9 July Buys From 119 S&P 1500 High Yield Aristocrats

Foreword

Most of this collection of 119 S&P 1500 Composite Index High Yield Dividend [HYD] Aristocrats is too pricey to justify their skinny dividends. However, four of the top ten, and five more outside the top ten, live up to the dogcatcher ideal of paying annual dividends (from a $1K investment) exceeding their single share prices.

Nine Dogcatcher Ideal HYD Aristos show annual yields (from $1K invested) meeting or exceeding their single-share prices at this time. They are: Walgreens Boots Alliance (WBA), Franklin Resources Inc. (BEN), Telephone and Data Systems Inc. (TDS), Leggett & Platt Inc. (LEG), Old Republic International Corp. (ORI); United Bankshares Inc. (UBSI), Amcor plc (AMCR), South Jersey Industries Inc. (SJI), and MDU Resources Group Inc. (MDU).

As we are now four months beyond two years removed from the anniversary of the 2020 Ides of March dip, the time to snap up those nine lingering top yield HYD 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 those you then hold.)

Actionable Conclusions (1-10): Analysts Predict 15.2% To 48.91% Top Ten HYD Aristocrat Net Gains To July 2023

Four of the ten top HYD 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 July 26 forecast for Aristocrats (as graded by Brokers) was 40% accurate.

Estimated dividend returns from $1000 invested in each of these highest-yielding stocks and their aggregate one-year analyst median target prices, as reported by YCharts, produced the 2022-23 data points for the projections below. Note: target prices from lone analysts were not used. Ten probable profit-generating trades projected to July 26, 2023 were:

Telephone and Data Systems Inc. was projected to net $489.05, 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 6% greater than the market as a whole.

V.F. Corp. (VFC) was projected to net $252.11, based on dividends, plus the median of target price estimates from twenty-one analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 38% greater than the market as a whole.

Bank OZK (OZK) was projected to net $238.86, based on the median of target price estimates from seven analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 49% greater than the market as a whole.

MDU Resources Group Inc. netted $228.50 based on a median target price estimate from four analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 25% less than the market as a whole.

Federal Realty Investment Trust (FRT) was projected to net $215.22, based on the median of target price estimates from nineteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 13% greater than the market as a whole.

Chevron Corp. (CVX) was projected to net $214.45 based on target price estimates from two analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 14% greater than the market as a whole.

Nu Skin Enterprises Inc. (NUS) was projected to net $182.49, 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 21% greater than the market as a whole.

Exxon Mobil Corp. (XOM) was projected to net $163.96, based on dividends, plus the median of target price estimates from twenty-five analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 7% more than the market as a whole.

International Business Machines Corp. (IBM) was projected to net $156.43, based on a median of target estimates from seventeen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 6% less than the market as a whole.

Essex Property Trust Inc. (ESS) was projected to net $151.95 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 24% below the market as a whole.

The average net gain in dividend and price was estimated to be 22.93% on $10k invested as $1k in each of these ten stocks. The average Beta ranking showed these estimates subject to risk/volatility 9% 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 if they are “Aristocrats.”

Top 50 High Yield Dividend Aristocrats By Broker Targets

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 50 HYDividend Aristocrats By Yield

Actionable Conclusions (11-20): Ten Top Stocks By Yield Are The July Dogs of The HYDividend Aristocrats

Top ten HYD Aristocrats selected 7/26/22 by yield represented seven of eleven Morningstar sectors. In first place was the lone technology sector Aristocrat, International Business Machines Corp. [1].

Then, in second place was one healthcare representative in the top ten, Walgreens Boots Alliance [2]. Thereafter, two financial services firms placed third, and tenth, Franklin Resources Inc [3] and T. Rowe Price Group Inc. (TROW)[10].

Fourth and eighth places were occupied by real estate representatives, National Retail Properties Inc. (NNN)[4], and Federal Realty Investment Trust [8].

The lone communication services representative in the top ten showed up in fifth place, Telephone and Data Systems [5].

Two consumer cyclical representatives took the sixth, and seventh places, Leggett & Platt Inc. [6], V.F. Corp. [7]. Finally, a lone industrial sector member placed ninth, 3M Co. (MMM) [9].This completed the July S&P1500 Composite High Yield Dividend Aristocrats top-ten, by yield.

Actionable Conclusions: (21-30) Ten HYD Aristocrats Showed 11.49% To 45.26% Upsides To July 2023; (31) On The Downside Were Seven -1.65% to -8.87% Losers

To quantify top-yield rankings, analyst median-price target estimates provided a “market sentiment” measure 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 28.68% Advantage For 5 Highest-Yield, Lowest-Priced, of Top Ten High Yield Dividend Aristocrats To July 2023

Ten top HYD Aristocrats were culled by yield for their quarterly update. Yield (dividend/price) results, verified by YCharts, did the ranking.

As noted above, top ten HYD Aristocrats selected 7/26/22 represented seven of eleven sectors in the Morningstar sector scheme.

Actionable Conclusions: Analysts Estimated 5 Lowest-Priced Of Ten Highest-Yield HYDividend Aristocrats (32) Delivering 18.6% Vs. (33) 14.45% Net Gains by All Ten, Come July 2023

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten HYDividend Aristocrats kennel by yield were predicted (by analyst 1-year targets) to deliver 28.68% more gain than $5,000 invested as $.5k in all ten. The very lowest-priced Aristocrats top-yield stock, Telephone and Data Systems Inc., was projected to deliver the best net gain of 48.91%.

The five lowest-priced top-yield Aristocrats as of July 26 were: Telephone and Data Systems Inc.; Franklin Resources Inc.; Leggett & Platt Inc.; Walgreens Boots Alliance Inc.; V.F. Corp, with prices ranging from $15.49 to $45.32

The five higher-priced top-yield Aristocrats as of July 26 were: National Retail Properties Inc.; Federal Realty Investment Trust; T. Rowe Price Group Inc.; International Business Machines Corp.; 3M Co., whose prices ranged from $47.319 to $140.75.

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, however, 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.

Afterword

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

Nine Dogcatcher Ideal HYD Aristos show annual yields (from $1K invested) meeting or exceeding their single-share prices at this time.

They are: Walgreens Boots Alliance; Franklin Resources Inc., Telephone and Data Systems Inc.; Leggett & Platt Inc.; Old Republic International Corp.; United Bankshares Inc., Amcor plc, South Jersey Industries Inc., and MDU Resources Group Inc.

Price Drops or Dividend Increases Could Get All Ten Top HYD Aristocrat Dogs Back to “Fair Price” Rates For Investors

Since four of the top ten Aristocrats shares were recently priced less than the annual dividends paid out from a $1K investment, the following charts compare those four plus six at recent prices. Fair pricing (when all ten top dogs conform to the ideal) is displayed in the middle chart. Finally, the dollar and percentage differences between recent and fair prices are documented in the bottom chart.

S&P 1500 HYD Aristocrats Alphabetically by 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.

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