Co (EMR) was projected to net $194.50, based on a median of target estimates from twenty-three analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to vrisk 31% more than the market as a whole.

Exxon Mobil Corp (XOM) was projected to net $181.98, based on a median target price estimate from twenty-two analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 5% less than the market as a whole.

Caterpillar Inc (CAT) was projected to net $179.14, based on dividends, plus a mean target price estimate from twenty-six analysts, less broker fees. The Beta number showed this estimate subject to risk 52% more than the market as a whole.

General Dynamics Corp (GD) netted $176.38 based on a median target price estimate from nineteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 15% more than the market as a whole.

Chevron (CVX) was projected to net $158.17, based on target price estimates from twenty-two analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk 2% less than the market as a whole.

The average net gain in dividend and price was estimated to be 19.9% on $10k invested as $1k in each of these ten stocks. The average Beta number showed these estimates subject to risk 16% more than the market as a whole.

Actionable Conclusion (11): (Bear Alerts) Analysts Predicted Three Dividend Aristocrat Dogs To Lose 3.38%-4.66% By June/July, 2020

The probable losing trades revealed by YCharts for June/July 2019 -20 were:

Source: YCharts.com

Clorox Co (CLX) projected a $33.78 loss based on dividend plus a median target price estimate from eighteen analysts including $10 of broker fees. The Beta number showed this estimate subject to risk 62% less than the market as a whole.

Kimberly-Clark Corp (KMB) projected a $37.69 loss based on dividend plus a median target price estimate from nineteen analysts including $10 of broker fees. The Beta number showed this estimate subject to risk 42% less than the market as a whole.

Franklin Resources Inc (BEN) projected a $46.60 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 16% more than the market as a whole.

The average net loss in dividend and price was estimated to be 7.33% on $3k invested as $1k in each of these three stocks. This gain estimate was subject to average risk 31% less than the market as a whole.

Source: lindasecrist.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 Broker Targets

Source: us.spindices/YCharts.com

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. As noted above, these scores may be taken as contrarian.

57 Dividend Aristocrats By Yield

Source: us.spindices/YCharts.com

Actionable Conclusions (13-22): Ten Top Stocks By Yield Are The Dogs of The Dividend Aristocrats

Top ten Aristocrats selected 6/19/19 by yield represented sevenof 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 fourth, Cardinal Health (CAH) [4].

Two energy representatives placed third, and seventh, Exxon Mobil (XOM) [3], and, Chevron (CVX) [7], while one financial services firm placed fourth, People's United Financial Inc (PBCT) [4].

A lone consumer cyclical firm took the sixth slot,Leggett & Platt Inc (LEG) [6]. Then two consumer defensive sector representatives, placed eighth, and tenth, Archer-Daniels Midland Co (ADM) [8], and Walgreens Boots Alliance Inc (WBA) [10].

A single industrials representative placed ninth, 3M Co (MMM) [10], to complete these S&P Aristocrats top ten by yield for June/July.

Source: YCharts.com

Actionable Conclusions: (23-32) Ten Aristocrats Showed 12.95% To 22.33% Upsides To June 19, 2020; (33) Downsides Projected From Eight Losers Ranged -0.29%. To -6.73%.

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 5.58% Advantage For 5 Highest Yield, Lowest Priced Dividend Aristocrats To June/July, 2020

Ten top Aristocrats were culled by yield for their monthly update. Yield (dividend/price) results verified by YCharts did the ranking.

As noted above, top ten Aristocrats selected 6/19/19 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 17.74% Vs. (33) 16.80% Net Gains by All Ten by June/July, 2020

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 5.58% more gain than $5,000 invested as $.5k in all ten. The second lowest priced Aristocrats top yield stock, AT&T Inc (ATT), was projected to deliver the best net gain of 32.41%.

Source: YCharts.com

The five lowest-priced top yield Aristocrats for June 19 (PBCT); AT&T, Inc. (T); Leggett & Platt Inc. (LEG); Archer-Daniels Midland Co (ADM); Cardinal Health (CAH), with prices ranging from $16.39 to $45.04

Five higher-priced Aristocrats as of June 19 were: Walgreens Boots Alliance Inc (WBA); Exxon Mobil Corp (XOM); AbbVie (ABBV); Chevron Corp (CVX); 3M Co (MMM), whose prices ranged from $52.90 to $170.75.

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 Dividend 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: swallow.marketing

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.