MLI - 4 Ideal Barron's Mid-Year 2023 Dividend Dog Buys

2023-07-23 07:54:18 ET

Summary

• Barron’s Mid-Year Roundtable, Published July 17, listed 40 stocks of note for 2023; 38 of those were unduplicated US publicly-listed companies, of-which YCharts reported 25 as paying dividends.
• Barron’s interviews with their ten financial-industry Roundtable pros tapped human intelligence (HI) to make predictions. Unfortunately, the YCharts screener employed to report current data, dropped seven funds off the list.
• Nevertheless, the Watchlist tracked by YCharts as of 7/19/23 projected ten top analyst-estimated net gains from ICE, PARA, TXT, AZN, MLI, BIIB, SIEGY, CHNI, TGNA, & topped by SLVM, ranging from 15.53%-31.31%.
• Ten top 2023 Barron’s Mid-Year Watchlist projected dividend yields ranged from 2.26% to 5.08% from GPC; CME; IGSB; CNHI; TGNA; SIEGY; AEE; TGT; MGDDY; ITUB.
• $5k invested July 19 in the five top-yield, lowest-priced, 2023 Barron’s Mid-Year Watchlist Stocks showed 10.77% more net gain than from $5k invested in all top ten. Little (lower-priced) equities led the top-ten 2023 Barron’s Mid-Year dividend dogs by over one length.

Foreword

This article is based on the July 17 Barron’s Weekly article aimed at revealing 40 Roundtable-selected stocks for 2023:

40 Investment Ideas From Our Roundtable Pros

Barron’s Midyear Roundtable panelists see value in healthcare, industrial, media, and other stocks that the market has overlooked.

Seven AI-tinged megacap stocks have driven most of the S&P 500 ’s 19% gain in 2023, rescuing the index from last year’s miserable slump. But what of the rest of the market, and the human intelligence, or HI, that helps the best money managers find tomorrow’s winners? That’s what the Barron’s Roundtable has always been about.

Barron’s 10 Roundtable panelists—some growth-stock gurus, others value-investing nerds—love to hunt for overlooked stocks attached to companies with temporary problems, savvy management, and demonstrable growth potential, some of it even fueled by AI. In a recent round of phone calls, they identified 40 promising investments to consider now, including a batch of fixed-income funds that finally live up to their name.

Roundtable Panelists

Any collection of stocks is more clearly understood when subjected to this yield-based (dog catcher) analysis, these Barron’s Mid-Year 2023 Watchlist selections are perfect for the dogcatcher process.

Here is July 19 updated YCharts data for 25 dividend paying stocks of 38 screened and the 4 living up to the dogcatcher ‘ideal’ in this collection. These made-up the Barron’s Mid-Year 2023 Watchlist collection.

The Ides of March 2020 plunge in the stock market took its toll on stocks over three and one-quarter years ago. However, sudden recovery in prices after the plunge by dividend stocks made the possibility of owning productive dividend shares from any collection more remote for first-time investors.

July, 2023 showed a glimmer of light from four stocks emerging as dogcatcher ideal candidates. They were: Itau Unibanco Holding SA ( ITUB ); Michelin ( OTCPK:MGDDY ); Tegna Inc. ( TGNA ); CNH Industrial N.V. ( CNHI ). Their prices settled between $10.10 and $45.01 below the annual dividend payout from a $1K investment.

Actionable Conclusions (1-10): Brokers Estimated Top-Ten Barron’s Mid-Year 2023 Watchlist Stocks Might Net 15.53% to 31.31% Gains By July 2024

Three of the tops-by-yield ten Barron’s Mid-Year 2023 Watchlist (tinted in the chart below) were also the top gainers for the coming year based on analyst 1-year targets. Thus, the top yield dog strategy for this group, as graded by analyst estimates for this month, proved 30% accurate.

Estimated dividend-returns from $1000 invested in each of the highest-yielding stocks and their aggregate one-year analyst median-target prices, as reported by YCharts, created the 2023-24 data points. However, one year target-prices by lone analysts were not counted. The resulting ten probable best profit-generating 2023 Barron’s Mid-Year Watchlist stocks projected to July 19, 2024, by that reckoning, were:

Sylvamo Corp ( SLVM ) netted $313.14 based on the median of target estimates from 2 analysts, less broker fees. A Beta number was not available for SLVM.

Tegna Inc netted $246.94 based on the median of target estimates from 4 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 39% less than the market as a whole.

CNH Industrial NV netted $241.41 based on the median of target estimates from 15 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 68% greater than the market as a whole.

Siemens AG ( SIEGY ) netted $213.02 based on the median of target prices estimated by 2 analysts, plus estimated dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 19% greater than the market as a whole.

Biogen Inc. ( BIIB ) netted $204.56 based on estimates from 27 analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 83% less than the market as a whole.

Mueller Industries, Inc. ( MLI ) netted $203.30 based on the median of target price estimates from 2 analysts plus dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 12% greater than the market as a whole.

AstraZeneca PLC ( AZN ) netted $200.25 based on the median of target estimates from 9 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 50% less than the market as a whole.

Textron Inc. ( TXT ) netted $188.13 based on the median of target estimates from 14 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 48% greater than the market as a whole.

Paramount Global ( PARA ) netted $168.34 based on dividends plus a median target price estimate from 25 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 65% less than the market as a whole.

Intercontinental Exchange, Inc. ( ICE ) netted $155.29 based on estimates from 14 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 7% less than the market as a whole.

The average net-gain in dividend and price was 21.34% on $10k invested as $1k in each of these ten 2023 Barron’s Mid-Year Watchlist stocks. This gain estimate was subject to average risk/volatility 4% greater than the market as a whole.

The Dividend Dogs Rule

The "dog" moniker was earned by stocks 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 specifically, these are, in fact, best called, "underdogs".

Top 32 Barron’s Mid-Year 2023 Watchlist Stocks By Broker Targets

This scale of broker-estimated upside (or downside) for stock prices provides a scale of market popularity. Note: no broker coverage or 1 broker coverage produced a zero score on the above scale. This scale can be taken as an emotional component as opposed to the strictly monetary and objective dividend/price yield-driven report below. As noted above, these scores may also be taken as contrarian.

Top 32 Barron’s Mid-Year 2023 Watchlist Stocks By Yield

Actionable Conclusions (11-20): Ten Top Stocks By Yield Are Barron’s Mid-Year 2023 Watchlist Dividend Dogs

Top ten Barron’s Mid-Year 2023 Watchlist Dividend Stocks selected 7/19/23 by yield represented six of eleven Morningstar sectors plus one ETF.

First place was secured by the first of two financial services providers, Itau Unibanco Holding SA [1], and CME Group Inc. ( CME ) [9].

Second place was secured by the first of two consumer cyclical members, Michelin [2], and Genuine Parts Co ( GPC ) [10].

Then, one consumer defensive member placed third, Target Corp ( TGT ) [3]. The lone utilities concern placed fourth, Ameren Corp ( AEE ) [4]. Then two industrials placed fifth, and seventh, Siemens AG [5], and CNH Industrial NV [7].

In sixth place was the lone communication services representative, Tegna Inc [6].

Finally, eighth place was taken by the lone ETF , iShares Investment Grade Corporate Bond ETF ( IGSB ) [8] and completed the top ten Barron’s Mid-Year 2023 Watchlist Dividend Dogs for July.

Actionable Conclusions: (21-30) Ten Barron’s Mid-Year 2023 Watchlist Stocks Showed 15.08% to 30.07% Upsides To July, 2024, With (31) One -0.71% Loser

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 10.77% Advantage For 5 Highest Yield, Lowest Priced of Top-Ten Barron’s Mid-Year 2023 Watchlist Stocks To July, 2024

Ten top Barron’s Mid-Year 2023 Watchlist Stocks were culled by yield for this monthly update. Yield (dividend/price) results verified by YCharts did the ranking.

As noted above, top-ten Barron’s Mid-Year 2023 Watchlist Dogs selected 7/19/23, showing the highest dividend yields, represented six of eleven sectors in the Morningstar scheme.

Actionable Conclusions: Analysts Estimated The 5 Lowest-Priced Of Ten Highest-Yield Barron’s Mid-Year 2023 Watchlis t Stocks (33) Delivering 13.17% Vs. (34) 11.89% Net Gains by All Ten by July, 2024

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Barron’s Mid-Year 2023 Watchlist Stocks by yield were predicted by analyst 1-year targets to deliver 10.77% more gain than $5,000 invested as $.5k in all ten. The fourth lowest-priced Barron’s Mid-Year 2023 Watchlist stock, Tegna Inc, was projected to deliver the best net gain of 24.69%.

The five lowest-priced top-yield Barron’s Mid-Year 2023 Watchlist stocks for July 19 were: Itau Unibanco Holding SA; CNH Industrial NV; Michelin; Tegna Inc; iShares 1-5 year Investment Grade Corporate Bond ETF, with prices ranging from $5.79 to $50.27

The five higher-priced top-yield Barron’s Mid-Year 2023 Watchlist Stocks for July 19 were: Siemens AG; Ameren Corp; Target Corp; Genuine Parts Co; CME Group Inc, whose prices ranged from $82.90 to $186.38.

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

In the current market advance, dividends from $1K invested in the four stocks listed above met or exceeded their single share prices as of 7/19/23.

As we are well past the third anniversary of the 2020 Ides of March dip, the time to snap up those four top yield Barron’s Mid-Year 2023 Watchlist is now... unless another big bearish drop in price looms ahead. (At which time your strategy would be to add to your holdings.)

Recent vs Fair Top Ten Barron’s Mid-Year 2023 Watchlist Prices

Since four of the top-ten Barron’s Mid-Year 2023 Watchlist shares are priced less than the annual dividends paid out from a $1K investment, the following top chart shows the dollar and percentage shift required for six at recent prices to create fair pricing for all ten. The recent prices are documented in the middle chart and the fair prices revealed in the bottom chart.

The top chart is an indicator of how low the six non-ideal stocks must adjust to become fair-priced. Which means conforming the standard of dividends from $1K invested exceeding the current single share price.

All 40 Barron’s Mid-Year 2023 Watchlist Stocks by Stockpicker Last Name

(Alphabetically)

The analysis above focuses primarily on the top yield 30 Barron’s Mid-Year 2023 Watchlist selections. Below is the list of all the stocks including duplicate listings, alphabetically, by stockpicker last name.

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 Barron’s Mid-Year 2023 Watchlist 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 Photo by Farzan Lelinwalla on Unsplash.

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