11 August Dividend Buys From Barron's And Fortune Mid-Year Picks

Aug. 21, 2022 6:19 AM ETAVGO, BAP, CAG, CB, CNHI, DIISF, DTEGY, FANUY, HAL, HRI, ICE, JWN, PARA, SBGI, SRLN, TSM, VICI2 Comments

Summary

  • 7/15/22, Barron's Weekly published their Midyear (MY) Roundtable stock picks following Fortune’s eleven steady stocks 7/14/22. Of 53 MY 2022 stocks selected, 32 pay dividends, and eleven of those are primed to buy.
  • The top-10 MY22 showed net gains ranging from 13.68%-51.96% by CB, ICE, PARA, AVGO, SBGI, CNHI, DTEGY, HRI, HAL, and TSM. Financials, communication services, and consumer stocks dominated; real estate and utilities went missing.
  • Top-10 MY22 by yield as of August were BAP, JWN, DTEGY, PARA, CAG, SBGI, VICI, SRLN, BBSEY, DIISF.
  • Prices of nine of the MY22 top-ten by yield made the possibility of owning productive dividend shares from this collection more viable for first-time investors. Those nine (plus two outside the top ten by yield) promise ideal dividend returns with dividends from $1k invested exceeding their single share prices.
  • $5k invested in the five lowest-priced of the 10 top-yield MY22 showed 68.07% more net gain than from $5k invested in all 10. Low-priced stocks solidly led the MY22 in 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 »

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Foreword

This article is based on Barron’s mid-year (MY22) convening of 10 principal investment advisors from major investment firms, aimed at pinpointing their recommendations for equities they see as promising for the rest of 2022. That information is supplemented the mid-year Fortune Quarterly Investment Guide.

Specifically, the Barron’s MY article, published July 15, 2022 by Lauren R. Rubin, was titled, What to Buy Right Now: 42 Picks From Barron’s Roundtable Pros.

Fortune’s MY quarterly investment guide article, titled “11 steady rising stocks to beat the bear market and beyond,” was penned by Larry Light and published July 14.

Any collection of stocks is more clearly understood when subjected to yield-based (dog catcher) analysis.

This collection, I've called the MY22, are perfect for the dogcatcher process. Below are the August 18 data for those 53 expert recommendations of which 32 pay dividends.

The prices of eleven of these 32 dividend-paying MY22 stocks made the possibility of owning productive dividend shares from this collection more viable for first-time investors.

Those eleven are: Direct Line Insurance Group PLC (OTCPK:DIISF), a financial service; BB Seguridade Participacoes SA (OTCPK:BBSEY), also a financial service; SPDR Blackstone/GSO Senior Loan ETF (SRLN), an ETF; VICI Properties Inc. (VICI) in real estate; Sinclair Broadcast Group Inc. (SBGI) from communication services; Conagra Brands Inc. (CAG), a consumer defensive selection; Paramount Global (PARA), another communication services member; Deutsche Telekom AG (OTCQX:DTEGY), a communication service stock; Nordstrom Inc. (JWN) from consumer cyclical; CNH Industrial NV (CNHI), an industrial; and Fanuc Corp. (OTCPK:FANUY), another industrial. All eleven 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 a buy signal. The Dogcatcher calls this his 'ideal dividend return rule'.

Actionable Conclusions (1-10): Analysts Estimated 13.68% To 51.96% Net Gains For Ten August Top MY22 Dogs

Three of 10 MY22 by yield were also among the top 10 gainers for the coming year based on analyst one-year target prices. (They are tinted gray in the chart below). Thus, the yield-based forecast for these M22 dogs was graded by Wall St. Wizards as 30% accurate.

MY22 (1) Ten Top Net Gainers AUG22

Sources: Barrons.com/YCharts.com/Fortune.com

Estimated dividends from $1000 invested in each of the highest yielding stocks plus their aggregate one-year analyst median target prices, as reported by YCharts created the 2022-23 data points. Note: one-year target prices by lone analysts were not applied. Ten probable profit-generating trades projected to August 18, 2023 were:

Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) was projected to net $519.59, based on dividends, plus the median of target price estimates from 10 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 2% under the market as a whole.

Halliburton Co. (HAL) was projected to net $437.54, based on dividends, plus median target price estimates from 25 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 118% greater than the market as a whole.

Herc Holdings Inc. (HRI) was projected to net $383.80, based on dividends, plus the median of target price estimates from 10 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 171% greater than the market as a whole.

Deutsche Telekom AG was projected to net $340.91, based on dividends, plus median target price estimates from 2 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 58% less than the market as a whole.

CNH Industrial N.V. was projected to net $250.25 based on the median of target price estimates from 13 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 75% over the market as a whole.

Sinclair Broadcast Group Inc. was projected to net $229.72, based on dividends, plus the median of target price estimates from 9 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 32% above the market as a whole.

Broadcom Inc. (AVGO) was projected to net $223.98 based on dividends, plus the median of target estimates from 23 brokers, less transaction fees. The Beta number showed this estimate subject to risk/volatility 8% above the market as a whole.

Paramount Global was projected to net $189.88, based on the median of target estimates from 24 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 86% greater than the market as a whole.

Intercontinental Exchange Inc. (ICE) was projected to net $158.71, based on the median of estimates from 12 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 10% less than the market as a whole.

Chubb Ltd. (CB) was projected to net $136.78, based on the median of target price estimates from 20 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 32% less than the market as a whole.

The average net gain in dividend and price was estimated at 28.71% on $10k invested as $1k in each of these 10 stocks. These gain estimates were subject to average risk/volatility 37% greater than 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 these "top dogs."

43 Barron's + Fortune MY22 August Selections By Target Gains

MY22 (3A) MY 43 by Target Gains AUG 22

Sources: Barrons.com/YCharts.com/Fortune.com

32 Barron's + Fortune August MY22 Picks By Yield

MY22 (3B) MY 32 by Yield AUG 22

Sources: Barrons.com/YCharts.com/Fortune.com

Actionable Conclusions (11-20): Ten Top August MY22 Stocks By Yield

Top 10 MY22 August Stocks, by yield, represented six of 11 Morningstar sectors, plus one ETF.

The first place stock was the first of three from the financial services sector, Direct Line Insurance Group PLC [1]. The other financials placed second, and tenth, BB Seguridade Participacoes SA [2], and Creditcorp Ltd. (BAP) [10].

In third place was the lone exchange traded fund [ETF], SPDR Blackstone/GSO Senior Loan ETF [3]. A single real estate sector representative placed fourth, VICI Properties Inc [4].

Then, three communication services representatives took the fifth, seventh, and eighth slots, Sinclair Broadcast Group Inc [5], Paramount Global [7], and Deutsche Telekom AG [8].

Finally, a consumer cyclical member claimed ninth Nordstrom Inc [9], to complete the August MY22 top 10 by yield.

Actionable Conclusions: (21-30) 10 Top August MY22 Showed 13.04%-50.78% Upsides. Four -0.12% to -18.04% Downsides Appeared

MY22 (4) MY 30 Up/Dn Sides AUG 22

Sources: Barrons.com/YCharts.com/Fortune.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, median analyst target price estimates became another tool to dig out bargains.

Analysts Forecast A 68.07% Advantage For Five Highest Yield, Lowest Priced of 10 Top My22 Stocks To August 2023

Ten top August MY22 were culled by yield for this update. Yield (dividend / price) results provided by YCharts did the ranking.

MY22 (5) MY10 Top Yields AUG 22

Sources: Barrons.com/YCharts.com/Fortune.com

As noted above, top 10 MY22 screened 8/18/22, showing the highest dividend yields, represented six of 11 Morningstar sectors plus one ETF.

Actionable Conclusions: Analysts Predicted Five Lowest-Priced Of The 10 Highest-Yield August MY22 Dividend Stocks (31) Delivering 15% Vs. (32) 8.93% Net Gains by All 10 Come August 2023

MY22 (6) MY10 By Gains AUG 22

Sources: Barrons.com/YCharts.com/Fortune.com

$5000 invested as $1k in each of the five lowest-priced stocks in the top 10 August MY22 kennel by yield was predicted by analyst 1-year targets to deliver 68.07% more gain than $5,000 invested as $.5k in all ten. The third lowest-priced selection, Deutsche Telekom, was projected to deliver the best net gain of 34.09%.

MY22 (7) MY10 By Price AUG 22

Sources: Barrons.com/YCharts.com.Fortune.com

The five lowest-priced top-yield MY22 as of August 18 were: Direct Line Insurance Group PLC, BB Seguridade Participacoes S.A., Deutsche Telekom AG, Nordstrom Inc., Sinclair Broadcast Group Inc., with prices ranging from $2.44 to $25.36.

Five higher-priced MY22 Picks as of August 18 were: Paramount Global, VICI Properties, Inc., Conagra Brands Inc., SPDR Blackstone/GSO Senior Loan ETF, Creditcorp Ltd., whose prices ranged from $25.97 to $135.06.

The distinction between five low-priced dividend dogs and the general field of 10 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.

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

If somehow you missed the suggestion of the stocks ready for pickup at the start of the article, here is a reprise of the list at the end:

The prices of eleven of these 32 dividend-paying MY22 stocks (listed by yield as of August 18) made the possibility of owning productive dividend shares from this collection more viable for first-time investors.

Those eleven are: Direct Line Insurance Group PLC, BB Seguridade Participacoes SA, SPDR Blackstone/GSO Senior Loan ETF, Sinclair Broadcast Group Inc., VICI Properties Inc., Paramount Global, Nordstrom Inc., Conagra Brands Inc., Deutsche Telekom AG, CNH Industrial NV, Fanuc Corp.

All eleven 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 a buy signal. The Dogcatcher calls this his 'ideal dividend return rule'.

Price Drops or Dividend Increases Could Get All 10 Top August MY22 Dogs Back to "Fair Price" Rates For Investors

MY22 (8) MY10 Recent vs Fair Prices AUG 22

Sources: Barrons.com/YCharts.com/Fortune.com

The charts above retain the recent dividend amount and adjust share price to produce a yield (from $1K invested) to equal or exceed the single share price of each stock. As you can see, this illustration shows nine fair-priced dogs and one out-of- bounds-priced stock. The outlier needs to trim its price by 53%s to realize the 50/50 goal for share prices equaling dividend payouts from $10k invested.

The alternative, of course, would be that companies raise their dividends. That, of course, is a lot to ask in these highly disrupted, dollar-flooded, inflationary times.

MY22 Picks (by Sources)

MY22 (9) MY22Picks AUG 22

Sources: Barrons.com/YCharts.com

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; Barrons.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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