2 December Dividend Kings To Buy

Foreword

As supplement to this article, please note that Dogs of the Dow has published a 2022 list detailing the latest 42 Dividend Kings and 2 Princes. The article, entitled 2022 Dividend Kings List, is on-line now.

While most of this collection of 44 K&Ps is too pricey to justify their skinny dividends, two of the top-ten, by yield, live up to the ideal of offering annual dividends (from a $1K investment) exceeding their single share prices, and this month there are two more to watch.

In the current market adjustment, it is now possible for Altria Group Inc (MO), and Leggett & Platt Inc (LEG), to stay fair-priced with their annual yield (from $1K invested) meeting or exceeding their single share prices at this time. The two to watch are Universal Corp (UVV) and Northwest Natural Holding Co (NWN). UVV needs to drop less than $0.25 in price (or 0.37%) to join the ideal duo, and when NWN sheds $5.30 in excess share price (or 10.73%), it will complete a kingly quartet.

As we are near two years and nine months removed from the anniversary of the 2020 Ides of March dip, the time to snap-up those two lingering top yield Royal 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 10.38% To 28.73% Top-Ten K&P Net Gains To December 2023

Six of the ten top K&Ps 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 November 28 forecast for K&Ps (as graded by Brokers) was 60% accurate.

Estimated dividend returns from $1,000 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 December 2023 were:

ABM Industries (ABM) was projected to net $287.27, based on a median of target estimates from 6 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 13% greater than the market as a whole.

National Fuel Gas Co (NFG) was projected to net $207.47, based on dividends, plus the median of target price estimates from 5 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 26% less than the market as a whole.

Lowe’s Companies Inc (LOW) was projected to net $160.12, based on the median of target price estimates from 27 analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 15% more than the market as a whole.

Parker-Hannifin Corp (PH) was projected to net $154.17, based on the median of target price estimates from 18 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 56% more than the market as a whole.

Altria Group Inc was projected to net $151.93 based on target price estimates from 16 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate is subject to risk/volatility 35% less than the market as a whole.

3M Co (MMM) was projected to net $112.90, based on the median of target price estimates from 18 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 2% greater than the market as a whole.

Stanley Black & Decker Inc (SWK) netted $112.13 based on a median target price estimate from 14 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 26% more than the market as a whole.

Northwest Natural Holding Co was projected to net $112.03 based on dividends, plus the median of target price estimates from 7 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 45% less than the market as a whole.

Abbott Laboratories (ABT) was projected to net $110.37, 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 30% less than the market as a whole.

Federal Realty Investment Trust (FRT) was projected to net $103.75, based on dividends, plus the median of target price estimates from 19 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 13% greater than the market as a whole.

The average net gain in dividend and price was estimated to be 15.12% on $10K invested as $1K in each of these ten stocks. The average Beta ranking showed these estimates subject to risk/volatility 1% 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 “Kings” and “Princes.”

Top 43 Dividend K&Ps 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 43 Dividend K&Ps By Yield

Actionable Conclusions (11-20): Ten Top Stocks By Yield Are The December Dogs of The Kings & Princes

Top ten K&Ps selected 11/28/22 by yield represented six of eleven Morningstar sectors. In first place was Altria Group Inc. [1], the top of three consumer defensive representatives listed. The other two placed second, and ninth, Universal Corp [2], Kimberly-Clark Corp (KMB) [9].

The lone consumer cyclical representative took the third place, Leggett & Platt Inc [3]. Then the first of two industrials sector representatives placed fourth, 3M Co [3]. The other industrial placed sixth, Stanley Black & Decker (SWK) [6].

In fifth place, was the lone real estate representative, Federal Realty Investment Trust [5]. Then, sixth place was claimed by the first of two utilities, Northwest Natural Holding Co [6], and seventh place went to Black Hills Corp (BKH) [7].

Finally, to complete these December K&P top-ten, by yield, was the tenth place finisher from the energy sector, National Fuel Gas Co [10].

Actionable Conclusions: (21-30) Ten K&Ps Showed 7.83% To 28.01% Upsides Into December 2023; (31) On The Downside Were Eight -0.74% To -11.53% 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 21.23% Advantage For 5 Highest Yield, Lowest Priced, of Top-Ten Dividend K&Ps To December 2023

Ten top K&Ps were culled by yield for their monthly update. Yield (dividend/price) results verified by YCharts did the ranking.

As noted above, top ten K&Ps selected 11/28/22 showing the highest dividend yields represented six of eleven in the Morningstar sector scheme.

Actionable Conclusions: Analysts Estimated The 5 Lowest-Priced Of Ten Highest-Yield Dividend K&Ps (32) Delivering 11.49% Vs. (33) 9.47% Net Gains by All Ten by December 2023

$5,000 invested as $1K in each of the five lowest-priced stocks in the top ten Dividend K&Ps kennel by yield were predicted by analyst 1-year targets to deliver 21.23% more gain than $5,000 invested as $.5K in all ten. The fifth lowest-priced K&Ps top-yield stock, National Fuel Gas Co was projected to deliver the best net gain of 20.75%.

The five lowest-priced top-yield Dividend Kings and Princes as of November 28 were: Leggett & Platt Inc, Altria Group Inc, Northwest Natural Holding Co, Universal Corp, National Fuel Gas Co, with prices ranging from $35.11 to $64.48.

The five higher-priced top-yield Dividend Kings and Princes for September 23 were: Black Hills Corp, Stanley Black & Decker Inc, Federal Realty Investment Trust, 3M Co, Kimberly-Clark Corp, whose prices ranged from $70.57 to $133.31.

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 80% 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 two stocks ripe for picking at the start of the article, here is a repeat of the list at the end:

The following 2 (as of 11/28/22) realized the ideal of offering annual dividends from a $1K investment exceeding their single share prices: Altria Group Inc, and Leggett & Platt Inc. Two more bear watching, Universal Corp, and Northwest Natural Holding Co prices are less than $6 away from being in that sweet spot.

Price Drops or Dividend Increases Could Get All Ten Top Dividend K&P Dogs Back to “Fair Price” Rates For Investors

Since two of the top ten Dividend K&P shares are now priced less than the annual dividends paid out from a $1K investment, the top chart below shows the dollar and percentage differences between recent and fair prices. Note that Universal was just $0.21 over, and NWN was just $5.29 over the mark. Also, SWK, NFG & BKH, are all within $25 of being there. The middle chart compares the two ideals with eight at recent prices. Fair pricing (when all ten top dogs conform to the ideal) is displayed in the bottom chart.

Dividend Kings and Princes Alphabetical 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.

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.