January Jumps On 22 Dividends Juiced By Graham Formula

Jan. 11, 2022 12:47 PM ETARCC, DGICA, FSK, GBDC, DINO, HTGC, LYB, MAIN, ORCC, ORI, PKX, QIWI, TX, VIA, AKO.B3 Comments9 Likes

Summary

  • "Benjamin Graham Value Stocks match the criteria. Benjamin Graham followed. " ---YCharts Value Screener.
  • 35 Graham Formula Picks screened-by YCharts January 7, 2022 are based-on Ben Graham's established value-detection-criteria. Of those, 21 met the dogcatcher-ideal of dividends from $1K invested exceeding their single-share-prices.
  • Representing ten-of-eleven Morningstar Sectors, all 35 pay regular-dividends. Broker-targeted-top-ten Graham dividend-paying net-gainers ranged 15.3%-72.92% topped by PKX, & QIWI, as of 1/7/22.
  • By yield, QIWI leads the top-ten Graham formula field of MAIN, TX, VIA, AKO.B, ARCC, GBDC, HTGC, ORCC, FSK, & QIWI. The ten averaged 9.76% yield.  Graham top-ten, by broker target-price upsides, were ORI, AFG, HFC, TX, ATHM, IGIC, PKX, QIWI, BGFV and HVT averaging 43.25%.
  • $5k invested January 7 in the five top-yield, lowest-priced, Graham formula stocks showed 25.83% more net-gain than from $5k invested all top ten. Little (lower-priced) equities led the top ten January Graham Formula derived dividend stocks.
  • Looking for a portfolio of ideas like this one? Members of The Dividend Dog Catcher get exclusive access to our model portfolio. Learn More »
Jumping, flying. Four cute playful purebred dogs, big and small, jumping isolated over multicolored studio backgrounds.

Anton Vierietin/iStock via Getty Images

Foreword

While 14 out of this collection of 35 Graham Dividend stocks are too pricey to justify their skinny dividends, 21 of the 35 by yield live up to the ideal of offering annual dividends (from a $1K investment) exceeding their price per share.

21 BGF Ideal Dogs Jan22

21 Ideal Graham Formula Dividend Dogs

YCharts

In the current market advance, the dividends from $1k Investments in any of the twenty-one stocks listed above met or exceeded their single share prices as of 1/7/22.

As we're well-past the first anniversary of the 2020 Ides of March dip, the time to snap up some the twenty-one top-yield Graham dogs is now... unless another big bearish drop in price looms ahead. (At which time your strategy would be to add to your position in any of these you then hold.)

To learn which of these 21 ideally-priced opportunities are "safer" to buy (namely which have ready cash to pay their dividends). Use the last bullet in the Summary above to navigate to my dividend dogcatcher follow-up article after January 17 in the SA Marketplace.

Actionable Conclusions (1-10): Analysts Estimate 15.3% To 72.92% Top Ten Graham Net Gains To January, 2023

Five of the ten top Graham Formula picks by yield were verified as also being 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 October forecast for Graham-derived dividend dogs (as graded by Brokers) was 50% accurate.

Estimated dividend-returns from $1000 invested in each of the highest-yielding stocks and their aggregate one-year analyst median target-prices, as reported by YCharts, created the 2022-23 data-points. Note: target prices by lone-analysts were not used. Ten probable profit-generating trades projected to January 7, 2023 were:

Source: YCharts.com

Gainers

Top Ten Ben Graham Formula Gainers

YCharts

QIWI PLC (QIWI) was projected to net $729.16 based on dividends, plus the median of target price estimates from six analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 30% less than the market as a whole.

POSCO (PKX) was projected to net $587.24, based on dividends, plus the median of target price estimates from two analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 5% greater than the market as a whole.

Ternium (TX) was projected to net $257.64, based on a median of target estimates from fourteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 54% greater than the market as a whole.

HollyFrontier Corp (HFC) was projected to net $235.19, 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/volatility 66% over the market as a whole.

Old Republic international (ORI) was projected to net $201.43, based on the median of target price estimates from two analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 13% less than the market as a whole.

Embotelladora Andina SA (AKO.B) netted $194.33 based on a median target price estimate from eight analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 46% less than the market as a whole.

Donegal Group Inc (DGICA) was projected to net $185.60, based on dividends, plus the median of target price estimates from two analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 93% less than the market as a whole.

Hercules Capital Inc (HTGC) was projected to net $171.43, based on dividends, plus the median of target price estimates from ten analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 51% more than the market as a whole.

LyondellBasell Industries NV (LYB) was projected to net $166.312, based on the median of target price estimates from twenty-two analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 48% over the market as a whole.

Owl Rock Capital Corp (ORCC) was projected to net $152.95, based on a median target price estimate from ten analysts, plus dividends, less broker fees. A Beta number is not yet available for ORCC.

The average net-gain in dividend and price was estimated to be 28.81% on $10k invested as $1k in each of these ten stocks. The average Beta showed these estimates subject to risk/volatility 6% less than the market as a whole.

Dog

Dog Art from Dividend Dog Catcher

Open source from DDC

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".

Top 35 Graham Value Formula Picks By Broker Targets

35 Graham Stocks By PrTgtUpsides

35 Graham Stocks by Price Target Upsides, January 2022

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.

Top 35 Graham Value Formula Picks By Yield

Graham Top Yield January Stocks

35 Graham Formula Stocks by January 2022Yield

YCharts

Actionable Conclusions (11-20): Ten Top Stocks By Yield Are The January Dogs of The Graham Formula Pack

Top ten Graham stocks selected 1/7/22 by yield represented five of eleven Morningstar sectors. First place was secured by QIWI PLC [1], the lone technology representative.

In second place was FS KKR Capital Corp (FSK) [2], the first of six financial services representatives listed. The other five third through sixth, and tenth: Owl Rock Capital Corp [3], Hercules Capital Inc (HRCC) [4], Golub Capital BDC Inc (GBDC) [5], Ares Capital Corp (ARCC) [6], and Main street Capital Corp (MAIN) [10].

One lone consumer defensive member placed seventh, Embotelladora Andina SA [7], Then one Utilities representative placed eighth, Via Renewables (VIA) [8].

Finally, one basic materials representative placed ninth, Ternium SA [10] to complete this Graham Formula top ten, by yield, for January.

upside

Graham Top Ten by Upside

YCharts

Actionable Conclusions: (21-30) Ten Graham Value Dividend Stocks Showed 10.4% To 59.01% Upsides To January, 2023, With (31) Three -0.23 to -6.93% Losers

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 25.83% Advantage For 5 Highest Yield, Lowest Priced of Top-Ten Graham Value Formula Dividend Stocks To January, 2023

Ten top Graham Formula stocks were culled by yield for this monthly update. Yield (dividend/price) results verified by YCharts did the ranking.

Graham Yield Chart

Top Ten Graham Stocks By Yield

YCharts

As noted above, top-ten Graham Formula Dogs selected 1/7/22 showing the highest dividend yields represented five of eleven sectors in the Morningstar scheme.

Actionable Conclusions: Analysts Estimated The 5 Lowest-Priced Of Ten Highest-Yield Graham Formula Dividend Stocks (33) Delivering 25.02% Vs. (34) 19.88% Net Gains by All Ten by January, 2023

Graham Gains

10 January Graham Stocks by Gains

YCharts

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Graham Formula dividend pack by yield were predicted by analyst 1-year targets to deliver 35.83% more gain than $5,000 invested as $.5k in all ten. The very lowest priced Graham top yield stock, QIWI PLC, was projected to deliver the best net gain of 72.92%.

Price Chart 1/22

10 By Price Jan 22-23

YCharts

The five lowest-priced top-yield Graham Formula dividend stocks for January 7 were: QIWI PLC; Via Renewables Inc; Embrotelladora Andina SA; Owl Rock Capital Corp; Golub Capital BDC Inc, with prices ranging from $8.05 to $15.48

January 7 were: Hercules Capital Inc; Ares Capital Corp; FS KKR Capital Corp; Main Street Capital Corp; Ternium SA, whose prices ranged from $17.03 to $48.28.

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 90% accurate on the direction of change and just 0% to 20% accurate on the degree of change.

Afterword

If somehow you missed the suggestion of the twenty one stocks ripe for picking at the start of the article, here is a repeat of the list at the end:

21 Ideal Graham stocks Jan 2022

21 Ideal Graham Formula Dogs as of January 7, 2022

YCharts

In the current market advance, dividends from $1K invested in the twenty-one stocks listed above met or exceeded their single share prices as of 1/7/21.

As we are well-past the first anniversary of the 2020 Ides of March dip, the time to snap up those twenty-four top yield Graham dogs is now... unless another big bearish drop in price looms ahead. (At which time your strategy would be to add to your holdings.)

To learn which of these 21 ideally-priced opportunities are "safer" to buy (namely which have ready cash to pay their dividends). Use the last bullet in the Summary above to navigate to my dividend dogcatcher follow-up article after December 17 in the SA Marketplace.

Since all of the top-ten Graham Value Dividend shares are now priced less than the annual dividends paid out from a $1K investment, the following charts compare those at current prices (top chart) with the break-even pricing of all ten (middle chart) concluding with the dollar and percent variants to all ten top dogs conforming to (but not exceeding) the dogcatcher ideal (bottom chart).

Current vs/B/Even Prices

Current vs Break-even Prices for Top Ten January 2022 Graham formula stocks

Y-Charts

You could look at the bottom chart as an indicator of how high each stock might rise in the coming year or two. However, it also shows how much the price must rise (in either dollars or percentage) before it no longer conforms the standard of dividends from $1K invested exceeding the current single share price.

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 Graham Value Dividend 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 www.indexarb.com; YCharts.com; finance.yahoo.com; analyst mean target price by YCharts. Dog picture: Open source dog art from dividenddogcatcher.com

This article was written by

Fredrik Arnold profile picture
28.24K Followers
Simple, straightforward 7-step analysis that finds lucrative income stocks.
Fredrik Arnold is my pen name. In 2012 I retired from doing quality service analysis in Boston and moved to North Carolina in 2013, thence to Central Oregon in 2018. My fascination with capital preservation, long-term investments, and trading systems keeps me blogging for Seeking Alpha. My articles focus on dividend yields, analyst median 1 yr targets, free cash flow yields, and one-year total returns as stock trading indicators. These are essential tools for catching the most valuable dividend dogs. My dividend dogcatcher premium site in the Seeking Alpha Marketplace shows annual real-time trading results since 2015.
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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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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