January Dividend Kings And Princes: 3 Buys And 2 To Watch

Foreword

As supplement to this article, please note that Dogs of the Dow has published a 2022 list detailing the latest 41 Dividend Kings and 2 Princes. The article, entitled 2022 Dividend Kings List, is on-line now.

While most of this collection of 43 K&Ps is too pricey to justify their skinny dividends, three 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), Universal Corp (UVV), and Leggett & Platt Inc (LEG) to stay fair-priced with their annual yield (from $1K invested) meeting or exceeding their single share prices.

The four to watch are Northwest Natural Holding Co (NWN), Stanley Black & Decker Inc (SWK), Black Hills Corp (BKH), and National Fuel Gas (NFG). NWN needs to drop less than $3.30 in price or 6.91% to join the ideal trio, and when SWK sheds $15.65 in excess share price or 21.67%, it will complete a kingly quintet.

As we are near two years and ten months removed from the anniversary of the 2020 Ides of March dip, the time to snap-up those three 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 18.25% To 39.03.% Top-Ten K&P Net Gains To January 2024

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 December 28 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 2023-24 data points for the projections below. (Note: target prices from lone-analysts were not used.) Ten probable profit-generating trades projected to January 2024 were:

Tennant Co (TNC) was projected to net $390.34 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 4% greater than the market as a whole.

ABM Industries (ABM) was projected to net $325.49, 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.

Target Corp (TGT) was projected to net $239.76 based on target price estimates from 30 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate is subject to risk/volatility 1% more than the market as a whole.

Stanley Black & Decker Inc netted $238.23 based on a median target price estimate from 15 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 25% more than the market as a whole.

National Fuel Gas Co was projected to net $231.44, 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.

Parker-Hannifin Corp (PH) was projected to net $201.03, 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 55% more than the market as a whole.

Lowe’s Companies Inc (LOW) was projected to net $200.64, 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 $196.17, based on dividends, plus the median of target price estimates from 13 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 9% greater than the market as a whole.

Federal Realty Investment Trust (FRT) was projected to net $183.19, 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 14% greater than the market as a whole.

3M Co (MMM) was projected to net $182.51, 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 1% greater than the market as a whole.

The average net gain in dividend and price was estimated to be 23.89% on $10K invested as $1K in each of these ten stocks. The average Beta ranking showed these estimates subject to risk/volatility 11% 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 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 January Dogs of The Kings & Princes

Top ten K&Ps selected 12/28/22 by yield represented six of eleven Morningstar sectors. In first place was Altria Group Inc. [1], the tops 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 fifth, Stanley Black & Decker [5].

In sixth place, was the lone real estate representative, Federal Realty Investment Trust [6]. Then, seventh place was claimed by the first of two utilities, Northwest Natural Holding Co [7], and eighth place went to Black Hills Corp [8].

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

Actionable Conclusions: (21-30) Top Ten K&Ps Showed 14.21% To 38.28% Upsides Into December 2023; (31) On The Downside Were Six -0.15% To -6.97% 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 2.33% Advantage For 5 Highest Yield, Lowest Priced, of Top-Ten Dividend K&Ps To January 2024

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 12/28/22 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 13.5% Vs. (33) 13.19% Net Gains by All Ten by January 2024

$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 2.33% more gain than $5,000 invested as $.5K in all ten. The seventh lowest-priced K&Ps top-yield stock, Stanley Black & Decker, was projected to deliver the best net gain of 23.82%.

The five lowest-priced top-yield Dividend Kings and Princes as of December 28 were: Leggett & Platt Inc, Altria Group Inc, Northwest Natural Holding Co, Universal Corp, and National Fuel Gas Co, with prices ranging from $31.97 to $64.04.

The five higher-priced top-yield Dividend Kings and Princes for December 27 were: Black Hills Corp, Stanley Black & Decker Inc, Federal Realty Investment Trust, 3M Co, and Kimberly-Clark Corp, whose prices ranged from $70.16 to $136.52.

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 3 (as of 12/28/22) realized the ideal of offering annual dividends from a $1K investment exceeding their single share prices: Altria Group Inc, Universal Corp, and Leggett & Platt Inc. Four more bear watching, Northwest Natural Holding Co, Stanley Black & Decker, Black Hills Corp, and National Fuel Gas Co prices are just $4 to $21 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 three 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 $3.27 over the mark. Also, SWK, NFG & BKH are all within $21 of being there. The middle chart compares the two ideals with seven 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.