As supplement to this article, please note that Kiplinger has published an online slide-show detailing the 65 S&P Dividend Aristocrats for 2020. The article is entitled 65 Best Dividend Stocks You Can Count On in 2020. You will find it written here by Dan Burrows, a contributing editor.
While more than half this collection of now 65 S&P 500 Dividend Aristocrats are too pricey to justify their skinny dividends, half of the top twelve by yield live up to the ideal of offering annual dividends (from a $1k investment) exceeding their price per share.
In the autumn market advance, it is still possible for six (Exxon Mobil Corp. (NYSE:XOM), AT&T (NYSE:T), People’s United Financial Inc. (NASDAQ:PBCT), Franklin Resources Inc. (NYSE:BEN), Walgreens Boots Alliance (NASDAQ:WBA), and Amcor (NYSE:AMCR)) of twelve highest-yield S&P 500 Dividend Aristocrat stocks to stay fair-priced with their annual yield (from $1k invested) meeting or exceeding their single share prices by year’s end.
In the wake of the Ides of March dip, the time to snap up the six top yield Aristocrat dogs is now… unless another big bearish drop in price looms ahead. (At which time your strategy would be to add to your position in any of these six you then hold.)
Actionable Conclusions (1-10): Analysts Predict 15.11% To 52.37% Aristocrat Net Gains To October 2021
Seven of the ten top Aristocrats by yield were verified as being among these 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 October forecast for Aristocrats (as graded by brokers) was 70% accurate.
Projections based on 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, created the 2020-21 data points. Note: one-year target prices by lone analysts were not applied. Ten probable profit-generating trades projected to October 7, 2021 were:
Exxon Mobil Corp. was projected to net $523.73 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 31% more than the market as a whole.
Chevron Corp. (CVX) was projected to net $393.59, based on target price estimates from twenty-five analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 26% more than the market as a whole.
Raytheon Technologies Corp. (RTN) was projected to net $328.55, 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 28% more than the market as a whole.
AbbVie Inc. (ABBV) was projected to net $296.07, based on dividends, plus the median of target price estimates from nineteen analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 27% less than the market as a whole.
Cardinal Health Inc. (CAH) was projected to net $280.40, based on a median of target estimates from nineteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 6% less than the market as a whole.
Federal Realty Investment Trust (FRT) was projected to net $210.09, based on a median target price estimate from sixteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 11% less than the market as a whole.
AT&T Inc. was projected to net $201.09, 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 30% less than the market as a whole.
Essex Property Trust Inc. (ESS) was projected to net $199.12, based on the median of target price estimates from twenty-one analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 36% less than the market as a whole.
General Dynamics Corp. (GD) netted $181.44 based on a median target price estimate from twenty analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 2% more than the market as a whole.
Walgreens Boots Alliance was projected to net $151.09, based on dividends, plus the median of target price estimates from twenty-two analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 56% less than the market as a whole.
The average net gain in dividend and price was estimated to be 27.65% on $10k invested as $1k in each of these ten stocks. The average Beta showed these estimates subject to risk/volatility 8% under 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.”
65 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.
65 Dividend Aristocrats By Yield
Actionable Conclusions (11-20): Ten Top Stocks By Yield Are The October Dogs of The Dividend Aristocrats
Top ten Aristocrats selected 10/7/20 by yield represented five of eleven Morningstar sectors. Two energy representatives placed first, and third, Exxon Mobil  and Chevron . In second place was AT&T, Inc. , the lone communication services representative in list.
Two financial services firms placed fourth, and eighth, People’s United Financial Inc.  and Franklin Resources Inc. . Following in fifth and ninth were the two real estate representatives, Federal Realty Investment Trust , and Realty Income Corp. (O) .
Three healthcare representatives in the top ten placed sixth, seventh, and tenth, AbbVie , Walgreens Boots Alliance , and then Cardinal Health Inc. , completed these S&P Dividend Aristocrats top ten by yield for October.
Actionable Conclusions: (21-30) Ten Aristocrats Showed 16.6% To 33.06% Upsides To October 2021; (31) On The Downside Were Six -1.33%-4.37% 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 10.55% Disadvantage For 5 Highest Yield, Lowest Priced of Top Ten Dividend Aristocrats To October 2021
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 10/7/20 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 Aristocrats (33) Delivering 19.82% Vs. (34) 22.16% Net Gains by All Ten by October 7, 2021
$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 10.55% LESS gain than $5,000 invested as $.5k in all ten. The fourth lowest priced Aristocrats top yield stock, Exxon Mobil Corp., was projected to deliver the best net gain of 52.38%.
The five lowest-priced top-yield Aristocrats for October 7 were: People’s United Financial Inc., Franklin Resources Inc., AT&T, Inc., Exxon Mobil Corp., Walgreens Boots Alliance Inc., with prices ranging from $10.97 to $36.49
The five higher-priced top-yield Aristocrats for October 7 were: Cardinal health, Realty Income Corp., Chevron Corp., Federal Realty Investment Trust, AbbVie, whose prices ranged from $47.15 to $87.07.
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.
If somehow you missed the suggestion of the six stocks ripe for picking at the start of the article, here is are repeat of the list at the end:
The following 6 (as of 10/7/20) realized the ideal of offering annual dividends from a $1k investment exceeding their single share prices: XOM, T, PBCT, BEN, WBA, and AMCR.
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 photo: thegraphicsfairy.com
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Disclosure: I am/we are long T. 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.