6 April Dividend Kings To Buy, 5 To Watch

Summary

• "There is only one-criterion to be included among the Dividend Kings: A publicly-traded company must increase its total fiscal-year dividend payout for a minimum of 50 consecutive years." - Dogs of the Dow.
• The 47 Dividend Kings screened as of March 27, 2023, represented eight of 11 Morningstar Sectors. Broker targeted top 10 net gainers ranged 21.65%-59.78% topped by VFC and GRC.
• By yield, MO tops all. Top 10 Kingly March yields from BKH, NWN, SWK, FRT, CDUAF, LEG, VFC, MMM, UVV, & MO averaged 5.40%.
• Kings showed top-ten broker-estimated target-price upsides from SWK, ABT, MSA, FRT, NFG, ABM, TNC, SCL, VFC, and GRC, averaging 33.96%.
• $5k invested March 27 in the five top-yield lowest-priced Kings showed 1.10% more net-gain than from $5k invested in all top 10. Little (lower-priced) equities led these Dividend Kings by a head.
• Looking for a portfolio of ideas like this one? Members of The Dividend Dog Catcher get exclusive access to our subscriber-only portfolios. Learn More »

Ирина Мещерякова

Foreword

As supplement to this article, please note that DogsoftheDow.com has published a 2023 list detailing the latest 47 Dividend Kings. The article, entitled 2023 Dividend Kings List, is online now.

While most of this collection of 47 Kings is too pricey to justify their skinny dividends, five of the top 10 by yield, live up to the ideal of offering annual dividends (from a $1K investment) exceeding their single share prices, and this month there is one more ideal dog, outside the top ten. Plus, there are five more to watch.

In the current market adjustment, it's now possible for Altria Group Inc (MO), Universal Corp (UVV), VF Corp (VFC), Leggett & Platt Inc (LEG), Canadian Utilities Ltd (OTCPK:CDUAF), and Gorman-Rupp Co (GRC) (the outsider), to stay fair-priced with their annual-yield (from $1K invested) meeting or exceeding their single-share prices.

The five to watch are Northwest Natural Holding Co (NWN), Black Hills Corp (BKH), Stanley Black & Decker (SWK), 3M Corp (MMM), and Federal Realty Investment Trust (FRT). NWN needs to drop just $2.81 in price or 7.4%, BKH can shed $11.31 in price, SWK is $19.84 high, MMM is $24.04 overweight, and FRT needs to lose $26.79 to join the ideal six.

As we have passed the three-year mark of the 2020 Ides of March dip, the time to snap-up those six lingering top-yield dividend King dogs is at hand... unless another big bearish drop in price looms ahead. (At which time your strategy would be to add to your position in any of those you then hold.)

Actionable Conclusions (1-10): Analysts Predict 21.65% To 59.78% Top-10 King Net Gains To April 2024

Four of the 10 top Kings by yield were verified as being among the top 10 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 27 forecast for Kings (as graded by Brokers) was 40% accurate.

Estimated dividend returns from $1,000 invested in each of these highest-yielding stocks and their aggregate one-year analyst median target prices, as reported by YCharts, produced the following 2023-24 data points. (Note: target-prices from lone-analysts were not used.) Ten probable profit-generating trades projected to April 2027 were:

Source: YCharts.com

Gorman-Rupp Co was projected to net $597.83, based on dividends, plus the median of target price estimates from 2 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 21% less than the market as a whole.

VF Corp was projected to net $511.13 based on dividends, plus the median of target price estimates from 21 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 46% more than the market as a whole.

ABM Industries Inc (ABM) was projected to net $323.34, based on dividends, plus the median of target price estimates from five analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 12% greater than the market as a whole.

National Fuel gas Co (NFG) was projected to net $321.35, based on the median of target price estimates from four analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 34% less than the market as a whole.

Federal Realty Investment Trust (FRT) was projected to net $315.34 based on target price estimates from 18 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate is subject to risk/volatility 20% greater than the market as a whole.

Stanley Black & Decker was projected to net $262.86, based on dividends, plus the median of target price estimates from 14 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 31% greater than the market as a whole.

3M Co was projected to net $254.14, based on the median of target price estimates from 18 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 3% less than the market as a whole.

Abbott Laboratories (ABT) was projected to net $243.69, based on a median of target estimates from 21 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 32% less than the market as a whole.

Emerson Electric Co (EMR) netted $240.63 based on a median target price estimate from 21 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 40% more than the market as a whole.

Lowe's Companies Inc (LOW) was projected to net $216.53, based on the median of target price estimates from 30 analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 10% more than the market as a whole.

The average net gain in dividend and price was estimated to be 32.87% on $10k invested as $1k in each of these 10 stocks. The average Beta ranking showed these estimates subject to risk/volatility 7% greater than the market as a whole.

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", even if they are "Kings" and "Princes."

Top 47 Dividend Kings By Broker Targets

Sources: dogsofthedow.com/YCharts.com

This scale of broker-estimated upside (or downside) for stock prices provides a measure of market popularity. Note: No broker coverage or single broker coverage produced a zero score on the above scale. These broker estimates can be seen as the emotional component (as opposed to the strictly monetary and objective dividend/price yield-driven report below). As noted above, these scores may also be regarded as contrarian.

Top 47 Dividend Kings By Yield

Source: YCharts.com

Actionable Conclusions (11-20): Ten Top Stocks By Yield Are The April Dogs Of The Dividend Kings

Top 10 Kings selected 3/27/23 by yield represented five of eleven Morningstar sectors. In first place was Altria Group Inc. [1], the tops of two consumer defensive representatives listed. The other placed second, Universal Corp [2].

Then, the first of two industrials sector representatives placed third, 3M Co [3], followed by Stanley Black & Decker Inc [10].

The first of two consumer cyclical representatives took fourth place, VF Corp [4]. The other placed fifth, Leggett & Platt Inc [5].

In sixth place, was the first of three utilities, Canadian Utilities Ltd [6]. Thereafter, in ninth was, Northwest Natural Holding Co [9], followed by Black Hills Corp [10].

Finally, to complete these April top 10 Kings, by yield, seventh place was claimed by the lone real estate representative, Federal Realty Investment Trust [7].

Source: YCharts.com

Actionable Conclusions: (21-30) Top Ten Kings Showed 20.45% To 57.87% Upsides Into March 2023; (31) On The Downside Was One -1.17% Loser

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 1.10% Advantage For 5 Highest Yield, Lowest Priced, of Top-Ten Dividend Kings By April, 2024

Ten top Kings were culled by yield for their monthly update. Yield (dividend/price) results verified by YCharts did the ranking.

Source: YCharts.com

As noted above, top 10 Kings selected 3/27/23 showing the highest dividend yields represented five of eleven in the Morningstar sector scheme.

Actionable Conclusions: Analysts Estimated The 5 Lowest-Priced Of Ten Highest-Yield Dividend Kings (32) Delivering 20.35% Vs. (33) 20.13% Net Gains by All Ten by April, 2024

Source: YCharts.com

$5000 invested as $1k in each of the five lowest-priced stocks in the top 10 Dividend Kings kennel by yield were predicted by analyst one-year targets to deliver 1.10% more gain than $5,000 invested as $.5k in all ten. The very lowest-priced Kings top-yield stock, VF Corp, was projected to deliver the best net gain of 51.11%.

Source: YCharts.com

The five lowest-priced top-yield Dividend Kings as of March 27 were: VF Corp; Canadian Utilities Ltd; Leggett & Platt Inc; Altria Group Inc; Northwest Natural Holding Co, with prices ranging from $20.84 to $46.84

The five higher-priced top-yield Dividend Kings and Princes for March 27 were: Universal Corp; Black Hills Corp; Stanley Black & Decker; Federal Realty Investment Trust; 3M Co, whose prices ranged from $51.68 to $101.49.

This 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, however, since analysts are historically only 20% to 85% accurate on the direction of change and just 0% to 15% accurate on the degree of change.

Afterword

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

The following six (as of 3/27/23) realized the ideal of offering annual dividends from a $1K investment exceeding their single share prices: Altria Group Inc, Universal Corp, VFCorp, Leggett & Platt Inc, Canadian Utilities Ltd, and Gorman-Rupp Co.

Five more bear watching, NWN needs to drop just $2.81 in price or 7.4%; BKH can shed $11.31 in price; SWK is $19.84 high; MMM is $24.04 overweight, and FRT needs to lose $26.79 to join the ideal six.

Price Drops or Dividend Increases Could Get All Ten Top Dividend Kings Back to "Fair Price" Rates For Investors

Source: YCharts.com

Since five of the top 10 Dividend K&P shares are now priced less than the annual dividends paid out from a $1K investment, the top chart below shows the dollar and percentage differences between recent and fair prices. Note that NWN was just $2.81 over the mark. All others are within $12 to $27 of being there. The middle chart compares the five ideals with five at recent prices. Fair pricing (when all ten top dogs conform to the ideal) is displayed in the bottom chart.

April Dividend Kings Alphabetical by Ticker Symbol

Source: Dogsofthedow.com

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

Analyst’s 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.