S&P 500 Top Yield Dividend Dogs Cavort In August

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Includes: ABBV, CTL, GAP, GPS, IPG, IRM, JWN, KIM, KSS, M, MPC, OXY, SPG, TPR, VLO
by: Fredrik Arnold
Summary

S&P500 dogs August top-ten net-gains ranged 33.03%-73.43% topped by Marathon 8/16/19. The ten, IPG; GPS; VLO; SPG; KSS, OXY; ABBV; JWN; TPR; MPC, averaged 42.6% projected gains.

99 Top S&P 500 index dogs ranged 3.01%-9.45% in estimated annual yield. Top 10, JWN, KSS, KIM, GPS, ABBV, TPR, OXY, IRM, CTL, & M averaged 7.04%.

S&P 500 index top ten firms by August broker target-price upsides, IPG, GPS, OXY, VLO, SPG, KSS, ABBV, JWN, TPR, & MPC,  averaged 37.82%. Stocks reporting annual returns below -23% were excluded.

$5k invested in the lowest-priced five August top-yield S&P 500 dividend Dogs showed 10.95% LESS net-gain than from $5k invested in all ten.  Big, high-price S&P 500 dogs again ruled the pack for August.

Actionable Conclusions (1-10): Analysts Forecast 33.03% To 73.43% Net Gains To August 2020

Six of ten top S&P 500 dividend dogs 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, this yield-based forecast for S&P 500 dogs was graded by Wall St. Wizards as 60% accurate.

These 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 16, 2020 were:

Source: YCharts.com

Marathon Petroleum Corp (MPC) netted $734.30 based on a median estimate from nineteen analysts, plus dividends. The Beta number showed this estimate subject to risk 70% more than the market as a whole.

Tapestry Inc (TPR) was projected to net $505.50, based on a median of target price estimates from thirty-one analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 11% less than the market as a whole.

Nordstrom Inc (JWN) was projected to net $454.50, based on the median of target price estimates from twenty-three analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk 34% more than the market as a whole.

AbbVie Inc (ABBV) was projected to net $388.08, based on a median target estimates from thirteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 4% less than the market as a whole.

Occidental Petroleum (OXY) was projected to net $377.93, 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 17% less than the market as a whole.

Kohl's Corp (KSS) was projected to net $376.08, based on the median of target price estimates from eighteen analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk equal to the market as a whole.

Simon Property Group (SPG) was projected to net $373.46, based on dividends, plus the median of target price estimates from twenty-two analysts, less broker fees. The Beta number showed this estimate subject to risk 48% less than the market as a whole.

Valero Energy Corp (VLO) was projected to net $360.98, based on a median of target price estimates from twenty-one analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk 48% more than the market as a whole.

Gap Inc (GPS) was projected to net $359.40, based on dividends, plus median target price estimates from twenty-five analysts, less broker fees. The Beta number showed this estimate subject to risk 29% less than the market as a whole.

The Interpublic Group of Companies (IPG) was projected to net $330.33, based on dividends, plus a mean target price estimate from twelve analysts, less broker fees. The Beta number showed this estimate subject to risk 6% more the market as a whole.

The average net gain in dividend and price was estimated at 42.61% on $10k invested as $1k in each of these ten stocks. These averaged risk 2% less than the market as a whole.

Source: teamjimmyjoe.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".

99 Top S&P 500 Dividend Dogs By Yield

Source: us.spindices/YCharts

Actionable Conclusions (11-20): 10 Top S&P 500 Dividend Dogs By Yield

Top ten S&P 500 stocks selected 8/16/19 by yield represented five of eleven Morningstar sectors. First place was claimed by one of five consumer cyclical sector representatives, Macy's Inc. (M) [1]. The other four placed fifth, seventh, ninth and tenth, Tapestry Inc (TPR) [5], Gap Inc (GPS) [7], Kohl's Corp, (KSS) [9], and Nordstrom Inc. (JWN) [10].

Second place went to the lone communication services sector representative, CenturyLink Inc. (CTL) [2].

Third place went to one of two real estate sector representatives, Iron Mountain Inc (IRM) [3]. The other real estate sector stock placed eighth, Kimco Realty Corp (KIM)[8].

Finally, single representatives from energy, and healthcare, placed fourth, and sixth. They were Occidental Petroleum Corp (OXY) [4], and AbbVie Inc (ABBV) [6], to complete the S&P 500 top ten dogs by yield for August.

Actionable Conclusions: (21-30) Top Ten S&P 500 Stocks Showed 29.35% To 69.84% Upsides To August, 2020; (31) Two Downsiders Ranged -2.05% To - 5.46%.

Source: YCharts.com

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

Analysts Forecast A 10.95% Disadvantage For 5 Highest Yield, Lowest Priced S&P 500 Dividend Stocks To August, 2020

Ten top S&P 500 dividend dogs were culled by yield for this monthly update. Yield (dividend / price) results verified by YCharts did the ranking. S&P 500 stocks reporting annual returns below -23% were not included and so as many as eleven dividend aristocrats, with annual increasing dividends paid for 25 years or more, were eliminated from this list.

Source: YCharts.com

As noted above, top ten S&P 500 dividend dogs selected 8/16/19 showing the highest dividend yields represented five of eleven in the Morningstar sector scheme.

Actionable Conclusions: Analysts Forecast 5 Lowest-Priced Of the Top Ten Highest-Yield S&P 500 Dogs (32) Delivering 28.4% Vs. (33) 31.89% 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 Dividend S&P 500 kennel by yield were predicted by analyst 1-year targets to deliver 10.95% LESS gain than $5,000 invested as $.5k in all ten. The fifth lowest-priced selection, Tapestry Inc (TPR), was projected to deliver the best net gain of 50.55%.

Source: YCharts.com

The five lowest-priced top-yield S&P 500 dividend dogs as of August 16 were: CenturyLink Inc (CTL), Gap Inc, (GAP); Macy's Inc (M); Kimco Realty Corp (KIM); Tapestry Inc (TPR), with prices ranging from $11.21 to $19.96.

Five higher-priced S&P 500 dividend dogs as of July 18 were: Nordstrom Inc (JWN); Iron Mountain Inc (IRM); Occidental Petroleum Corp (OXY); Kohl's Corp (KSS); AbbVie Inc (ABBV), whose prices ranged from $25.32 to $64.43.

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&P500 dividend dog 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: teamjimmyjoe.com

Disclosure: I am/we are long PFE. 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.