- "S&P 500® Dividend Aristocrats measure the performance S&P 500 companies that have increased dividends every year for the last 25 consecutive years." - US SPIndices.
- The 64 Aristocrats of March 2020 represented ten of eleven Morningstar sectors (no Technology). Broker target top-ten net gains ranged 19.47-40.37% topped by Chevron and Exxon Mobil 3/2/20.
- By yield, Exxon now tops all Aristocrats. Top ten Yields from Walgreens Boots Alliance, 3M Co., Leggett & Platt, Franklin Resources, Amcor, People's United Financial, AbbVie, Chevron, AT&T, and Exxon averaged 4.84%.
- Aristocrats top ten by broker target price upsides, Federal Realty Investment Trust, Walgreens Boots Alliance, Caterpillar, Emerson Electric, Leggett & Platt, Archer-Daniels Midland, V.F. Corp., Nucor Corp., Exxon Mobil, and Chevron averaged 24.21% in estimated upside. One bottom-dweller showed -1.2%.
- $5k invested March 2 in the five top-yield lowest priced Aristocrats showed 26.6% less net gain than from $5k invested in the top ten. Big, higher-priced equities held their lead in this list of 64 S&P 500 Dividend Aristocrats.
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As supplement to this article, please note that Kiplinger has published an online slideshow detailing all 64 S&P Dividend Aristocrats and calling out the seven new members for 2020. The article is entitled 64 Best Dividend Stocks You Can Count On in 2020. You will find it written here by Dan Burrows, a contributing editor.
Actionable Conclusions (1-10): Analysts Expect 19.47% To 40.38% Aristocrat Net Gains To March 2021
Five 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 March forecast for Aristocrats graded by brokers was 50% accurate.
Projections based on estimated dividend returns from $1000 invested in each of the highest-yielding stocks and their aggregate 1-year analyst median target prices, as reported by YCharts, created the 2020-21 data points. Note: 1-year target prices by lone analysts were not applied. Ten probable profit-generating trades projected to March 2, 2021 were:
Chevron (CVX) was projected to net $403.79 based on target price estimates from twenty-five analysts plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk 4% over the market as a whole.
Exxon Mobil Corp. (XOM) was projected to net $389.05 based on a median target price estimate from twenty-four analysts plus dividends, less broker fees. The Beta number showed this estimate subject to risk 10% over the market as a whole.
Nucor Corp. (NUE) was projected to net $318.10 based on the median of target price estimates from fifteen analysts plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk 61% more than the market as a whole.
V.F. Corp. (VFC) netted $301.70 based on a median target price estimate from twenty-six analysts plus dividends, less broker fees. The Beta number showed this estimate subject to risk 13% more than the market as a whole.
Archer-Daniels Midland (ADM) was projected to net $270.66 based on dividends plus the median of target price estimates from fourteen analysts, less broker fees. The Beta number showed this estimate subject to risk 14% greater than the market as a whole.
Leggett & Platt Inc. (LEG) was projected to net $227.32 based on dividends plus the median of target estimates from seven brokers, less transaction fees. The Beta number showed this estimate subject to risk 21% more than the market as a whole.
Emerson Electric (EMR) was projected to net $214.7 based on a median of target estimates from thirty-five analysts plus dividends, less broker fees. The Beta number showed this estimate subject to risk 38% more than the market as a whole.
People's United Financial (PBCT) was projected to net $206.66 based on dividends plus the median of target price estimates from thirteen analysts, less broker fees. The Beta number showed this estimate subject to risk 24% more than the market as a whole.
Walgreens Boots Alliance (WBA) was projected to net $199.10 based on a median target price estimate from twenty-four analysts plus dividends, less broker fees. The Beta number showed this estimate subject to risk 14% less than the market as a whole.
Caterpillar Inc. (CAT) was projected to net $194.71 based on dividends plus the median of target price estimates from twenty-six analysts, less broker fees. The Beta number showed this estimate subject to risk 44% more than the market as a whole.
The average net gain in dividend and price was estimated to be 27.26% on $10k invested as $1k in each of these ten stocks. The average Beta showed these estimates subject to risk 22% above the market as a whole.
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".
64 Dividend Aristocrats By March Broker Targets
Source: US SPIndices /YCharts
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. 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 also be taken as contrarian.
64 Dividend Aristocrats By March Yield
Source: US SPIndices/YCharts
Actionable Conclusions (12-21): Ten Top Stocks By Yield Are The March Dogs of The Dividend Aristocrats
Top ten Aristocrats selected 3/2/20 by yield represented six of eleven Morningstar sectors. Two energy representatives placed first and third, Exxon Mobil  and Chevron , respectively. In second place was AT&T, Inc. (T) , the lone communication services representative in the top ten. Two healthcare representatives in the top ten placed fourth and tenth, AbbVie (ABBV)  and Walgreens Boots Alliance Inc. , respectively.
Two financial services firms placed fifth and seventh, People's United Financial Inc.  and Franklin Resources Inc. (BEN) , respectively.
Then, two representing consumer cyclicals placed sixth and eighth, Amcor PLC (AMCR)  and Leggett & Platt Inc. , respectively. Following in ninth was the lone industrials representative, 3M Company (MMM) , to complete the S&P Dividend Aristocrats top ten by yield for March.
Actionable Conclusions: (22-31) Ten Aristocrats Showed 17.07% To 36.04% Upsides To March 2021; (32) Downside Projected From One Loser Was -1.2%.
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 28.6% Disadvantage For 5 Highest-Yield, Lowest-Priced Dividend Aristocrats To March 2021
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 3/2/20 showing the highest dividend yields represented six of eleven in the Morningstar sector scheme.
Actionable Conclusions: Analysts Estimated The 5 Lowest-Priced Of Ten Highest-Yield Dividend Aristocrats (33) Delivering 15.57% Vs. (34) 21.21% Net Gains by All Ten by March 2021
$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 26.6% less gain than $5,000 invested as $.5k in all ten. The ninth-lowest priced Aristocrats top yield stock, Chevron Corp., was projected to deliver the best net gain of 40.38%.
The five lowest-priced top-yield Aristocrats for March 2 were Amcor PLC, People's United Financial Inc., Franklin Resources Inc., AT&T, Inc., and Leggett & Platt Inc., with prices ranging from $9.79 to $40.25
The five higher-priced top-yield Aristocrats for March 2 were Walgreens Boots Alliance Inc., Exxon Mobil Corp., AbbVie, Chevron Corp., and 3M Co., whose prices ranged from $48.16 to $153.02.
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 20-80% accurate on the direction of change and just 0-20% 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.
The 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 IndexArb; YCharts; Yahoo Finance; analyst mean target price by YCharts. Dog photo: theverybesttop10.com
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This article was written by
Fredrik Arnold is a retired quality service analyst sharing investment ideas with a primary focus on dividend yields by utilizing free cash flow and one-year total returns as trading indicators.He is the leader of the investing group The Dividend Dog Catcher, where he shares a minimum of one new dividend stock idea per week with focus on yield or extraordinary financial circumstances. All ideas are archived and available after weekly announcement. Learn more.
Analyst’s 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.
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