Foreword
As supplement to this article, please note that Kiplinger has published an on-line slide-show detailing the latest 2023 S&P Dividend Aristocrats. The article, entitled The S&P 500 Dividend Aristocrats, is by Dan Burrows, a contributing editor.
S&P Dow Jones Indices rebalances the S&P 500 Dividend Aristocrats every January, the Aristocratic population now stands at 66 with VFC likely disqualified for the next listing.
Nevertheless, most of this collection of 66 S&P 500 Dividend Aristocrats are too pricey to justify their skinny dividends. The consequence of stock market popularity (measured by stock price) is skinny dividends. The contrarian approach finds the top dogs by looking for high dividends. This month, four of the top ten. and one outside the ten highest-yield Aristocrats, live up to our ideal. That is, they pay annual dividends (from a $1K investment) exceeding their single share prices.
Four in the top ten are: Walgreens Boots Alliance (WBA); Realty Income Corp (O), Amcor PLC (AMCR); Franklin Resources Inc (BEN). The one outsider is Hormel Foods (HRL).
Six more in the top ten, 3M Co (MMM), T. Rowe Price Group (TROW), Federal Realty Investment Trust (FRT), Chevron Corp (CVX), Essex Property Trust Inc (ESS), and AbbVie Inc (ABBV), could soon join the ideal four. 3M Co was just $25.10 off the mark as of 12/12/23.
As we are now near nine months, past three-years, removed from the 2020 Ides of March dip, the time to snap-up those five lingering top yield Aristocrat dogs is at hand... Of course, when another big bearish drop in price happens, your strategy would be to add to your position in any of those you then hold.
Actionable Conclusions (1-10): Analysts Predict 13.71% To 31.37% Top Ten Aristocrat Net Gains To December 2024
Three of the ten top Aristocrats by yield were also 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 December 12 forecast for Aristocrats (as graded by Brokers) was 30% 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 2023-24 data -points for the projections below. (Note: target-prices from less-than two analysts were not used.) Ten probable profit-generating trades projected to December 12, 2024 were:
Exxon Mobil Corp (XOM) netted $313.66 based on a median target price estimate from 24 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 2% over the market as a whole.
Chevron Corp netted $293.45 based on a median target price estimate from 24 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 11% over the market as a whole.
Walgreens Boots Alliance was projected to net $251.20, based on dividends, plus the median of target price estimates from 13 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 24% under the market as a whole
NextEra Energy Inc (NEE) was projected to net $197.48, based on the median of target price estimates from 18 analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 46% less than the market as a whole.
Genuine Parts Co (GPC) was projected to net $168.93 based on the median of target price estimates from 13 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 8% under the market as a whole.
Air Products & Chemicals Inc (APD) was projected to net $168.67 based on dividends, plus the median of target price estimates from 23 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 20% less than the market as a whole.
Realty Income Corp was projected to net $162.41, based on a median of target estimates from 13 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 74% under the market as a whole.
Medtronic PLC (MDT) net $162.11, based on dividends, plus the median of target price estimates from 28 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 27% less than the market as a whole.
Cincinnati Financial Corp (CINF) was projected to net $145.53 based on target price estimates from 7 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate is subject to risk/volatility 38% under the market as a whole.
PepsiCo Inc (PEP) was projected to net $137.11, based on the median of target price estimates from 22 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 44% less than the market as a whole.
The average net gain in dividend and price was estimated to be 20% on $10k invested as $1k in each of these ten stocks. The average Beta ranking showed these estimates subject to risk/volatility 27% less 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 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 Dividend Aristocrats By Yield
Actionable Conclusions (11-20): Ten Top Stocks By Yield Are The December Dogs of The Dividend Aristocrats
Top ten Aristocrat Dogs selected 12/12/23 by yield represented six of eleven Morningstar sectors. First place went to the first of two healthcare representatives in the top ten, Walgreens Boots Alliance [1]. The other placed tenth, AbbVie Inc [10].
One industrials representative, placed second, 3M Co [2]. Then three real estate representatives took the third, seventh and ninth slots, Realty Income Corp[3], Federal Realty Investment Trust [7], and Essex Property Trust Inc [9].
These were followed, in fourth, by the lone consumer cyclical representative, Amcor PLC [4]. Then in fifth and sixth places, were two financial services sector Aristocrats, T. Rowe Price Group Inc [5], and Franklin Resources Inc [6].
Finally the lone energy dog grabbed the eighth slot, Chevron Corp [8], and completed the December S&P500 Dividend Aristocrats top-ten, by yield.
Actionable Conclusions: (21-30) Ten Aristocrats Showed 11.77% To 28.51% Upsides To December 2024; (31). Six -2.67% to -10.7% Downside Dogs Were Found
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, (or unrealistic expectations).
Analysts Estimated A 3.53% Disadvantage For 5 Highest-Yield, Lowest-Priced, of Top Ten Dividend Aristocrats To December, 2024
Ten top Aristocrats were culled by (dividend/price) yield results for this monthly update.
As noted above, top ten Aristocrats by yield selected 12/12/23 represented six of eleven sectors in the Morningstar sector scheme.
Actionable Conclusions: Analysts Estimated 5 Lowest-Priced Of Ten Highest-Yield Dividend Aristocrats (32) Delivering 10.66% Vs. (33) 11.05% Net Gains by All Ten, Come December, 2024
$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Dividend Aristocrats kennel by yield was predicted (by analyst 1-year targets) to deliver 3.53% LESS gain than $5,000 invested as $.5k in all ten. The eighth lowest-priced Aristocrats top-yield stock, Chevron Corp, was projected by analysts to deliver the best net gain of 19.35%.
The five lowest-priced top-yield Aristocrats as of December 12 were: Amcor PLC; Walgreens Boots Alliance Inc; Franklin Resources; Realty Income Corp; Federal Realty Investment Trust, with prices ranging from $9.44 to $99.33
The five higher-priced top-yield Aristocrats as of December 12 were: T. Rowe Price; 3M Co; Chevron Corp; AbbVie Inc; Essex Property Trust, whose prices ranged from $99.36 to $227.61.
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 15% 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 four 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 12/12/23) realized the ideal of offering annual dividends from a $1K investment exceeding their single share prices: Walgreens Boots Alliance; Realty Income Corp; Amcor PLC; Franklin Resources Inc; Hormel Foods Corp. Watch for 3M Co to plunge $25.10 to become ideal next year.
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. The dollar and percentage differences between recent and fair prices are documented in the top chart. Recent pricing is shown in the middle chart. Fair pricing, when all ten top dogs conform to the ideal, is displayed in the bottom chart.
S&P500 Aristocrats Alphabetically by Ticker Symbol
Note that the number of years of dividend increases for these 66 Aristocrats are documented in the far right column on the chart above.
The net gain/loss estimates in the article 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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