Altria & Leggett & Platt: 2 Dividend Kings Buys For June

Foreword

As supplement to this article, please note that Dogs of the Dow has published a 2022 list detailing the latest 38 Dividend Kings and 5 Princes. The article, entitled 2022 Dividend Kings List is online now.

While most of this collection of 43 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.

In the current market adjustment, it is now possible for Altria Group (MO), and Leggett & Platt (LEG) to stay fair-priced with their annual yield (from $1K invested) meeting or exceeding their single share prices at this time.

As we are over two-years 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 27.21% To 49.28% Top-Ten K&P Net Gains To June 2023

Four 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 June 23 forecast for K&Ps (as graded by Brokers) was 40% 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 June 23, 2023 were:

Stanley Black & Decker (SWK) netted $492.46 based on a median target price estimate from fourteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 38% more than the market as a whole.

Parker-Hannifin Corp (PH) was projected to net $480.78, based on the median of target price estimates from sixteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 58% more than the market as a whole.

American Water Works Co (AWK) was projected to net $442.94 based on target price estimates from fourteen analysts, plus annual dividend, less broker fees. The Beta number showed this estimate is subject to risk/volatility t55% less than the market as a whole.

ABM Industries Inc (ABM) was projected to net $426.63, based on the median of target price estimates from five analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 10% less than the market as a whole.

Emerson Electric Co (EMR) was projected to net $424.14 based on dividends, plus the median of target price estimates from twenty-one analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 42% greater than the market as a whole.

Altria Group Inc was projected to net $392.04, based on a median of target estimates from seventeen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 51% less than the market as a whole.

Lowe’s Companies Inc (LOW) was projected to net $382.26, based on the median of target price estimates from twenty-six analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 25% more than the market as a whole.

Federal Realty Investment Trust (FRT) was projected to net $373.27, 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 9% greater than the market as a whole.

PPG Industries Inc (PPG) was projected to net $345.86, based on dividends, plus the median of target price estimates from twenty analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 15% greater than the market as a whole.

3M Co (MMM) was projected to net $272.07, based on dividends, plus the median of target price estimates from seventeen analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 8% less than the market as a whole.

The average net gain in dividend and price was estimated to be 40.33% on $10k invested as $1k in each of these ten stocks. The average Beta ranking showed these estimates subject to risk/volatility 8% 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”, even if they are “Kings” and “Princes.”

Top 50 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 50 Dividend K&Ps By Yield

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

Top ten K&Ps selected 6/23/22 by yield represented five of eleven Morningstar sectors. In first place was Altria Group Inc. [1], the tops of four consumer defensive representatives listed. The others placed second, seventh, and tenth, Universal Corp (UVV) [2], Kimberly-Clark Corp (KMB) [7], Target Corp (TGT) [10].

Thereafter, one consumer cyclical representative took the third place, Leggett & Platt Inc [3]. Then the industrials sector K&P leader of two placed fourth, 3M Co [4]. The other industrial placed ninth, Stanley Black & Decker Inc [9].

Following, 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 (NWN) [6], and eighth place went to, Black Hills Corp (BKH) [8], to complete these June K&P top-ten, by yield.

Actionable Conclusions: (21-30) Ten K&Ps Showed 23.26% To 47.31% Upsides Into June 2023; (31) On The Downside Were Two -0.68% and -1.53% 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 An 23.42% Disadvantage For 5 Highest Yield, Lowest Priced, of Top-Ten Dividend K&Ps To June 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 6/23/22 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 K&Ps (32) Delivering 17.39% Vs. (33) 22.71% Net Gains by All Ten by June 2023

$5000 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 23.42% LESS gain than $5,000 invested as $.5k in all ten. The seventh lowest-priced K&Ps top-yield stock, Stanley Black & Decker Inc was projected to deliver the best net gain of 49.28%.

The five lowest-priced top-yield Dividend Kings and Princes as of June 23 were: Leggett & Platt Inc; Altria Group Inc; Northwest Natural Holding Co; Universal Corp; Black Hills Corp, with prices ranging from $35.43 to $70.17

The five higher-priced top-yield Dividend Kings and Princes for June 24 were: Federal Realty Investment Trust; Stanley Black & Decker Inc; 3M Co; Kimberly-Clark Corp; Target Corp, whose prices ranged from $97.15 to $146.81.

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 90% 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 6/23/22) realized the ideal of offering annual dividends from a $1K investment exceeding their single share prices: Altria Group Inc, and Leggett & Platt Inc.

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 compares those two plus eight at recent prices. Fair pricing (when all ten top dogs conform to the ideal) is displayed in the middle chart. Finally, the dollar and percentage differences between recent and fair prices are revealed in the bottom chart. Note that UVV was just $2.18 away from the Fair price mark as of June 23, and NWN was $8.21 over the mark.

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.