Seeking Alpha

Your 57 September S&P 500 Dividend Aristocrats

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Includes: ABBV, ADM, BEN, CAH, CAT, CVX, EMR, ITW, JNJ, LEG, MCD, MMM, NUE, PBCT, T, UTX, XOM
by: Fredrik Arnold
Summary

S&P 500® Dividend Aristocrats measure the performance of S&P 500 companies that have increased dividends every year for the last 25 consecutive years." - us.spindices.com.

The 57 Aristocrats stocks for September 2019 represent all 11 Morningstar Sectors. Broker target-top-10 net gains ranged 9.68-30.79% topped by ABBV 9/11/19.

By yield, ABBV topped all Aristocrats again. Top 10 Yields from ADM, MMM, BEN, LEG, CVX, CAH, PBCT, XOM, T, and ABBV averaged 4.27%.

Aristocrats top 10 by broker target price upsides from CAT, NUE, GD, MCD, XOM, CVX, JNJ, UTX, ADM, and ABBV averaged 12.9% in estimated gains. Ten bottom-dwellers averaged -11.05%.

$5k invested September 11 in the five top-yield lowest priced Aristocrats showed 36.27% LESS net gain than from $5k invested in the top ten. High price big dogs led the Dividend Aristocrats.

Actionable Conclusions (1-10): Analysts Expect 9.68% To 30.79% Aristocrat Net Gains By September 2020

Four of the ten top Aristocrats by yield were verified as being among these top ten gainers for the coming year based on analyst one-year target prices. (They are tinted gray in the chart below). Thus, this yield-based forecast for Aristocrats graded by Brokers was 40% 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 September 11, 2020 were:

Source: YCharts.com

AbbVie Inc. (ABBV) was projected to net $307.90 based on dividends, plus the median of target price estimates from 12 analysts, less broker fees. The Beta number showed this estimate subject to risk 5% less than the market as a whole.

Archer-Daniels Midland Co. (ADM) was projected to net $183.66, based on the median of target price estimates from 15 analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk 5% more than the market as a whole.

Chevron (CVX) was projected to net $159.64, based on target price estimates from 26 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk 1% over market as a whole.

Johnson & Johnson (JNJ) was projected to net $151.12, based on dividends, plus a mean target price estimate from 20 analysts, less broker fees. The Beta number showed this estimate subject to risk 32% less than the market as a whole.

Exxon Mobil Corp. (XOM) was projected to net $150.59, based on a median target price estimate from 25 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk equal to the market as a whole.

United Technologies Corp. (UTX) was projected to net $146.58 based on dividends, plus the median of target estimates from 19 brokers, less transaction fees. The Beta number showed this estimate subject to risk 21% more than the market as a whole.

McDonald's Corp. (MCD) netted $115.81 based on a median target price estimate from 33 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 51% less than the market as a whole.

Nucor Corp. (NUE) was projected to net $110.87, based on a median target price estimate from 16 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 62% more than the market as a whole.

Caterpillar Inc. (CAT) was projected to net $97.72, based on dividends, plus a mean target price estimate from 27 analysts, less broker fees. The Beta number showed this estimate subject to risk 54% more than the market as a whole.

Emerson Electric Co. (EMR) was projected to net $96.79, based on a median of target estimates from 24 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 35% more than the market as a whole.

The average net gain in dividend and price was estimated to be 15.2% on $10k invested as $1k in each of these 10 stocks. The average Beta showed these estimates subject to risk 9% more than the market as a whole.

Actionable Conclusion (11): (Bear Alert) Analysts Predicted One Dividend Aristocrat Dog To Lose 4.74% By September 2020

The probable losing trade revealed by YCharts for September 2019-20 was:

Source: YCharts.com

Illinois Tool Works Inc. (ITW) projected a $47.36 loss based on dividend plus a median target price estimate from 20 analysts including $10 of broker fees. The Beta number showed this estimate subject to risk 31% less than the market as a whole.

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The Dividend Dogs Rule

Stocks earned the "dog" moniker by exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where, and (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 one broker coverage produced a zero score on the above scale. This scale 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 (12-21): Ten Top Stocks By Yield Are The Dogs of The Dividend Aristocrats

Top ten Aristocrats selected 9/11/19 by yield represented seven of 11 Morningstar sectors. Top yielding stock, the first of two healthcare representatives was, AbbVie [1], while the second health issue in the top ten placed fifth, Cardinal Health (CAH) [5].

In second place was AT&T, Inc. (T) [2], the lone communication services representative in the top ten. Two energy representatives placed third, and sixth, Exxon Mobil [3], and, Chevron [6], while two financial services firms placed fourth, and eighth, People's United Financial Inc. (PBCT) [4], and Franklin Resources Inc. (BEN) [8].

A lone consumer cyclical firm took the seventh slot, Leggett & Platt Inc. (LEG) [7]. Following in ninth place was the lone industrials representative, 3M Company (MMM) [9]. Finally the lone consumer defensive sector representative placed tenth, Archer-Daniels Midland Co. [10], to complete these S&P Aristocrats top 10 by yield for September.

Source: YCharts.com

Actionable Conclusions: (22-31) Ten Aristocrats Showed 7.67% To 24.63% Upsides To August 16, 2020; (32) Downsides Projected From Eight Losers Ranged -0.37% To -6.42%

To quantify top yield rankings, analyst median 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 36.27% Disadvantage For Five Highest Yield, Lowest Priced Dividend Aristocrats To September 2020

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

Source: YCharts.com

As noted above, top 10 Aristocrats selected 9/11/19 showing the highest dividend yields represented six of eleven in the Morningstar sector scheme.

Actionable Conclusions: Analysts Estimated The Five Lowest-Priced Of Ten Highest-Yield Dividend Aristocrats (33) Delivering 18.09% Vs. (34) 21.39% Net Gains by All Ten by August 2020

Source: YCharts.com

$5,000 invested as $1k in each of the five lowest-priced stocks in the top ten Dividend Aristocrats kennel by yield were predicted by analyst one-year targets to deliver 1.10% more gain than $5,000 invested as $.5k in all 10. The seventh lowest priced Aristocrats top yield stock, AbbVie Inc., was projected to deliver the best net gain of 30.79%.

Source: YCharts.com

The five lowest-priced top yield Aristocrats for September 11 were: People's United Financial, Franklin Resources, AT&T, Archer-Daniels Midland, and Leggett & Platt, with prices ranging from $16.01 to $42.04

September 11 were: Cardinal Health, AbbVie, Exxon Mobil, Chevron, and 3M Co., whose prices ranged from $48.88 to $168.08.

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.

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: 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: dogbreedsplus.com.