45 February Value Dog Buys

Foreword

About Large Cap Value

A Value ranking for large cap stocks from YCharts puts together complementary strategies found during their stock research. As a value ranking, it looks at the price of a stock relative to a number of measurements that determine intrinsic firm value. Only the largest 10% of companies based on market cap are allowed in this portfolio.

What it is: The Value Score is a composite score. It tells you how much you are getting in terms of profits, cash flows, assets, sales, etc., for the stock price that you pay. It is a relative measurement, so it says nothing about the overall level of the market. Rather, it answers the question: “Given the current market level, which stocks give you the most current value for your dollar of investment?” Tens are the most value, and 1s are the least.

How to use it: Use it to find companies that are selling at a low price relative to their assets and profits.

Limitations of the Value Score: Watch out for companies with a lot of uncertainty or bad prospects for the future (e.g. Pharma companies with expiring patents, industries on the decline, etc.).

About the Ben Graham Formula

The Ben Graham Formula strategy contains ultra-stable stocks that will infrequently lose money if held over a long period of time. It was developed based on a screen in Graham’s book, “The Intelligent Investor.” For those who have read the book, it is the “Defensive Investor” screen. It selects stocks that are large in terms of sales and total assets, have a strong track record of earnings and dividend payments, have a reasonable current ratio and level of long term debt, and have a low valuation given by PE Ratios and Price to Book Value ratios.

-YCharts

While 9 out of this collection of 57 All-Star-Value Dividend stocks are too pricey to justify their skinny dividends, 45 of the 64, by yield, live up to the ideal of offering annual dividends (from a $1K investment) exceeding their price per share.

This list of February All-Star-Value stocks did discard three stocks showing outlandish yield numbers, namely ZIM, KEN and PBR.

45 Ideal Value Dogs for February

In the current market swing, the dividends from $1k investments in 45 of the sixty-four stocks listed above, met or exceeded their single share prices as of 2/9/23.

As we are now almost eleven months past the second anniversary of the 2020 Ides of March dip, the time to snap up some the 45 top-yield All-Star-Value 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 you then hold.)

Actionable Conclusions (1-10): Analysts Estimate 29.09% To 42.4% Top Ten All-Star-Value Net Gains To February 2024

Six of the ten top picks by yield were verified as also 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 forecast for All-Star-Value derived dividend dogs (as graded by brokers) was 60% accurate.

Estimated dividend-returns from $1000 invested in each of the highest-yielding stocks and their aggregate one-year analyst median target-prices, as reported by YCharts, created the 2023-24 data-points. (Note: target prices by lone-analysts were not used. Ten probable profit-generating trades projected to February 9, 2024 were:

JOYY Inc. (YY) was projected to net $423.98, 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 48% less than the market as a whole.

Energy Transfer LP (ET) netted $384.97 based on a median target price estimate from 18 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 77% greater than the market as a whole.

Coterra Energy Inc. (CTRA) was projected to net $340.15, based on dividends, plus the median of target price estimates from 25 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 73% under the market as a whole.

Bancolombia SA (CIB) was projected to net $334.80 based on dividends, plus the median of target price estimates from 11 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 14% more than the market as a whole.

Pioneer Natural Resources (PXD) was projected to net $334.34, based on dividends, plus the median of target price estimates from 32 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 39% greater than the market as a whole.

Devon Energy Corp. (DVN) was projected to net $328.36, 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 137% greater than the market as a whole.

ICL Group Ltd. (ICL) was projected to net $317.06, 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 11% greater than the market as a whole.

Sociedad Quimica y Minera de Chile SA (SQM) was projected to net $301.59, based on the median of target price estimates from 16 analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 4% less than the market as a whole.

Diamondback Energy Inc. (FANG) was projected to net $299.50, based on a median target price estimates from 30 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 102% over the market as a whole.

Honda Motor Co. Ltd. (HMC) was projected to net $290.87, based on a median of target estimates from 4 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 25% less than the market as a whole.

The average net-gain in dividend and price was estimated to be 33.56% on $10k invested as $1k in each of these ten stocks. The average Beta showed these estimates subject to risk/volatility 23% 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”.

Top 50 All-Star-Value Picks 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.

Top 50 All-Star-Value Picks By Yield

Actionable Conclusions (11-20): Ten Top Stocks By Yield Are The February Dogs of The All-Star-Value Pack

Top ten All-Star-Value stocks selected 2/9/23 by yield represented just four of eleven Morningstar sectors. First place was secured by the first of six energy sector representatives, Dorian LPG Ltd. (LPG) [1]. The others placed fourth, fifth, seventh, eighth and ninth: Pioneer Natural Resources Co. [4], Coterra Energy Inc. [5], Energy Transfer LP [7], MPLX LP (MPLX) [8], and Devon Energy Corp. [9].

The lone technology member placed second, Himex Technologies Inc. (HIMX) [2]. Then, one basic materials representative placed third, ICL Group Ltd. [3].

Finally, two financial services representatives placed sixth and tenth, Owl Rock Capital Corp. (ORCC) [6], and Bancolombia SA [10], to complete this All-Star-Value top ten, by yield, for February.

Actionable Conclusions: (21-30) Ten All-Star-Value Dividend Stocks Showed 21.32% To 37.82% Upsides To February 2024, With (31) Five -0.36% to -9.75 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 8.05% Disadvantage For 5 Highest Yield, Lowest Priced of Top-Ten All-Star-Value Dogs To February 2024

Ten top All-Star-Value stocks were culled by yield for this monthly update. Those (dividend/price) results provided by YCharts did the ranking.

As noted above, top-ten All-Star-Value Dogs selected 2/9/23, showing the highest dividend yields, represented four of eleven sectors in the Morningstar scheme.

Actionable Conclusions: Analysts Estimated The 5 Lowest-Priced Of Ten Highest-Yield All-Star-Value Dividend Stocks (33) Delivering 25.87% Vs. (34) 28.13% Net Gains by All Ten by February 2024

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten All-Star-Value dividend pack, by yield, were predicted by analyst 1-year targets to deliver 8.05% LESS gain than $5,000 invested as $.5k in all ten. The third lowest-priced All-Star-Value top-yield stock, Energy Transfer LP, was projected to deliver the best net gain of 38.5%.

The five lowest-priced top-yield All-Star-Value dividend stocks for February 9 were: ICL Group Ltd.; Himex Technologies Inc.; Energy Transfer LP; Owl Rock Capital Corp.; Dorian LPG Ltd., with prices ranging from $7.69 to $22.36

The five higher-priced top-yield All-Star-Value dividend stocks for January 9 were: Coterra Energy Inc.; Bancolombia SA, MPLX LP; Devon Energy Corp.; Pioneer Natural Resources Co., whose prices ranged from $15.96 to $227.13.

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 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 twenty-five stocks ripe for picking at the start of the article, here is a repeat of the list at the end:

In the current market bounce, dividends from $1K invested in the forty-five stocks listed above met or exceeded their single share prices as of 2/9/23.

As we are nearly eleven months past the second anniversary of the 2020 Ides of March dip, the time to snap up some top-yield All-Star-Value dogs is now… unless another big bearish drop in price looms ahead. (At which time your strategy would be to add to your holdings.)

Recent vs Breakeven Top Ten All-Star-Value Stock Prices

Since nine of the top-ten All-Star-Value Dividend shares are now priced less than the annual dividends paid out from a $1K investment, the following top chart shows the dollar and percent variants to all ten top dogs conforming to (but not exceeding) the dogcatcher ideal.

Those at recent prices are the subject of the middle chart with the breakeven pricing of all ten is delivered in the bottom chart.

You could look at the top chart as an indicator of how high each stock might rise or fall in the coming year or two. However, it also shows how much the price must rise or fall (in either dollars or percentage) before it exactly conforms the standard of dividends from $1K invested equaling the current single share price.

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 All-Star-Value Dividend 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 silhouette: Open source dog art from dividenddogcatcher.com