10 January Inflation Busting Ideal Dividend Dogs

Foreword

This article is based on five UBS, Kiplinger, and Barron’s articles aimed at finding “Inflation Busting” stocks for 2022. The author believes these stock suggestions are prescient into the new year 2023. The title and links to the articles follow:

24 Pricing Power Performers

“With inflation pressures surging, pricing power relative to cost exposures will be a key theme and source of [absolute outperformance] for global equity markets,” writes the UBS Equity Strategy team.” – by: Dan Burrows April 14, 2022

7 REITS with Rising Dividends

“REIT dividends are expected to post double-digit percentage growth this year, making the yield-friendly sector all the more attractive.” – by: Lisa Springer April 13, 2022

10 Stocks for Rising Interest Rates

“The Federal Reserve has signaled in no uncertain terms that interest rates will head higher in 2022. Here are 10 of the best stocks for this environment.” -by: Jeff Reeves April 4, 2022

5 Stocks To Stave Off Sizzling inflation

“Income investors like utility stocks for their stability and generous dividends. Here are 12 top-rated ones to watch in the new year.” – by: Dan Burrows February 10, 2022

6 Dividend Stocks Whip Inflation

“The hot new investment theme isn’t socially nuanced crypto space finance or metaverse charging networks for virtual vehicles. It’s dividends-cash payments to shareholders.

To find more dividend growers, Barron’s used an approach inspired by the Federal Reserve’s so-called dot plot, or path of expected interest rate hikes. They screened the S&P 500 for companies that analysts predict will increase payments nicely in the years ahead. The came up with six.” – By Jack Hough Updated April 24, 2022 / Original April 22, 2022

Any collection of stocks is more clearly understood when subjected to yield-based (dog catcher) analysis, this collection of UBS, Kiplinger, and Barron’s articles, aimed at finding the “Inflation Busting” stocks is perfect for the dogcatcher process. Below are the January 13. 2023 “Inflation Busters” as parsed by YCharts.

The prices of 10 of these 48 UBS, Kiplinger, and Barron’s dividend selections, made the possibility of owning productive dividend shares from this collection more viable for first-time investors.

Those 10 Dogcatcher Ideal “Inflation Busting” stocks for January are: Arbor Realty Trust, Inc. (ABR); Ares Capital (ARCC); BHP Group Ltd. (BHP); AllianceBernstein Holding (AB); British American Tobacco p.l.c. (BTI); VICI Properties Inc. (VICI); PacWest Bancorp (PACW); Fifth Third Bancorp (FITB); HP Inc. (HPQ); Navient Corp. (NAVI).

Those ten all live up to the ideal of having their annual dividends from a $1K investment exceed their single share prices. Many investors see this condition as “look closer to maybe buy” opportunity.

Actionable Conclusions (1-10): Analysts Estimated 16.64% To 39% Net Gains For Ten Top ‘Inflation Busting’ Dividend Stocks To January 2024

Five of ten top “Inflation Buster” dividend stocks by yield were also 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, the yield-based forecast for these January dogs was graded by Wall St. Wizards as 50% accurate.

Estimated dividends from $1000 invested in each of the highest yielding “Inflation Buster” stocks, added to the median of aggregate one-year target prices from analysts (as reported by YCharts), generated the following results. Note: one-year target prices by lone analysts were not included. Ten probable profit-generating trades projected to January, 2024 were:

British American Tobacco was projected to net $390.02 based on dividends, plus the median of target estimates from 3 brokers, less transaction fees. The Beta number showed this estimate subject to risk/volatility 39% less than the market as a whole.

Hasbro, Inc. (HAS) was projected to net $350.05, 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% less than the market as a whole.

CVS Health Corp. (CVS) was projected to net $316.72 based on the median of target price estimates from 24 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 29% less than the market as a whole.

Arbor Realty Trust Inc. was projected to net $278.01, based on the median of target price estimates from 5 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 90% greater than the market as a whole.

NexPoint Residential Trust (NXRT) was projected to net $273.94, based on the median of estimates from 7 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 4% greater than the market as a whole.

Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) was projected to net $209.25, based on the median of target estimates from 11 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 6% greater than the market as a whole.

PacWest Bancorp was projected to net $190.16, based on dividends, plus the median of target price estimates from 9 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 41% over the market as a whole.

Fifth Third Bancorp was projected to net $171.07, based on dividends, plus the median of target price estimates from 22 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 21% over the market as a whole.

Pfizer Inc. (PFE) was projected to net $166.72, based on dividends, plus median target price estimates from 21 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 32% under the market as a whole.

Extra Space Storage Inc. (EXR) was projected to net $166.40, based on dividends, plus the median of target price estimates from 15 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 49% less than the market as a whole.

The average net gain in dividend and price was estimated at 25.12% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility 1% 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”.

48 Inflation Busters For 2023-24 Per January Analyst Target Data

48 Inflation Busters 2023-24 Dividends By January Yields

Actionable Conclusions (11-20): Ten Top Inflation Busters By Yield For 2023-24

Top ten 2023-24 “Inflation Busting” stocks by yield in January represented five of eleven Morningstar sectors. First place went to the first of three real estate sector representatives, Arbor Realty Trust Inc. [1]. The others placed seventh and tenth, VICI Properties Inc. [7] and Extra Space Storage Inc. [10].

Positions two, four, and nine were claimed by financial services sector members: Ares Capital Corp. [2]; AllianceBernstein Holding LP [4]; PacWest Bancorp [9].

Third place was claimed by the single basic materials rep in the top ten, BHP Group Ltd. [3].

Two consumer defensive stocks took the fifth and sixth slots on this list, British American Tobacco PLC [5], and Philip Morris International Inc. (PM) [6].

Finally, a lone consumer cyclical member placed eighth, Hasbro Inc. [8], to complete the top ten “Inflation Busters” for 2023-24 dividend pack as of January 12.

Actionable Conclusions: (21-30) Ten Top “Inflation Buster” Dividend Payers For 2023-24 Showed 13.75%-32.37% Upsides While (31) Three Downsiders Stumbled In January

To quantify top dog rankings, analyst median price target estimates provided a “market sentiment” gauge of upside potential. Added to the simple high-yield metrics, median analyst target price estimates became another tool to dig out bargains.

Analysts Forecast A 28.71% Advantage For 5 Highest Yield, Lowest Priced, of 10 Inflation Busting Stocks for January 2023-24

Ten top UBS, Kiplinger, and Barron’s dividend selections, aimed at finding the “Inflation Busters” for 2023-24 were culled by yield for this update. Yield (dividend / price) results provided by YCharts did the ranking.

As noted above, top ten UBS, Kiplinger, and Barron’s dividend selections, aimed at finding the best Inflation Buster stocks, as screened 1/12/23, showing the highest dividend yields, represented five of eleven in the Morningstar sector scheme.

Actionable Conclusions: Analysts Predicted 5 Lowest-Priced Of The Top Ten Highest-Yield Inflation Buster Dividend Stocks for 2023-24 (32) Delivering 23.06% Vs. (33) 17.92% Net Gains by All Ten Come January, 2024

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten UBS, Kiplinger, and Barron’s dividend selections, aimed at finding the “Inflation Busters” for 2022-23 by yield, were predicted, by analyst 1-year targets, to deliver 28.71% more gain than $5,000 invested as $.5k in all ten. The fifth lowest-priced selection, British American Tobacco PLC, was projected to deliver the best net gain of 39.00%.

The five lowest-priced top-yield UBS, Kiplinger, and Barron’s dividend selections, aimed at finding the “Inflation Busters” as of January 12 were: Arbor Realty Trust Inc.; Ares Capital Corp.; PacWest Bancorp; VICI Properties Inc.; British American Tobacco PLC, with prices ranging from $14.13 to $39.00.

Five higher-priced UBS, Kiplinger, and Barron’s dividend selections, aimed at finding “Inflation Busters” as of December 12 were: AllianceBernstein Holding LP; Hasbro Inc.; BHP Group Ltd.; Philip Morris International Inc.; Extra Space Storage Inc., whose prices ranged from $39.00 to $154.11.

The 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 85% accurate on the direction of change and just 0% to 15% accurate on the degree of change.

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.

Afterword

This article features 48 UBS, Kiplinger, and Barron’s “Inflation Buster” selections for 2022-23. The article focuses on the top 30, or so, dividend payers. Thus, nearly one-third of the original list of companies is neglected. Therefore, below is the complete list of 48 stocks grouped by source.

If somehow you missed the suggestion of which stocks are ripe for picking at the start of this article, here is a reprise of the list at the end:

The prices of 10 of these 48 UBS, Kiplinger and Barron’s dividend selections, as “Inflation Buster”, stocks for 2023-24 made the possibility of owning productive dividend shares from this collection more viable for first-time investors.

Those 10 Dogcatcher ideal “inflation Busting” dividend stocks for January are:

Those ten all live up to the ideal of having their annual dividends from a $1K investment exceed their single share prices. Many investors see this condition as “look closer to maybe buy” opportunity.

How All Ten Top “Inflation Buster” 2023-24 Stocks Could Become Ideal Fair Priced Dogs

Since seven of the top ten UBS, Kiplinger and Barron’s “Inflation Buster” stocks for 2022 shares are now priced less than the annual dividends paid out from a $1K investment, the above charts compare those seven plus three at recent prices.

The dollar and percentage differences between recent and fair prices are detailed in the top chart. The recent prices are shown in the middle chart with the fair pricing of all ten top dogs conforming to the dogcatcher ideal are detailed in the bottom chart.

With renewed downside market pressure to 49.76%, it is possible for all ten highest-yield UBS, Kiplinger & Barron’s Inflation Busting Dividend stocks, to become fair-priced with their annual yield (from $1K invested) meeting or exceeding their single share prices. This pack got a nice head-start with seven of ten already fair priced.

Stocks listed above were suggested only as possible reference points for your 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 Thomson/First Call in Yahoo Finance. Dog image:Open source dog art from dividenddogcatcher.com.