February Dividend Kings: 5 Buys; 1 To Watch

Foreword

As supplement to this article, please note that Dogs of the Dow has published a 2023 list detailing the latest 47 Dividend Kings. The article, entitled 2023 Dividend Kings List, is on-line now.

While most of this collection of 47 Kings is too pricey to justify their skinny dividends, five 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 is one more to watch,

In the current market adjustment, it is now possible for Altria Group Inc (MO), V.F. Corp (VFC), Universal Corp (UVV), Leggett & Platt Inc (LEG), and Canadian Utilities Ltd (OTCPK:CDUAF), to stay fair-priced with their annual yield (from $1K invested) meeting or exceeding their single share prices.

The one to watch s Northwest Natural Holding Co (NWN). NWN needs to drop just $5.18 in price or 10.53% to join the ideal five.

As we are two-years and ten months removed from the anniversary of the 2020 Ides of March dip, the time to snap-up those five 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 12.84% To 36.92.% Top-Ten King Net Gains To February 2024

Three of the ten top Kings 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 January 26 forecast for Kings (as graded by Brokers) was 30% accurate.

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

National Fuel Gas Co (NFG) was projected to net $369.22, 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 28% less than the market as a whole.

ABM Industries (ABM) was projected to net $292.97, based on a median of target estimates from 5 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 13% greater than the market as a whole.

Gorman-Rupp Co (GRC) was projected to net $286.74 based on dividends, plus the median of target price estimates from 3 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 27% less than the market as a whole.

Altria Group was projected to net $177.64 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 38% less than the market as a whole.

Emerson Electric Co (EMR) netted $171.81 based on a median target price estimate from 23 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 41% more than the market as a whole.

Lowe’s Companies Inc (LOW) was projected to net $155.90, based on the median of target price estimates from 29 analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 16% more than the market as a whole.

Sysco Corp (SYY) was projected to net $150.62, based on dividends, plus the median of target price estimates from 14 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 11% greater than the market as a whole.

Northwest Natural Holding Co was projected to net $134.87, based on the median of target price estimates from 7 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 45% less than the market as a whole.

3M Co (MMM) was projected to net $132.86, based on the median of target price estimates from 17 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 1% greater than the market as a whole.

Coca-Cola Co (KO) was projected to net $128.37, 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 43% less than the market as a whole.

The average net gain in dividend and price was estimated to be 20.00% on $10k invested as $1k in each of these ten stocks. The average Beta ranking showed these estimates subject to risk/volatility 10% 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 47 Dividend Kings 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 47 Dividend Kings By Yield

Actionable Conclusions (11-20): Ten Top Stocks By Yield Are The February Dogs Of Kings

Top ten Kings selected 1/25/23 by yield represented six of eleven Morningstar sectors. In first place was Altria Group Inc. [1], the tops of two consumer defensive representatives listed. The other placed third, Universal Corp [3].

The first of two consumer cyclical representatives took second place, V.F. Corp. The other placed fifth, Leggett & Platt Inc [5]. Then the first of two industrials sector representatives placed fourth, 3M Co [3]. The other industrial placed tenth, Stanley Black & Decker (SWK) [10].

In sixth place, was the first of two utilities, Northwest Natural Holding Co [6], and eighth place went to, Black Hills Corp (BKH) [8].

Seventh place was claimed by the lone healthcare representative, AbbVie Inc (ABBV) [7].

Finally, to complete these February top-ten Kings, by yield, a lone real estate representative placed ninth, Federal Realty Investment Trust (FRT) [9].

Actionable Conclusions: (21-30) Top Ten Kings Showed 9.82% To 28.35% Upsides Into February 2023; (31) On The Downside Were Five -0.10% To -5.81% 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 4.23% Advantage For 5 Highest Yield, Lowest Priced, of Top-Ten Dividend Kings To February 2024

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

As noted above, top ten Kings selected 1/25/23 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 Kings (32) Delivering 9.01% Vs. (33) 8.64% Net Gains by All Ten by February 2024

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Dividend Kings kennel by yield were predicted by analyst 1-year targets to deliver 4.23% more gain than $5,000 invested as $.5k in all ten. The fourth lowest-priced Kings top-yield stock, Altria Group Inc, was projected to deliver the best net gain of 17.76%.

The five lowest-priced top-yield Dividend Kings as of January 25 were: Canadian Utiilties Ltd; V.F. Corp; Leggett & Platt Inc; Altria Group Inc; Northwest Natural Holding Co, with prices ranging from $28.28 to $49.21.

The five higher-priced top-yield Dividend Kings and Princes for December 27 were: Universal Corp; Stanley Black & Decker Inc; Federal Realty Investment Trust; 3M Co; AbbVie Inc, whose prices ranged from $53.18 to $147.79.

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

The following 5 (as of 1/25/23) realized the ideal of offering annual dividends from a $1K investment exceeding their single share prices: Altria Group Inc, V.F. Corp, Universal Corp, Leggett & Platt Inc, and Canadian Utilities Ltd. One more bears watching, Northwest Natural Holding Co, is just $5.18 away from being in that sweet spot.

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

Since five 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 NWN was just $5.18 over the mark. All others are within $32 to $72 of being there. The middle chart compares the five ideals with five at recent prices. Fair pricing (when all ten top dogs conform to the ideal) is displayed in the bottom chart.

February Dividend Kings 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.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.