Buy 10 Inflation Buster Ideal Dividend Dogs In August

Aug. 09, 2022 12:54 PM ETAB, ABR, AES, ARCC, ARE, AVGO, BHP, BTI, COP, DFS, FITB, HAS, NAVI, NXRT, PACW, PM, TSM, VICI2 Comments

Summary

  • March-April 2022 UBS, Kiplinger, and Barrons analysts/reporters combined to list five sets of stocks sorted as: “Inflation Busters for 2022.” Those five articles revealed 48 equities, with 43 paying dividends.
  • Article titles were, ’24 PricingPowerPerformers’ [UBS]; ‘7 REITS Raising-Dividends’ [KIP]…; '10 Stocks for Rising Interest-Rates’ [KIP]…; ‘5 Stocks to Stave-off Sizzling Inflation”[KIP]…; ‘6 Dividend Stocks Whip Inflation…[Barron’s].’.
  • Those 48 top-inflation busting stocks ranged 0.08% to 12.97% in annual yield and ranged 4.38% to 55.06% in one-year price-target-upsides per brokers 8/5/22-23.
  • Top-ten 2022 Inflation Busting Dividend stocks boasted net gains from 22.8% to 56.23% as of August 5, 2022-23, per YCharts forward-looking data.
  • $5k invested in the August lowest-priced five of ten top-yield Inflation Busters for 2022 showed 3.14% LESS net gain than from $5k invested in all ten. Bigger (higher-priced) stocks lead by a neck in this ‘inflation-busting pack for August.
  • Looking for a portfolio of ideas like this one? Members of The Dividend Dog Catcher get exclusive access to our model portfolio. Learn More »

Special shape hot air balloon in shape of dog head

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Foreword

This article is based on five Kiplinger and Barron's articles aimed at finding "Inflation Busting" stocks for 2022. The title and links to the articles are below:

24 Pricing Power Performers

"With inflation pressures surging, pricing power relative to cost exposures will be a key theme and source of [absolute outperformance] for global equity markets," writes the UBS Equity Strategy team.-by: Dan Burrows April 14, 2022

7 REITS with Rising Dividends

REIT dividends are expected to post double-digit percentage growth this year, making the yield-friendly sector all the more attractive.-by: Lisa Springer April 13, 2022

10 Stocks for Rising Interest Rates

The Federal Reserve has signaled in no uncertain terms that interest rates will head higher in 2022. Here are 10 of the best stocks for this environment. -by: Jeff Reeves April 4, 2022

5 Stocks To Stave Off Sizzling inflation

Income investors like utility stocks for their stability and generous dividends. Here are 12 top-rated ones to watch in the new year. -by: Dan Burrows February 10, 2022

6 Dividend Stocks Whip Inflation

The hot new investment theme isn't socially nuanced crypto space finance or metaverse charging networks for virtual vehicles. It's dividends-cash payments to shareholders.

To find more dividend growers, Barron's used an approach inspired by the Federal Reserve's so-called dot plot, or path of expected interest rate hikes. We screened the S&P 500 for companies that analysts predict will increase payments nicely in the years ahead. Here are six. -By Jack Hough Updated April 24, 2022 / Original April 22, 2022

Any collection of stocks is more clearly understood when subjected to yield-based (dog catcher) analysis, this collection of Kiplinger, and Barron's articles, aimed at finding the "Inflation Busting", stocks for 2022 is perfect for the dogcatcher process. Below are the August 5 "Inflation-Busters" as parsed by YCharts.

The prices of 10 of these 48 Kiplinger, and Barron's dividend selections, made the possibility of owning productive dividend shares from this collection more viable for first-time investors.

Those 10 Dogcatcher Ideal "Inflation Busting" stocks for August are: BHP Group Ltd (BHP); Arbor Realty Trust Inc (ABR); Ares Capital Corp (ARCC); AllianceBernstein Holding (AB); British American Tobacco p.l.c. (BTI); VICI Properties Inc (VICI); Navient Corp (NAVI); PacWest Bancorp (PACW); Fifth Third Bancorp (FITB); The AES Corp (AES).

Those ten all live up to the ideal of having their annual dividends from a $1K investment exceed their single share prices. Many investors see this condition as "look closer to maybe buy" opportunity.

Actionable Conclusions (1-10): Analysts Estimated 22.8% To 56.23% Net Gains For Ten Top 'Inflation Busting' Dividend Stocks To August, 2023

Four of ten top "Inflation Buster" dividend stocks by yield were also 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.

KBIB22 (1A) GAINERS AUG 22-23

Source: YCharts.com

Estimated dividends from $1000 invested in each of the highest yielding "Inflation Buster" stocks, added to the median of aggregate one-year target prices from analysts (as reported by YCharts), generated the following results. Note: one-year target prices by lone analysts were not included. Ten probable profit-generating trades projected to August, 2023 were:

Taiwan Semiconductor Manufacturing Co Ltd (TSM) was projected to net $562.33, based on the median of target estimates from nine analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 2% less than the market as a whole.

Arbor Realty Trust Inc was projected to net $524.65, based on the median of target price estimates from five analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 77% greater than the market as a whole.

British American Tobacco was projected to net $393.98 based on dividends, plus the median of target estimates from four brokers, less transaction fees. The Beta number showed this estimate subject to risk/volatility 43% greater than the market as a whole.

ConocoPhillips (COP) was projected to net $371.10, based on dividends, plus median target price estimates from twenty-five analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 41% greater than the market as a whole.

Hasbro Inc (HAS) was projected to net $326.50, based on dividends, plus the median of target price estimates from twelve analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 21% less than the market as a whole.

PacWest Bancorp was projected to net $285.35 based on the median of target price estimates from five analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 82% greater than the market as a whole.

Alexandria Real Estate Equities Inc (ARE) was projected to net $279.36, based on dividends, plus the median of target price estimates from twelve analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 8% greater than the market as a whole.

Discover Financial Services (DFS) was projected to net $241.54, based on dividends, plus the median of target price estimates from eighteen analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 45% over the market as a whole.

Broadcom Inc (AVGO) was projected to net $239.60, based on dividends, plus the median of target price estimates from twenty-three analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 8% above the market as a whole.

NexPoint Residential Trust (NXRT) was projected to net $228.23, based on the median of estimates from six analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 1% greater than the market as a whole.

The average net gain in dividend and price was estimated at 34.53% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility 18% above the market as a whole.

KBIB22 (2) AUG 22-23 Open source dog art DDC4 from dividenddogcatcher.com

Source: Open source dog art from dividenddogcatcher.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".

48 Inflation Busters For 2022 Per August Analyst Target Data

KBIB22 (3A) 1-48BYTARGETS AUG 22-23

Source: YCharts.com

48 Inflation Busters 2022 Dividends By August Yields

KBIB22 (3B) 1-50BY YIELD AUG22-23

Source: YCharts.com

Actionable Conclusions (11-20): Ten Top Inflation Busters By Yield For 2022

Top ten 2022 "Inflation Busting" stocks by yield in August represented five of eleven Morningstar sectors. First place went to the lone basic materials member, BHP Group Ltd.

Second, and seventh places were claimed by real estate sector representatives, Arbor Realty Trust Inc [2], Vici Properties Inc [7].

Positions three, four, eight and ten were claimed by financial services sector members: Ares Capital Corp [3]; AllianceBernstein Holding LP [4]; Navient Corp [8]; PacWest Bancorp [10].

Two consumer defensive stocks took the fifth and seventh slots on this list, British America Tobacco p.l.c. [5], and Phillip Morris International Inc (PM) [7].

Finally, a lone consumer cyclical member placed ninth, Hasbro Inc to complete the top ten "Inflation Busters" for 2022 dividend pack as of August 5.

Actionable Conclusions: (21-30) Ten Top "Inflation Buster" Dividend Payers For 2022 Showed 19.57%-55.06% Upsides While (31) Two Down-siders Stumbled In August

KBIB22 (4) UP/DNSIDES AUG 22-23

Source: YCharts.com

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

Analysts Forecast A 3.14% Disadvantage For 5 Highest Yield, Lowest Priced, Of 10 Inflation Busting Stocks For 2022

Ten top Kiplinger, and Barron's dividend selections, aimed at finding the "Inflation Busters" for 2022 were culled by yield for this update. Yield (dividend / price) results provided by YCharts did the ranking.

KBIB22 (5)10LIST AUG 22-23

Source: YCharts.com

As noted above, top ten Kiplinger, and Barron's dividend selections, aimed at finding the best Inflation Buster stocks for 2022 screened 8/5/22, showing the highest dividend yields, represented five of eleven in the Morningstar sector scheme.

Actionable Conclusions: Analysts Predicted 5 Lowest-Priced Of The Top Ten Highest-Yield Best Bets For 2022 Dividend Stocks (32) Delivering 21.47% Vs. (33) 22.17% Net Gains by All Ten Come August 2022

KBIB22 (6) 10GAINS AUG22-23

Source: YCharts.com

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Kiplinger, Barrons, and Dogs of the Dow dividend selections, aimed at finding the "Inflation Busters" for 2022 by yield were predicted by analyst 1-year targets to deliver 3.14% LESS gain than $5,000 invested as $.5k in all ten. The sixth lowest-priced selection, British American Tobacco p.l.c., was projected to deliver the best net gain of 39.40%.

KBDBB22 (7)10BYPRICE AUG 22-23

Source: YCharts.com

The five lowest-priced top-yield Kiplinger, and Barron's dividend selections, aimed at finding the "Inflation Busters" for 2022 as of August 5 were: Arbor Realty Trust Inc; Navient Corp; Ares Capital Corp; PacWest Bancorp; VICI Properties Inc, with prices ranging from $15.64 to $34.45.

Five higher-priced Kiplinger, and Barron's dividend selections, aimed at finding the "Inflation Busters" for 2022 as of August 5 were: British American Tobacco p.l.c.; AllianceBernstein Holding LP; BHP Group Ltd; Hasbro Inc; Phillip Morris International Inc, whose prices ranged from $39.29 to $97.60.

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 90% accurate on the direction of change and just 0% to 15% 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.

Afterword

This article features 48 Kiplinger, and Barron's "Inflation Buster" selections for 2022. The article focuses on the top 30 so dividend payers. Thus, nearly one third of the original list of companies is neglected. Therefore, below is the complete list of 48 stocks grouped by source.

KBIB22 (8) 48 BY SOURCE AUG22-23

Sources: Kiplinger.com, Barrons.com, YCharts.com

If somehow you missed the suggestion of which stocks are ripe for picking at the start of this article, here is a reprise of the list at the end:

The prices of 10 of these 48 Kiplinger, and Barron's dividend selections, as "Inflation Buster", stocks for 2022 made the possibility of owning productive dividend shares from this collection more viable for first-time investors.

Those 10 Dogcatcher ideal "inflation Busting" dividend stocks for August are:

KBIB22 (9) 10 Ideal Inflation Busters AUG22-23

Source: YCharts.com

Those ten all live up to the ideal of having their annual dividends from a $1K investment exceed their single share prices. Many investors see this condition as "look closer to maybe buy" opportunity.

Which of the 10 are 'safer' dividend dogs? To find the answer find my 'Safer' July Dividend Dogcatcher follow-up detailing these Kiplinger, and Barron's Inflation Busting, stocks for 2022 in the Seeking Alpha Marketplace appearing on or about August 15. Simply click on the link in last Summary bullet point at the top of this article.

How All Ten Top "Inflation Buster" 2022 Stocks Could Become Ideal Fair Priced Dogs

KBIB22 (10) RECENT vs FAIR PR KBIB22 AUG 22-23

Source: YCharts.com

Since eight of the top ten Kiplinger, and Barron's "Inflation Buster", stocks for 2022 shares are now priced less than the annual dividends paid out from a $1K investment, the above charts compare those eight plus two at recent prices (top chart) with the fair pricing of all ten top dogs conforming to that ideal (middle chart). The dollar and percentage differences between recent and fair prices are detailed in the bottom chart.

With renewed downside market pressure to 32.1%, it is possible for all ten highest-yield Kiplinger & Barron's Inflation Busting Dividend stocks, to become fair-priced with their annual yield (from $1K invested) meeting or exceeding their single share prices. This pack got a nice head-start with eight of ten already fair priced.

Stocks listed above were suggested only as possible reference points for your 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.

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This article was written by

Fredrik Arnold profile picture
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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.

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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