Buy 4 November Dividend Dogs Of The Dow And Watch 2 More

Foreword

While more than half this collection of Dow Industrials is too pricey and reveals only skinny dividends, four of the five lowest priced Dogs of the Dow are ready to buy. This month, Verizon Communications Inc (VZ), Dow Inc (DOW), Walgreens Boots Alliance (WBA), and Intel Corp (INTC), live up to the dogcatcher ideal of annual dividends from $1K invested exceeding their single share prices. Furthermore, one more, Cisco (CSCO) showed its price within $6.54 of meeting that goal. When the slide continues, watch IBM, MMM, JPM (& KO currently out of the top-ten) bubble to the surface.

With renewed downside market pressure of 70.84%, it would be possible for all ten (even GS) to become elite fair-priced dogs with their annual yield (from $1K invested) meeting or exceeding their single share prices by year’s end. [See a summary of top ten fair-priced August Dow Dogs in Actionable Conclusion 21 near the middle of this article.]

Actionable Conclusions (1-10): Brokers Expect 18.99% To 33.39% Net Gains From Top-Ten Dow Dogs By November 2023

Three of ten top dividend-yielding Dow dogs (tinted gray in the chart below) were among the top ten gainers for the coming year based on analyst 1-year target prices. So, this November, 2023 yield-based forecast for Dow dogs, as graded by Wall St. wizard estimates, was 30% accurate.

Estimated dividend-returns from $1,000 invested in the ten highest-yielding stocks and their aggregate one-year analyst median target prices, as reported by YCharts, created the 2022-23 data points for the projections below. Note: one-year target prices estimated by lone analysts were not applied. Ten probable profit-generating trades projected to November 2023 were:

Salesforce Inc (CRM) was projected to net $333.87, based on the median of target price estimates from 47 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 12% greater than the market as a whole.

Boeing Co (BA) was forecast to net $317.63, based on the median of target price estimates from 21 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 45% greater than the market as a whole.

The Walt Disney Co (DIS) was projected to net $305.00, based on the median of target estimates from 29 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 25% over the market as a whole.

Microsoft Corp (MSFT) was projected to net $298.19, based on the median of target price estimates from 42 analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 8% less than the market as a whole.

Verizon Communications Inc was projected to net $263.47, based on dividends, plus the median of target price estimates from 24 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 62% less than the market as a whole.

Cisco Systems Inc was projected to net $240.56, based on dividends, plus the median target price estimates from 23 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility equal to the market as a whole.

The Home Depot Inc (HD) was projected to net $213.86, based on the median of target prices estimated by 31 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 5% less than the market as a whole.

Intel Corp was projected to net $207.98 based on the median of target price estimates from 32 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 26% less than the market as a whole.

Visa Inc (V) was projected to net $194.78, based on dividends, plus the median of target price estimates from 30 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 4% under the market as a whole.

Nike Inc (NKE) netted $189.88 based on the median of target price estimates from 32 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 12% greater than the market as a whole.

The average net gain in dividend and price was estimated at 25.65% on $10K invested as $1K in each of these top ten Dow Index stocks. This gain estimate was subject to average 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”.

The November 2022 Dow 30 By Yield

Actionable Conclusions (11-20): 10 Top Dow Dividend Stocks By Yield Ranged 2.93% To 6.93% Per YCharts

Top ten Dow dogs as of 10/31/22 represented seven of eleven Morningstar sectors.

The lone communication services sector member took first place, Verizon [1]. In second place was the lone basic materials dog, Dow Inc [2].

Healthcare placed third, represented by Walgreens Boots Alliance [3].

Then three technology dogs placed in the fourth, fifth, and seventh positions, Intel Corp [4], International Business Machines (IBM) [5], and Cisco Systems Inc [7].

A lone industrials dog was sixth, 3M Co (MMM) [6], and another lone energy representative was ninth, Chevron (CVX) [9].

Finally, eighth and tenth places belonged to the financial services representatives, JPMorgan Chase & Co (JPM) [8], and The Goldman Sachs Group Inc (GS) [10], to complete the November Dogs of the Dow by yield lists from YCharts.

Dividend Vs. Price Results

A graph above shows the relative strengths of the top ten Dow dogs by dividend and price as of market close 10/31/2022.

This month six of the top-ten Dow dogs show an overbought condition (in which aggregate single share price of those six exceeds projected annual dividend from $10K invested as $1K each). A dividend dogcatcher priority is to select stocks whose dividends from $1K invested exceed their single share price. As mentioned above, that condition was reached by four of the five lowest priced Dogs of the Dow: Verizon Communications, Dow Inc, Walgreens Boots Alliance, and Intel Corp, live up to the dogcatcher ideal of annual dividends from $1K invested exceeding their single share prices. Furthermore, one more, Cisco Systems, showed a price within $6.54 of meeting that goal as of October 31.

Actionable Conclusion (21): Six of Ten Top Dow Dogs Are Overbought

This gap between high share price and low dividend per $1K (or oversold condition) means, no matter which chart you read, 23 of all 27 Dow dividend payers are low risk and low opportunity dogs, with the non-dividend payers being particularly dismal. The Dow top-ten average cost per dollar of annual dividend for October 31, 2022 was $23.99 per YCharts.

One that cut its dividend after March, 2020 Boeing, has re-learned (and is now certified that it knows how to fly in some countries) and is thus prepared to take off again when airlines trust planes made in the USA again. The used plane and Airbus market, however, is soaring. BA is struggling to recover from being in worse shape than was GE when excused from the Dow index.

As for DIS, the magic kingdom may be close to reinstating a dividend but don’t hold your breath. Furthermore, the newest of the three latest no-dividend stocks on the block, CRM, is simply overpriced. Those three non-dividend payers are the true down in the dumps dogs of the Dow, despite analysts high-balling their future share price estimates. All of the three demonstrate a total disregard for shareholders.

Remember this dogcatcher yield-based stock-picking strategy is contrarian. That means rooting for (buying) the underdog is productive when you don’t already own these stocks. If you do hold these stocks, then you must look for opportune pull-backs in price to add to your position to best improve your dividend yield. Plenty of pull-back opportunities appear to be ahead.

Price Drops or Dividend Increases Could Get All Ten Dow Dogs Back to “Fair Price” Rates For Investors

The charts above retain the current dividend amount and adjust share price to produce a yield (from $1K invested) to equal or exceed the single share price of each stock. As the top illustration shows, four are ideally priced. Beside Verizon Communications, Dow Inc, Walgreens Boots Alliance, and Intel Corp breaking into the ideal zone, one more low priced stock, Cisco Systems Inc, is within $6.54 of making the grade.

Five more, however (IBM, MMM, CVX, JPM, GS), need to trim prices between $38.81 and $70.84 to attain that elusive 50/50 goal.

The alternative, of course, would be that these companies raise their dividends but that is a lot to ask in these highly disrupted, inflationary, yet cash-rich times. Mr. Market is much more effective at moving prices up or down to appropriate amounts, just watch and buy when the price moves into the sweet spot.

Actionable Conclusions: (22-31) The Dow Index Showed 16.78% To 34.39% Top Ten Upsides To November 2023; (32) Two Downsides of -1.71% and 6.42% Were Revealed By Broker 1-Yr. Targets

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

Analysts Forecast A 44.73% Advantage For 5 Highest-Yield, Lowest-Priced of 10 Dow Dogs As Of October 31, 2023

Ten top Dow dogs were culled by yield for their monthly update. Yield (dividend / price) results as verified by YCharts did the ranking.

As noted above, top-ten Dow dogs selected 10/31/22 by YCharts method revealing the highest dividend-yields represented seven of the eleven sectors. Consumer Cyclical and Consumer Defensive selections were missing. (Real Estate is not reported and Utilities has its own Dow Index.)

Actionable Conclusions: Analysts Expected 5 Lowest-Priced of the Ten Highest-Yield Dow Dogs (34) To Deliver 18.88% Vs. (35) 13.04% Net Gains by All Ten Come October 31, 2023

$5,000 invested as $1K in each of the five lowest-priced stocks in the top ten Dow Dividend kennel by yield were predicted by analyst 1-year targets to deliver 44.73% more gain than from $5,000 invested in all ten. The third lowest priced top ten stock, Verizon Communications Inc, showed top analyst-estimated gains of 36.35%.

The five lowest-priced Dow top-yield dogs for October 31 were: Intel Corp, Walgreens Boots Alliance Inc, Verizon Communications Inc, Cisco Systems Inc, Dow Inc, with prices ranging from $28.43 to $46.74.

Five higher-priced Dow top-yield dogs for October 31 were: 3M Co; JPMorgan Chase & Co; International Business Machines Corp; Chevron Corp; The Goldman Sachs Group Inc, whose prices ranged from $125.79 to $344.51.

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 90% accurate on the direction of change and just 0% to 15% accurate on the degree of change. (In 2017, the market somewhat followed analyst sentiment. In 2018, analysts’ estimates were contrarian indicators of market performance, and they continued to be contrary for the first two quarters of 2019 but switched to conforming for the last two quarters.) In 2020, analyst projections were quite contrarian. The first half of 2021, most dividend stock price actions exceeded all analyst expectations. The last half of 2021 was still gangbusters. The 2022 November sag may free up five or more Dow dogs, sending them into the ideal zone where returns from $1K invested equal (or exceed) their single-share price.

Afterword

Lest there be any doubt about the recommendations in this article, this month there were four Dow Index stocks showing dividends for $1K invested exceeding single share price: Intel Corp, Walgreens Boots Alliance, Verizon Communications, and Dow Inc.

The dogcatcher hands-off recommendations are still in place referring to one that cut its dividend in March 2020. While Boeing has re-learned (and is certified in certain countries) how to fly, it still has to coax customers to buy planes again. BA faces strong headwinds to stay on the Dow index (despite analyst optimism for the lone U.S. commercial air-crafter).

Also keep hands off the newest non-dividend member of the Dow, Salesforce Inc, until it declares a dividend from $1K invested greater than its single share price.

While subscriptions keep the ship afloat, Disney needs audiences to get strapped back into buying tickets to watch and ride before resuming a dividend. Meanwhile DIS has Apple, Amazon, Netflix, and Paramount, and numerous other content providers pouring out streamable content. Will the mouse house ever roar again, let alone pay dividends?

Is anyone else amazed to see The Goldman Sachs Group Inc as one of the top ten dogs of the DOW?

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 Dow dividend dog stock purchase or sale research process. These were not recommendations.

Graphs and charts were compiled by Rydlun & Co., LLC from data derived from indexArb; YCharts; finance.yahoo.com; analyst mean target price by YCharts. Open source dog art from dividenddogcatcher.com