STLA - 50 Large-Cap High-Yield Stocks For August

2023-08-07 05:06:53 ET

Summary

• dogsofthedow.com (DOD) recently published this list of 50 large-cap high-dividend stocks as of 8/3/23 per data from YCharts.
• The DOD list targeted investors who “don’t want to simply focus on a high dividend yield only to discover that the stock price has plunged or that the corporation has gone belly-up."
• Investors reduce this volatility/risk by searching for high dividends from large well-established companies. For example, YCharts net-gain estimates (updated 8/3/23) for STLA, PBA, ET, BTI, TEF, T, PBR, IEP, VOD & MO ranged 36.88%-65.73%.
• Ten top August YCharted large-cap high-yield dividends ranged 8.97% to 45.72% from MPLX; E; ET; ARCC; BCH; VOD; IEP; EC; PBR; PBR.A.
• $5k invested August 3 in the top-five high-yield, lowest-priced, large-cap stocks showed 27.89% more net gain than from $5k invested all top ten. Little (lower-priced) equities led the top ten August high-yield large-cap dividend dogs by over two and three-quarter lengths.

Foreword

This article is based on an August 3, 2023 list of high-yield large-cap stocks published by dogsofthedow.com entitled,

Highest Dividend Paying Large-Cap Stocks

Yields for those top big dog 50 were all greater than 4.14% in early August. In late May the minimum yield was at 4.49% and June bottomed out at 5.9%!

“The advantage of focusing on large-cap stocks is that these companies tend to be less volatile and also tend to have more resources (e.g. strong management, access to credit, etc.) to maintain their dividend payments over the long-term.”

—Dogs of the Dow

Any collection of stocks is more clearly understood when subjected to this yield-based (dog catcher) analysis, these high-dividend large -cap stocks are perfect for the dogcatcher process. Below is August 3 data for 50 dividend paying stocks including 42 living up to the dogcatcher ‘ideal’ in this one-source collection.

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

August, 2023 shows a glimmer of light from forty-two large-cap and high-yield stocks emerging as dogcatcher ideal candidates. They are:

Actionable Conclusions (1-10): Brokers Estimated Top-Ten August High-Dividend Large-Cap Stocks Might Net 36.88% to 65.73% Gains By 2024

Four of the top-yield high-dividend large-cap Stocks (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 40% 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 highest-dividend large-cap stocks projected to August, 2024, by that reckoning, were:

Altria Group ( MO ) netted $657.29 based on the median of target estimates from 14 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 22% under the market as a whole.

Vodafone Group ( VOD ) netted $618.18 based on estimates from 4 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 21% less than the market as a whole.

Icahn Enterprises L.P. ( IEP ) netted $550.59 based on dividends plus a median target price estimate from 13 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 177% greater than the market as a whole.

Petroleo Brasileiro S.A. - Petrobras ( PBR ) netted $543.81 based on the median of target prices estimated by 14 analysts, plus estimated dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 42% greater than the market as a whole.

AT&T ( T ) netted $459.86 based on the median of target estimates from 23 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 36% less than the market as a whole.

Telefonica, S.A. (TEF) netted $454.25 based on the median of target estimates from 2 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 40% less than the market as a whole.

British American Tobacco p.l.c. (BTI) netted $437.37 based on the median of target estimates from 2 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 45% less than the market as a whole.

Energy Transfer LP (ET) netted $433.95 based on the median of target price estimates from 16 analysts plus dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 70% greater than the market as a whole.

Pembina Pipeline ( PBA ) netted $389.99 based on the median of target estimates from 2 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 27% greater than the market as a whole.

Stellantis N.V. (STLA) netted $368.81 based on estimates from 6 analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 57% greater than the market as a whole.

The average net-gain in dividend and price was 49.14% on $10k invested as $1k in each of these ten high-dividend large-cap stocks. This gain estimate was subject to average risk/volatility 21% 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 50 High-Dividend Large-Cap August Stock Picks By Broker Targets

This list of broker-estimated upside (or downside) for stock prices provides a scale of market popularity. Note: no broker coverage or one 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 50 High-Dividend Large-Cap August Stock Picks By Yield

Actionable Conclusions (11-20): Ten Top Stocks By Yield Are The August Dogs of High-Dividend Large-Cap Collection

Top ten High-Dividend Large-Cap Stocks selected 8/3/23 by yield represented just three of eleven Morningstar sectors.

First place was secured by the first of seven energy outfits, Petroleo Brasileiro S.A. - Petrobras (PBR.A) & ( PBR ) [1][2]. The others placed third, fourth, and eighth, through tenth: Ecopetrol S.A. ( EC ) [3]; Icahn Enterprises L.P. [4]; Energy Transfer LP [8]; Eni S.p.A. ( E ) [9]; MPLX LP ( MPLX ) [10].

Finally, fifth place went to the lone communication services member, Vodafone Group [5], and sixth and seventh places were taken by the two financial services representatives in the top ten, Banco de Chile ( BCH ) [6], and Ares Capital ( ARCC ) [7], to complete the top ten Dogs of the high-dividend large-cap collection for August.

Actionable Conclusions: (21-30) Ten High-Dividend Large-Cap Stocks Showed 24.62% to 58.24% Upsides To August 2024, With (31) Two -0.28% to -2.01% 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 27.63% Advantage For 5 Highest Yield, Lowest Priced of Top-Ten High-Dividend Large-Cap Stocks To August 2023

Ten top high-dividend large-cap stocks were culled by yield for this monthly update. Yield (dividend/price) results verified by YCharts did the ranking.

As noted above, top-ten high-dividend large-cap stocks selected 8/3/23, showing the highest dividend yields, represented three of eleven sectors in the Morningstar scheme.

Actionable Conclusions: Analysts Estimated The 5 Lowest-Priced Of Ten High-Yield Large-Cap Stocks (33) Delivering 47.468% Vs. (34) 37.28% Net Gains by All Ten by August 2024

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten high-dividend large-cap stocks by yield were predicted by analyst 1-year targets to deliver 27.89% more gain than $5,000 invested as $.5k in all ten. The very lowest-priced high-dividend large-cap top-yield stock, Vodafone Group, was projected to deliver the best net gain of 61.82%.

The five lowest-priced top-yield high-dividend large cap stocks for August 3 were: Vodafone Group; Ecopetrol S.A.; Petroleo Brasileiro S.A. - Petrobras [2]; Energy Transfer LP, with prices ranging from $9.26 to $14.03

Five higher-priced top-yield high-dividend large cap stocks for August 3 were: Ares Capital; Banco De Chile; Eni S.p.A.; Icahn Enterprises; MPLX LP, whose prices ranged from $19.51 to $34.55.

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 forty-two 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 forty-two stocks listed above met or exceeded their single share prices as of 8/3/23.

As we are over three and one third years past the 2020 Ides of March dip, the time to snap up some those forty-two top yield high-dividend large-cap stocks 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 Break-Even Top Ten High-Dividend Large-Cap Stock Prices

Since all ten of the top-ten high- dividend large-cap stocks are priced less than the annual dividends paid out from a $1K investment, the following top chart shows the dollar and percentage shift required to create break-even pricing for all ten. Starting with the dollar and percent variants to all ten top dogs conforming to (but not exceeding) the dogcatcher ideal in the top chart, the recent prices are documented in the middle chart, and the break-even prices are revealed in the bottom chart.

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

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 2023 top-yield high-dividend large cap 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; Yahoo Finance - Stock Market Live, Quotes, Business & Finance News; analyst mean target price by YCharts. Dog Photo by Marek Szturc on Unsplash.

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