Seeking Alpha

Kiplinger's Most Reliable Stocks For Retirees July Update

|
Includes: ADM, CVS, DOC, ENB, EPD, GLAD, IP, LTC, MDP, MMP, MNR, OKE, PG, PSA, SKT, SWM, T, XOM
by: Fredrik Arnold
Summary

Kiplinger Investing periodically lists retirement tips. This 40-stock list came from two articles: one by Brian Bollinger, 8/13/18 and another by Charles Lewis Sizemore, CFA, 7/2/19.

The articles were titled, "25 Stocks Every Retiree Should Own" and "20 Stocks for 20 Retirement Years." The list was cut to 40 as three showed up on both lists.

These 40 select dividend stocks ranged 0.00-8.72% in annual yield and ranged -10.99-37.00% in annual price target upsides per brokers 7/8/19.

Top Ten Kiplinger reliable retiree dividend stocks boasted gains from 11.11% to 30.45%.

$5k invested in the lowest-priced five top-yield Kiplinger reliable retirement dogs showed 31.51% more net-gain than from $5k invested in all ten. Little low-price Kiplinger reliable retirement stocks led the pack.

Foreword

25 Stocks Every Retiree Should Own by Charles Lewis Sizemore, CFA, published 7/2/19 featured a "group of retirement stocks that includes both pure income plays and growth companies, with a focus on very-long-term performance and durability.”

20 Quality Dividend Stocks (yielding roughly 4% or higher), published 8/13/18 by Brian Bollinger, noted, "...should fund at least 20 years of retirement, if not more. They have paid uninterrupted dividends for more than 20 consecutive years, appear to have secure payouts and have the potential to collectively grow their dividends to protect investors’ purchasing power."

Actionable Conclusions (1-10): Analysts Estimated 11.11% To 30.45% Net Gains For Ten Top Kiplinger July Reliable Retirement Dogs Into 2020

Five of ten top Kiplinger most reliable retirement stocks by yield were 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, the yield-based forecast for these July dogs was graded by Wall St. Wizards as 50% accurate.

Source: YCharts.com

Projections were based on estimated dividends from $1000 invested in each of the highest yielding stocks and their aggregate one-year analyst median target prices, as reported by YCharts. Note: one-year target prices by lone analysts were not applied. Ten probable profit-generating trades projected to July 8, 2020, were:

CVS Health Corp. (NYSE:CVS) was projected to net $304.45, based on a median of target price estimate from twenty-seven analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 12% less than the market as a whole.

Schweitzer-Mauduit Int'l (SWM) was projected to net $286.58, based on a median of target price estimates from two analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk 58% more than the market as a whole.

Enbridge Inc. (ENB) was projected to net $231.81, based on the median of target estimates from twenty-one analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 42% less than the market as a whole.

Enterprise Products Partners (EPD) was projected to net $220.86, based on dividends, plus the median of target price estimates from twenty-four analysts, less broker fees. The Beta number showed this estimate subject to risk 12% less than the market as a whole.

Archer-Daniels-Midland Co. (ADM) netted $202.52 based on the median of estimates from fourteen analysts, plus dividends. The Beta number showed this estimate subject to risk, 3% more than the market as a whole.

International Paper Co. (IP) was projected to net $190.87, based on dividends, plus a mean target price estimate from fifteen analysts, less broker fees. The Beta number showed this estimate subject to risk 50% more than the market as a whole.

Meredith Corp. (MDP) was projected to net $172.09, based on dividends, plus median target price estimates from eighteen analysts, less broker fees. The Beta number showed this estimate subject to risk 46% less than the market as a whole.

Exxon Mobil Corp. (XOM) was projected to net $165.21, based on dividends, plus a mean target price estimate from twenty-one analysts, less broker fees. The Beta number showed this estimate subject to risk 3% under the market as a whole.

Monmouth Real Estate (MNR) was projected to net $158.24 based on dividends, plus the median of target estimates from six brokers, less transaction fees. The Beta number showed this estimate subject to risk 36% less than the market as a whole.

Magellan Midstream Partners (MMP) was projected to net $111.07, based on the median of target price estimates from twenty-two analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk 26% less than the market as a whole.

The average net gain in dividend and price was estimated at 20.441% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk 7% less than the market as a whole.

Actionable Conclusion (11): (Bear Alert) Analysts Predicted Two Kiplinger Reliable Retirement Top Yield Dogs To Show 3.33% And 8.76% Losses to July 2020

The probable losing trades revealed by Y-Charts to 2020 were:

Source: YCharts.com

Procter & Gamble Co. (PG) projected a loss of $33.34, based on dividend and a median of the target price estimates from twenty-five analysts including broker fees. The Beta number showed this estimate subject to risks 56% less than the market as a whole.

Public Storage (PSA) projected a loss of $87.64, based on dividend and a median of the target price estimates from fifteen analysts including broker fees. The Beta number showed this estimate subject to risks 83% less than the market as a whole.

The average net loss in dividend and price was estimated at 6.05% on $2k invested as $1k in each of these two stocks. These loss estimates were subject to average volatility 69% less than the market as a whole.

Source: wallpapersafari.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."

40 Kiplinger Reliable Retirement Stocks By July Target Gains

Source: YCharts.com

40 Kiplinger Reliable Retirement Stocks By July Yield

Source: YCharts.com

Actionable Conclusions (11-20): 10 Top Kiplinger Reliable Retirement Stocks By Yield

Top ten Kiplinger Reliable Retirement stocks selected 7/8/19 by yield represented four of eleven Morningstar sectors. First place was claimed by the first of four real estate sector representatives, Tanger Factory Outlet Centers, Inc. (SKT) [1]. The other three real estate representatives placed sixth, ninth, and tenth, Physicians Realty Trust (DOC) [6], Monmouth Real Estate Investment Corp. [9], LTC Properties, Inc. (LTC) [10].

Four from the energy sector placed second, third, fourth, and eighth, Magellan Midstream Partners LP[2], Enbridge Inc. [3], Enterprise Products Partners LP [4], [7], and ONEOK, Inc. (OKE) [8].

The lone financial services representative emerged in third place by yield, Gladstone Capital Corp. (GLAD) [3].

The lone communications services pup claimed fifth place, AT&T Inc. (T) [5]. Finally, a lone basic materials representative placed sixth, Schweitzer-Mauduit International, Inc. [6], to complete the Kiplinger reliable retirement top ten by yield for July.

Actionable Conclusions: (21-30) Top Ten Kiplinger Reliable Retirement Dogs Showed 13.98-31.95% Upsides While (31) Eight Lowly Downsiders Sank -0.63% to -11.00%

Source: YCharts.com

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

Analysts Forecast A 31.51% Advantage For 5 Highest Yield, Lowest Priced Kiplinger Reliable Retirement Stocks To July 2020

Ten top Kiplinger reliable retirement dogs were culled by yield for this update. Yield (dividend/price) results provided by YCharts did the ranking.

Source: YCharts.com

As noted above, top ten Kiplinger reliable retirement dogs screened 6/8/19 showing the highest dividend yields represented four of eleven in the Morningstar sector scheme.

Actionable Conclusions: Analysts Predicted 5 Lowest-Priced Of The Top Ten Highest-Yield Kiplinger Featured Retirement Dogs (32) Delivering 17.67% Vs. (33 ) 13.43% Net Gains by All Ten Come July 2020

Source: YCharts.com

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Kiplinger reliable retirement kennel by yield were predicted by analyst 1-year targets to deliver 31.51% more gain than $5,000 invested as $.5k in all ten. The fifth lowest priced selection, Schweitzer-Mauduit International, Inc., was projected to deliver the best net gain of 28.66%.

Source: YCharts.com

The five lowest-priced top-yield Kiplinger most reliable dividend dogs as of July 8 were: Monmouth Real Estate Investment Corp., Tanger Factory Outlet Centers Inc (SKT); Physicians Realty Trust (DOC); Enterprise Products Partners LP; Schweitzer-Mauduit International, Inc., with prices ranging from $13.85 to $32.98.

Five higher-priced Kiplinger most reliable dividend dogs as of July 8 were: AT&T Inc. (T); Enbridge Inc.; LTC Properties Inc (LTC); Magellan Midstream Partners LP; ONEOK Inc. (OKE), whose prices ranged from $34.25 to $69.57.

The 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 S&P 500 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: wallpapersafari.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.