AMCR - 4 Dividend Aristocrats Signal Buys In November As 6 Await

2023-11-08 11:27:40 ET

Summary

• "Dividend Aristocrats in the S&P 500 Index… have raised their annual payouts every year for at least 25 consecutive years. "-- Kiplinger.com/Investing.
• 66 Aristocrats, screened as of November 6, 2023, represented all eleven Morningstar Sectors. Broker estimated-top-ten net-gains ranged 22.29%-34.44% topped-by O & WBA.
• By yield, WBA topped-all Aristocrats. Top-ten Yields from ESS, ABBV, IBM, FRT, BEN, TROW, AMCR, O, MMM, & WBA, averaged 5.49%.
• Aristocrats top ten, by broker-estimated target-price targets, O, ABT, LOW, CVX, MDT, ADM, NEE, WAG, TGT, and ALB, averaged 30.29%.
• $5k invested November 6 in the five top-yield, lowest-priced, Dogs of the Aristocrats showed 19.46% more net-gain than from $5k invested in all top ten. Small (lower-priced) November S&P500 Dividend Aristocrats led the pack by near two lengths.

Foreword

As a supplement to this article, please note that Kiplinger has published an online slideshow detailing the latest 2023 S&P Dividend Aristocrats. The article, entitled The S&P 500 Dividend Aristocrats , is by Dan Burrows, a contributing editor.

S&P Dow Jones Indices rebalances the S&P 500 Dividend Aristocrats every January. The Aristocratic population now stands at 66, with VFC likely disqualified for the next listing.

Nevertheless, most of this collection of 66 S&P 500 Dividend Aristocrats are 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, four 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 four are Walgreens Boots Alliance, Inc. ( WBA ); Realty Income Corporation ( O ), Amcor plc ( AMCR ); Franklin Resources, Inc. ( BEN ).

Six more in the top ten, 3M Company ( MMM ), International Business Machines Corporation ( IBM ), Federal Realty Investment Trust ( FRT ), AbbVie Inc. ( ABBV ), T. Rowe Price Group, Inc. ( TROW ), and Essex Property Trust, Inc. ( ESS ), could soon join the ideal four. MMM was just $16.04 off the mark as of 11/6/23.

As we are now over six months, past three years, removed from the 2020 Ides of March dip, the time to snap up those four lingering top-yield Aristocrat dogs is at hand... Of course, when another big bearish drop in price happens, your strategy would be to add to your position in any of those you then hold.

Actionable Conclusions (1-10): Analysts Predict 22.29% To 34.97% Top Ten Aristocrat Net Gains To November 2024

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 6 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 2023-24 data points for the projections below. (Note: target prices from less than two analysts were not used.) Ten probable profit-generating trades projected to November 6, 2024 were:

Target Corporation ( TGT ) netted $349.73 based on a median target price estimate from 31 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 4% over the market as a whole.

Walgreens Boots Alliance, Inc. was projected to net $336.81, 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 20% under the market as a whole

NextEra Energy, Inc. ( NEE ) was projected to net $280.17, based on the median of target price estimates from 18 analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 46% less than the market as a whole.

Chevron Corporation ( CVX ) netted $274.64 based on a median target price estimate from 24 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility by 16% over the market as a whole.

Medtronic plc ( MDT ) net $271.13, based on dividends, plus the median of target price estimates from 18 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 29% greater than the market as a whole.

Realty Income Corporation was projected to net $246.50, based on a median of target estimates from 12 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 13% under the market as a whole.

Cincinnati Financial Corporation ( CINF ) was projected to net $226.31 based on target price estimates from 5 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate is subject to risk/volatility 36% under the market as a whole.

Exxon Mobil Corporation (XOM) was projected to net $224.54 based on the median of target price estimates from 24 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 7% over the market as a whole.

AbbVie, Inc. was projected to net $222.99 based on dividends, plus the median of target price estimates from 27 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 49% less than the market as a whole.

3M Company was projected to net $222.93, 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 2% less than the market as a whole.

The average net gain in dividend and price was estimated to be 26.56% on $10k invested as $1k in each of these ten stocks. The average Beta ranking showed these estimates subject to risk/volatility 17% 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 11/6/23 by yield represented six of eleven Morningstar sectors. First place went to the first of two healthcare representatives in the top ten, Walgreens Boots Alliance, Inc. [1]. The other placed ninth, AbbVie, Inc. [9].

One industrials representative, placed second, 3M Company [2]. Then three real estate representatives took the third, seventh and tenth slots, Realty Income Corporation [3], Federal Realty Investment Trust [7], and Essex Property Trust, Inc. [10].

These were followed, in fourth, by the lone consumer cyclical representative, Amcor plc [4]. Then in fifth and sixth places, were two financial services sector Aristocrats, Franklin Resources, Inc. [5], and T. Rowe Price Group, Inc. [6].

Finally, the lone technology dog grabbed the eighth slot, International Business Machines Corp [8], and completed the November S&P500 Dividend Aristocrats top-ten, by yield.

Actionable Conclusions: (21-30) Ten Aristocrats Showed 19.2% To 32% Upsides To November 2024; (31). Four -0.56% to -3.10% Downside Dogs Were Found

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 19.46% Advantage For 5 Highest-Yield, Lowest-Priced, of Top Ten Dividend Aristocrats To November, 2024

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

As noted above, top ten Aristocrats by yield selected 11/6/23 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 18.41% Vs. (33) 15.41% Net Gains by All Ten, Come November, 2024

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Dividend Aristocrats kennel by yield was predicted (by analyst 1-year targets) to deliver 19.46% more gain than $5,000 invested as $.5k in all ten. The second lowest-priced Aristocrats top-yield stock, Walgreens Boots Alliance, Inc., was projected by analysts to deliver the best net gain of 33.68%.

The five lowest-priced top-yield Aristocrats as of November 6 were: Amcor plc; Walgreens Boots Alliance, Inc.; Franklin Resources, Inc.; Realty Income Corporation; 3M Company, with prices ranging from $9.06 to $93.52

The five higher-priced top-yield Aristocrats as of October 3 were: Federal Realty Investment Trust; T. Rowe Price Group, Inc.; AbbVie, Inc.; International Business Machines Corporation; Essex Property Trust, Inc., whose prices ranged from $94.17 to $212.26.

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 15% 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 four stocks ripe for picking at the start of the article, here is a repeat of the list at the end:

The following 4 (as of 11/6/23) realized the ideal of offering annual dividends from a $1K investment exceeding their single share prices: Walgreens Boots Alliance, Inc.; Realty Income Corporation; Amcor plc; Franklin Resources, Inc. Watch for 3M Company to plunge $16.04 to become ideal next month.

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

Since four 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 four plus six 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&P500 Aristocrats Alphabetically by Ticker Symbol

Note that the number of years of dividend increases for these 66 Aristocrats is documented in the far right column on the chart above.

The net gain/loss estimates in the article 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.

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