Summary
- "Dividend Aristocrats in the S&P 500 Index have raised their annual payouts every year for at least 25 consecutive years." - Kiplinger.com/Investing.
- The 65 Aristocrats screened as of August 19, 2021 represented all eleven Morningstar sectors. Broker targeted-top-ten net-gainers ranged 13.45%-34.92% topped by CVX and XOM.
- By yield, T still tops-all Aristocrats. Top-ten Yields from CAH, O, WBA, ED, ABBV, PBCT, IBM, CVX, XOM, and T averaged 4.93%.
- Aristocrats top ten by broker estimated target price upsides, ATO, ADM, CAH, PBCT, T, SYY, LEG, VFC, XOM, and CVX, averaged 18.77%.
- $5K invested August 19 in the five top-yield lowest-priced Aristocrats showed 20.61% more net-gain than from $5K invested in all top ten. Little (lower-priced) equities led these Pre-September S&P 500 Dividend Aristocrats by over two lengths.
Foreword
As supplement to this article, please note that Kiplinger has published an online slide-show detailing the latest 2021 65 S&P Dividend Aristocrats. The article entitled 65 Best Dividend Stocks You Can Count On in 2021,is by Dan Burrows, a contributing editor.
While most of this collection of now 65 S&P 500 Dividend Aristocrats is too pricey to justify their skinny dividends, five of the top ten by yield live up to the ideal of offering annual dividends (from a $1K investment) exceeding their single share prices.
In the current market adjustment, it is now possible for these five, AT&T Inc (T), Exxon Mobil Corp (XOM), People's United Financial (PBCT), Amcor plc (AMCR), and Franklin Resources Inc (BEN) to stay fair-priced with their annual yield (from $1K invested) meeting or exceeding their single share prices at this time. PBCT will merge with M&T Bank toward the end of 2021 and will leave the Aristocrat ranks and its generous dividend will be absorbed by the new entity.
As we are well-past the anniversary of the 2020 Ides of March dip, the time to snap up those five top yield Aristocrat 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 the five you then hold.)
Actionable Conclusions (1-10): Analysts Predict 13.45% To 34.92% Top Ten Aristocrat Net Gains To September 2022
Six of the ten top Aristocrats by yield were verified as 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 August 19 forecast for Aristocrats (as graded by Brokers) was 60% accurate.
Estimated dividend returns from $1,000 invested in each of the highest yielding stocks and their aggregate one year analyst median target prices, as reported by YCharts, produced the 2021-22 data points for the projections below. Note: target prices by lone analysts were not applied. Ten probable profit-generating trades projected to August 19, 2022, were:
Chevron Corp (CVX) was projected to net $349.17, based on the median of target price estimates from twenty-eight analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 33% greater than the market as a whole.
Exxon Mobil Corp. was projected to net $317.14, based on the median of target price estimates from twenty-eight analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 45% greater than the market as a whole.
V.F. Corp (VFC) was projected to net $266.75, 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 37% greater than the market as a whole.
Leggett & Platt Inc (LEG) was projected to net $251.37, based on dividends, plus the median of target price estimates from four analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 48% greater than the market as a whole.
AT&T Inc was projected to net $233.58, based on dividends, plus the median of target price estimates from twenty-seven analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 21% less than the market as a whole.
Sysco Corp (SYY) was projected to net $185.91, based on the median of target price estimates from fifteen analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 44% greater than the market as a whole.
People's United Financial was projected to net $177.77 based on dividends, plus the median of target price estimates from thirteen analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 21% greater than the market as a whole.
Cardinal Health Inc (CAH) netted $150.57 based on a median target price estimate from fifteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 6% greater than the market as a whole.
Walgreens Boots Alliance (WBA) was projected to net $139.91, based on a median of target estimates from twenty-one analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 52% greater than the market as a whole.
Archer-Daniels-Midland Co (ADM) was projected to net $134.45, based on target price estimates from sixteen analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 11% less than the market as a whole.
The average net gain in dividend and price was estimated to be 22.07% on $10K invested as $1K in each of these ten stocks. The average Beta showed these estimates subject to risk/volatility 15% over 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 if they are "Aristocrats."
Top 50 Dividend Aristocrats By Broker Targets
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 50 Dividend Aristocrats By Yield
Actionable Conclusions (11-20): Ten TopStocks By Yield Are The September Dogs of The DividendAristocrats
Top ten Aristocrats selected 8/19/21 by yield represented seven of eleven Morningstar sectors. In first place was AT&T, Inc. [1], the lone communication services representative listed.
Two energy representatives placed second, and third, Exxon Mobil [2], and, Chevron [3]. Following in fourth place was the technology sector Aristocrat, International Business Machines Corp (IBM) [4].
One financial services firm placed fifth, People's United Financial Inc [5]. Thereafter, three healthcare representatives in the top ten placed sixth, eighth, and tenth, AbbVie (ABBV) [6], Walgreens Boots Alliance Inc [8], and Cardinal Health Inc [10].
Placing seventh was the lone utilities representative, Consolidated Edison Inc (ED) [7].
Finally, one real estate firm placed ninth, Realty Income Corp (O) [9] completed these pre-September S&P Dividend Aristocrats top ten, by yield.
Actionable Conclusions: (21-30) Ten Aristocrats Showed 11.31% To 30.24% Upsides To September 2022; (31) On The Downside Were Three -0.08% to -4.32% 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 20.61% Advantage For 5 Highest Yield, Lowest Priced of Top Ten Dividend Aristocrats To September 2022
Ten top Aristocrats were culled by yield for their monthly update. Yield (dividend/price) results verified by YCharts did the ranking.
As noted above, top ten Aristocrats selected 8/19/21 showing the highest dividend yields represented seven of eleven in the Morningstar sector scheme.
Actionable Conclusions: Analysts Estimated The 5 Lowest-Priced Of TenHighest-YieldDividend Aristocrats (32) Delivering 20.38% Vs.(33) 16.90%Net Gainsby All TenbyAugust 19, 2022
$5,000 invested as $1K in each of the five lowest-priced stocks in the top ten Dividend Aristocrats kennel by yield were predicted by analyst 1-year targets to deliver 20.61% more gain than $5,000 invested as $.5K in all ten. The eighth lowest-priced Aristocrats top yield stock, Chevron Corp, was projected to deliver the best net gain of 34.92%.
The five lowest-priced top-yield Aristocrats for August 19 were: People's United Financial Inc; AT&T, Inc; Walgreens Boots Alliance; Cardinal Health Inc; Exxon Mobil Corp, with prices ranging from $15.67 to $52.73.
The five higher-priced top-yield Aristocrats for July 21 were: Realty Income Corp; Consolidated Edison Inc; Chevron Corp; AbbVie Inc; International Business Machines Corp, whose prices ranged from $71.54 to $138.02.
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 80% 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 five stocks ripe for picking at the start of the article, here is a repeat of the list at the end:
The following 5 (as of 8/19/21) realized the ideal of offering annual dividends from a $1K investment exceeding their single share prices: AT&T Inc, Exxon Mobil Corp, People's United Financial, Amcor plc, and Franklin Resources.
Price Drops or Dividend Increases Could Get All Ten Top Aristocrat Dogs Back to "Fair Price" Rates For Investors
Since four of the top ten Aristocrats shares are now priced less than the annual dividends paid out from a $1K investment, the following charts compare those four plus six at current prices. Notice the three top ideal dividend Aristocrats still are ideal even if their dividend payouts are halved as shown in the top chart. Fair pricing when all ten top dogs conform to the ideal is displayed in the middle chart. Finally, the dollar and percentage differences between current and fair prices are revealed in the bottom chart.
S&P500 Aristocrats Alphabeticalby Ticker Symbol
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.
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