This article is based on A Kiplinger Today special report entitled, Potent Picks to Profit in 2022.
Yield isn't everything when it comes to finding the best dividend stocks. Income investors know there's no substitute for regular dividend increases over the long haul.
Investors looking for stability in the new year may want to consider value stocks. Here are 15 of the best-rated ones for 2022.
Mid-caps are the market's so-called 'sweet spot,' offering up an ideal combination of financial stability and growth potential.
A recent pullback in the global equities market has opened the door for investors to buy some of the top dividend-paying European stocks at a discount.
These high-income stocks deliver on headline yield, offering up between roughly 5% and 9%. But just as important: They also have the financial fortitude to keep those payouts coming.
A volatile market has investors seeking safety. These top-rated defensive stocks could act as shelter from the storm.
Any collection of stocks is more clearly understood when subjected to yield-based (dog catcher) analysis, this collection of Kiplinger Potent Picks to Profit for 2022 is perfect for the dogcatcher process. Below are the September 29 data for the 97 dividend stocks populating those Potent Picks to Profit as parsed by YCharts.
The prices of 14 of those 97 dividend selections, turned the possibility of owning productive dividend shares from this collection a reality for first-time investors.
The 14 Dogcatcher ideal best-to-buy October stocks were: Arbor Realty Trust (ABR); Starwood Property Trust (STWD); Magellan Midstream Partners LP (MMP); Enterprise Products Partners LP (EPD); Main Street Capital Corp (MAIN); Kinder Morgan Inc (KMI); Pembina Pipeline Corp (PBA); Walgreens Boots Alliance Inc (WBA); Leggett & Platt Inc (LEG); Franklin Resources Inc (BEN); Sanofi SA (SNY); Amcor PLC (AMCR); ABB Ltd (ABB); eXp World Holdings Inc (EXPI).
Those fourteen all live up to the idea 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 14 are 'safer' dividend dogs? To find the answer, seek-out my 'Safer' October Dividend Dogcatcher follow-up detailing the "safest" of these stocks for 2022 in the Seeking Alpha Marketplace appearing on or about October 9. To get there, simply click on the link in the last Summary bullet point above.
Four of ten top Potent Pick 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 September favorites was graded by Wall St. Wizards as 40% accurate.
Estimated dividends from $1000 invested in each of the highest yielding Potent Picks to Profit stocks, added to the median of aggregate one-year target prices from analysts (as reported by YCharts), generated the following list. Note that one-year target prices by lone-analysts were not included. Ten probable profit-generating trades projected to October 2023 were:
Innovative Industrial Properties Inc (IIPR) was projected to net $908.46 based on the median of target estimates from 6 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 63% greater than the market as a whole.
Sanofi SA was projected to net $641.26, based on dividends, plus the median of target price estimates from 6 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 46% under the market as a whole.
Stanley Black & Decker Inc (SWK) was projected to net $555.81, based on dividends, plus the median of target price estimates from 15 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 28% over the market as a whole.
Starwood Property Trust Inc was projected to net $552.09, based on dividends, plus median target price estimates from 8 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 45% greater than the market as a whole.
Ares Management Corp (ARES) was projected to net $406.20, based on the median of estimates from 12 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 19% greater than the market as a whole.
Federal Realty Investment Trust (FRT) was projected to net $402.59, based on dividends, plus the median of target price estimates from 19 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 13% greater than the market as a whole.
Walgreens Boots Alliance was projected to net $385.29, based on dividends, plus the median of target price estimates from 15 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 38% less than the market as a whole.
ABB Ltd was projected to net $384.11 based on the median target price estimates from 4 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 10% greater than the market as a whole.
Enterprise Products Partners LP was projected to net $382.62, based on the median of target price estimates from 19 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 15% greater than the market as a whole.
Realty Income Corp (O) was projected to net $370.13 based on dividends, plus the median of target estimates from 18 brokers, less transaction fees. The Beta number showed this estimate subject to risk/volatility 27% less than the market as a whole.
The average net gain in dividend and price was estimated at 49.89% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility 8% over the market as a whole.
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 ten 'Potent Picks to Profit' by yield for October represented five of eleven Morningstar sectors. First place was held by the first of three real estate sector members: Arbor Real Estate Trust Inc . Other real estate representatives placed second and fourth, Starwood Property Trust , and Innovative Industrial Properties .
Third place went to the first of four energy representatives, Magellan Midstream Partners LP . The others placed fifth, seventh and eighth, Enterprise Products Partners LP , Kinder Morgan Inc , and Pembina Pipeline Corp .
Sixth place was claimed by the financial services representative, Main Street Capital Corp , while ninth place went to the healthcare member, Walgreens Boots Alliance Inc.
A consumer defensive representative placed tenth, Philip Morris International (PM) , to complete the top ten 'Potent Picks to Profit' for 2022 dividend pack for October.
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.
Ten top Kiplinger dividend 'Potent Picks to Profit' yield (dividend/price) results provided by YCharts showed the following ranking.
As noted above, top ten Kiplinger, 'Potent Picks' stocks for 2022 screened 9/29/22, showing the highest dividend yields, represented five of eleven in the Morningstar sector scheme.
$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Kiplinger, 'Potent Picks' for 2022 by yield were predicted by analyst 1-year targets to deliver 22.64% LESS gain than $5,000 invested as $.5k in all ten. The tenth lowest-priced selection, Innovative Industrial Properties Inc, was projected to deliver the best net gain of 90.85%.
The five lowest-priced top-yield Kiplinger 'Potent Picks to Profit' for 2022 Dividend Dogs as of September 29 were: Arbor Realty Trust Inc; Kinder Morgan Inc; Starwood Property Trust Inc, Enterprise Product Partners Inc; Pembina Pipeline Corp, with prices ranging from $11.58 to $30.86.
Five higher-priced Kiplinger, 'Potent Picks to Profit' for 2022 Dividend Dogs as of August 26 were: Walgreens Boots Alliance Inc; Main Street Capital Corp; Magellan Midstream Partners LP; Philip Morris International Inc; Innovative Industrial Properties Inc, whose prices ranged from $31.55 to $88.09.
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.
This article features Kiplinger, 'Potent Picks to Profit' for 2022 and focuses on the top 30, so over two thirds the original list of 118 companies is neglected. Therefore, below is:
stocks sorted by yield.
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 14 of these 118 Kiplinger, 'Potent Picks to Profit' for 2022 made the possibility of owning productive dividend shares from this collection more viable for first-time investors.
Those fourteen all live up to the idea of having their annual dividends from a $1K investment equal or exceed their single share prices. Many investors see this condition as "look closer to maybe buy" opportunity.
Eight of the top ten Kiplinger, Potent Picks for Profit stocks for 2022 shares are now priced less than the annual dividends paid out from a $1K investment. The dollar and percentage differences between current and fair prices are detailed in the top chart. Eight ideal fair priced stocks plus the two at current prices are shown in the middle chart. Finally, the fair pricing of all ten top dogs conforming to that ideal are the subject of the bottom chart.
With renewed downside market pressure to 17.25%, it is possible for all ten highest-yield Kiplinger Potent Picks for Profit 2022 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 Y Charts.
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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.