Walgreens Named November Aristocrats Top Dog

Foreword

As a supplement to this article, please note that Kiplinger has published an online slide show detailing the latest 2022 65 S&P Dividend Aristocrats. The article, entitled 65 Best Dividend Stocks You Can Count On, is by Dan Burrows, a contributing editor.

Most of this collection of 65 S&P 500 Dividend Aristocrats is too pricey to justify their skinny dividends. The consequence of stock market popularity (measured by stock price) is skinny dividends. The contrarian approach finds the top dogs by looking for high dividends. This month, five of the top ten highest-yield Aristocrats live up to the dogcatcher ideal. That is, they pay annual dividends (from a $1K investment) exceeding their single share prices.

Those five are: V.F. Corp. (VFC), Walgreens Boots Alliance (WBA), Franklin Resources, Inc. (BEN); Leggett & Platt, Inc. (LEG); Amcor plc (AMCR). One more in the top ten could soon join the ideal five, Realty Income Corp. (O) was within $8.78 of making the dogcatcher ideal team as of 11/8/22.

As we are now eight months beyond two years removed from the anniversary of the 2020 Ides of March dip, the time to snap up these five lingering top-yield Aristocrat 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 11.21% To 36.63% Top Ten Aristocrat Net Gains To November 2023

Four of the ten top Aristocrats by yield were also 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 November 8 forecast for Aristocrats (as graded by Brokers) was 40% 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 2022-23 data points for the projections below. Note: target prices from lone analysts were not used. Ten probable profit-generating trades projected to November 8, 2023, were:

Essex Property Trust, Inc. (ESS) was projected to net $366.27 based on target price estimates from 23 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate is subject to risk/volatility 27% below the market as a whole.

Medtronic plc (MDT) netted $320.82 based on a median target price estimate from 22 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 23% under the market as a whole.

V.F. Corp. was projected to net $283.92, based on dividends, plus the median of target price estimates from 21 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 39% greater than the market as a whole.

Target Corp. (TGT) was projected to net $196.01 based on dividends, plus the median of target price estimates from 29 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 2% greater than the market as a whole.

Stanley Black & Decker, Inc. (SWK) was projected to net $187.90, based on the median of target price estimates from 15 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 26% greater than the market as a whole.

Federal Realty Investment Trust (FRT) was projected to net $153.33, based on a median of target estimates from 19 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 13% greater than the market as a whole.

Coca-Cola Company (KO) was projected to net $136.95, based on the median of target price estimates from 25 analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 43% less than the market as a whole.

Realty Income Corp. was projected to net $134.25, based on dividends, plus the median of target price estimates from 17 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 21% less than the market as a whole.

Atmos Energy Corp. (ATO) was projected to net $120.74, based on the median of target price estimates from nine analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 45% under the market as a whole.

Amcor plc was projected to net $112.13, based on dividends, plus the median of target price estimates from 9 analysts, less broker fees. A Beta number was not available for AMCR.

The average net gain in dividend and price was estimated to be 19.92% on $10k invested as $1k in each of these ten stocks. The average Beta ranking showed these estimates subject to risk/volatility 18% 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 “Aristocrats.”

Top 50 Dividend Aristocrats 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 Aristocrats By Yield

Actionable Conclusions (11-20): Ten Top Stocks By Yield Are The November Dogs of The Dividend Aristocrats

Top ten Aristocrat Dogs selected 11/8/22 by yield represented six of eleven Morningstar sectors. First place went to the first of three consumer cyclical representatives, V.F. Corp. [1]. The others took the second and ninth places, Leggett & Platt, Inc. [2] and Amcor plc [9].

One healthcare representative in the top ten placed third, Walgreens Boots Alliance [3].

Thereafter, two financial services firms placed fourth and ninth, Franklin Resources, Inc. [4] and T. Rowe Price (TROW) [9].

A lone industrials representative, placed fifth, 3M Company (MMM) [5]. In sixth place was the technology sector Aristocrat, International Business Machines Corp. (IBM) [6].

Then, two real estate representatives took the seventh and tenth slots, Realty Income Corp. [7] and Essex Property Trust, Inc. [10].

This completed the November S&P 500 Dividend Aristocrats top-ten, by yield.

Actionable Conclusions: (21-30) Ten Aristocrats Showed 8.66% To 33.40% Upsides To November 2023; (31) On The Downside Were Eight -0.61% to 15.12% Losers

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

Analysts Estimated A 0.63% Disadvantage For The 5 Highest-Yield, Lowest-Priced, of Top Ten Dividend Aristocrats To November, 2023

Ten top Aristocrats were culled by (dividend/price) yield results for this monthly update.

As noted above, top ten Aristocrats by yield selected 11/8/22 represented six of eleven sectors in the Morningstar sector scheme.

Actionable Conclusions: Analysts Estimated 5 Lowest-Priced Of Ten Highest-Yield Dividend Aristocrats (32) Delivering 10.40% Vs. (33) 10.46% Net Gains by All Ten, Come November 2023

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Dividend Aristocrats kennel by yield were predicted (by analyst 1-year targets) to deliver 0.63% LESS gain than $5,000 invested as $.5k in all ten. The tenth lowest-priced Aristocrats top-yield stock, Essex Property Trust, Inc., was projected to deliver the best net gain of 36.63%.

The five lowest-priced top-yield Aristocrats as of November 8 were: Amcor plc; Franklin Resources; V.F. Corp.; Leggett & Platt, Inc.; Walgreens Boots Alliance, Inc., with prices ranging from $11.22 to $38.29.

The five higher-priced top-yield Aristocrats as of November 8 were: Realty Income Corp.; T. Rowe Price; 3M Company; International Business Machines Corp.; Essex Property Trust, Inc., whose prices ranged from $63.34 to $207.65.

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 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 11/8/22) realized the ideal of offering annual dividends from a $1K investment exceeding their single share prices: V.F. Corp.; Walgreens Boots Alliance; Franklin Resources, Inc.; Leggett & Platt, Inc.; Amcor plc. Watch for Realty Income Corp. to drop about $9 in price to become ideal.

Choosing One Top Dog Aristocrat

The chart above uses eight selective columns to rank the top five chosen Aristocrat contrarians. The top dog in the pack, Walgreens Boots Alliance, showed the best score in four of eight columns and the second best rank in one more. None of the other four did better.

The categories used to rank the top dog were: (1) Seeking Alpha Author Rating; (2) Overall YCharts Y Rating; (3) Yield as of 11/8/22 market close with highest bring best; (4) Number of years increasing dividends have been paid; (5) Stock price, with the lowest being best; (6) Future prospects, from dismal to bright; (7) Quant rank by industry #/of #; (8) Quant rank overall #/of 4746 All but the Y rating categories were collected from Seeking Alpha charts.

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

Since five of the top ten Aristocrats shares are now priced less than the annual dividends paid out from a $1K investment, the following charts compare those five plus five at current prices. The dollar and percentage differences between recent and fair prices are documented in the top chart.

Recent pricing is shown in the middle chart. Fair pricing, when all ten top dogs conform to the ideal, is displayed in the bottom chart.

S&P 500 Aristocrats Alphabetically 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.

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 art: Open source dog art from dividenddogcatcher.com.