Kiplinger's Most Reliable Stocks For Retirees August Update

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Includes: ADM, CVS, DOC, ENB, EPD, IP, LTC, MDP, MMP, MNR, OKE, PSA, SKT, SWM, T, UN, 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 for 20 retirement years. The list was cut to 40 as three showed up on both lists.

These 40 select dividend stocks ranged 0.00-9.17% in annual yield and ranged -9.91-45.52% in annual price target upsides per brokers 8/5/19.

Top Ten Kiplinger reliable retiree dividend stocks boasted net gains from 16.69% to 32.41%.

$5k invested in the lowest-priced five top-yield Kiplinger reliable retirement dogs showed 25.41% 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, "...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 16.69% To 32.41% Net Gains For Ten Top Kiplinger August Reliable Retirement Dogs Into 2020

Four 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 40% 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 August 5, 2020, were:

Archer-Daniels-Midland Co. (ADM) netted $324.08 based on the median of estimates from fourteen analysts, plus dividends. The Beta number showed this estimate subject to risk, 5% more than the market as a whole.

Schweitzer-Mauduit Int'l (SWM) was projected to net $308.95, 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 57% more than the market as a whole.

Enbridge Inc. (ENB) was projected to net $306.00, based on the median of target estimates from twenty-two analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 41% less than the market as a whole.

CVS Health Corp. (NYSE:CVS) was projected to net $292.52, 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 10% less than the market as a whole.

Enterprise Products Partners (EPD) was projected to net $267.52, based on dividends, plus the median of target price estimates from twenty-five analysts, less broker fees. The Beta number showed this estimate subject to risk 12% less than the market as a whole.

Meredith Corp. (MDP) was projected to net $239.09, based on dividends, plus median target price estimates from six analysts, less broker fees. The Beta number showed this estimate subject to risk 17% more than the market as a whole.

Exxon Mobil Corp. (XOM) was projected to net $238.99, based on dividends, plus a mean target price estimate from nineteen analysts, less broker fees. The Beta number showed this estimate subject to risk 3% under the market as a whole.

International Paper Co. (IP) was projected to net $226.37, based on dividends, plus a mean target price estimate from fifteen analysts, less broker fees. The Beta number showed this estimate subject to risk 49% more than the market as a whole.

Monmouth Real Estate (MNR) was projected to net $216.41 based on dividends, plus the median of target estimates form six brokers, less transaction fees. The Beta number showed this estimate subject to risk 35% less than the market as a whole.

Unilever NV (UN) was projected to net $166.93, based on the median of target price estimates from three analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk 47% less than the market as a whole.

The average net gain in dividend and price was estimated at 25.87% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk 2% less than the market as a whole.

Actionable Conclusion (11): (Bear Alert) Analysts Predicted One Kiplinger Reliable Retirement Top Yield Dog To Show A 6.63% Loss to August 2020

The probable losing trade revealed by Y-Charts to 2020 was:

Source: YCharts.com

Public Storage (PSA) projected a loss of $66.31 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.

Source: shootinguk.co.uk

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."

40Kiplinger Reliable Retirement Stocks By August Target Gains

Source: YCharts.com

40 Kiplinger Reliable Retirement Stocks By August Yield

Source: YCharts.com

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

Top ten Kiplinger Reliable Retirement stocks selected 8/5/19 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, fifth, and eighth, Enbridge Inc. [2], Magellan Midstream Partners, L.P. (MMP)[3], Enterprise Products Partners LP [5], and ONEOK, Inc. (OKE) [8].

A lone communications services pup claimed fourth place, AT&T Inc. (T) [4]. Finally, a lone basic materials representative placed seventh, Schweitzer-Mauduit International Inc. [7], to complete the Kiplinger reliable retirement top ten by yield for August.

Actionable Conclusions: (21-30) Top Ten Kiplinger Reliable Retirement Dogs Showed 14.45-31.95% Upsides While (31) Four Lowly Downsiders Sank -0.41% to -8.89%

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 25.41% Advantage For 5 Highest Yield, Lowest Priced Kiplinger Reliable Retirement Stocks To August 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 8/5/19 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 21.23% Vs. (33 ) 16.93% Net Gains by All Ten Come August 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 25.41% 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 30.9%.

Source: YCharts.com

The five lowest-priced top-yield Kiplinger most reliable dividend dogs as of August 5 were: Monmouth Real Estate Investment Corp., Tanger Factory Outlet Centers Inc.; Physicians Realty Trust; Enterprise Products Partners LP; Schweitzer-Mauduit International Inc., with prices ranging from $13.03 to $32.42.

Five higher-priced Kiplinger most reliable dividend dogs as of July 8 were: Enbridge Inc.; AT&T Inc.; LTC Properties, Inc.; Magellan Midstream Partners, L.P.; ONEOK Inc., whose prices ranged from $32.93 to $67.67.

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 Retirement stock purchase or sale research process. These were not recommendations.

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: shootinguk.co.uk

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.

Additional disclosure: 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.