UVV - Buy 6 December Dividend Kings 4 More On Watch

2023-11-27 07:53:11 ET

Summary

• "There is only one-criterion to be included among the Dividend Kings: a publicly-traded company must increase its total fiscal-year dividend-payout for a minimum of 50 consecutive years." - Dogs of the Dow.
• The 49 Dividend Kings screened as of November 22 represented eight of eleven Morningstar Sectors. Broker targeted-top-ten net-gains ranged 18.52%-38.49% topped by Northwest Natural and Gorman-Rupp.
• By yield, Altria tops all. Top-ten Kingly December yields reported for NFG, ABBV, FRT, BKH, NWN, UVV, CDUAF, MMM, LEG, & MO averaged 5.86%.
• The Kings showed top-ten broker-estimated target-price upsides from: NFG, FRT, MSEX, EMR,TNC, BDX, ABBV, ADM, NWN, and GRC, averaging 22.49%.
• $5k invested November 22 in the five top-yield, lowest-priced Kings showed 4.75% LESS net-gain than from $5k invested in all top ten. Bigger (higher-priced) equities led these Dividend Kings by near half a length. Two dividend princes were tagged, LOW and RPM are on the cusp of 50 yr dividend increases.

Foreword

As supplement to this article, please note that The Motley Fool, which sourced this latest list, and Sure Dividend, which claims RPM & LOW as kings on their list, both update their lists periodically.

While most of this collection of 49 Kings is too pricey to justify their skinny dividends, five of the top-ten, by yield, and one more outside of the top ten, live up to the ideal of offering annual dividends (from a $1K investment) exceeding their single share prices, and this month there are four more to watch.

In the current market adjustment, it is now possible for these six, Altria Group Inc. ( MO ), Leggett & Platt Inc. ( LEG ), Canadian Utilities Ltd. ( CDUAF ), Universal Corp. ( UVV ), Northwest Natural Holding Co. ( NWN ) (inside the top ten), and Hormel Foods Corp. ( HRL ) (the outsider) to stay fair-priced with their annual-yield (from $1K invested) meeting or exceeding their single-share prices.

The four to watch are: Black Hills Corp. ( BKH ), National Fuel Gas ( NFG ), 3M Corp. ( MMM ), Federal Realty Investment Trust ( FRT ).

BKH is $1.21 overpriced, NFG can shed $6.64, MMM is $17.92 overweight, and FRT needs to lose $26.09 in price to join the ideal six.

As we blog past the three-year and three quarter mark of the 2020 Ides of March dip, the time to snap-up those ten lingering top-yield dividend King 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 18.52% To 38.49% Top-Ten Kingly Net Gains To December 2024

Six of the ten top Kings 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 October 25 forecast for December Kings (as graded by brokers) was 60% 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 following 2023-24 data points. (Note: target-prices from lone-analysts were not used.) Ten probable profit-generating trades projected to December, 2024 were:

Gorman-Rupp Co. ( GRC ) was projected to net $384.94, based on the median of target price estimates from 2 analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 15% less than the market as a whole.

Northwest Natural Holding Co. was projected to net $309.23, 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 39% less than the market as a whole.

AbbVie Inc. ( ABBV ) was projected to net $243.73, based on dividends, plus the median of target price estimates from 28 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 49% less than the market as a whole.

Archer-Daniels Midland Co. ( ADM ) was projected to net $241.16, 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 17% less than the market as a whole.

Federal Realty Investment Trust was projected to net $228.53, 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 25% greater than the market as a whole.

Altria Group Inc. was projected to net $226.25, based on dividends, plus the median of target price estimates from 16 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 33% under the market as a whole.

National Fuel Gas Co. was projected to net $212.42 based on dividends, plus the median of target price estimates from 4 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 33% greater than the market as a whole.

Emerson Electric Co. ( EMR ) netted $211.26 based on a median target price estimate from 23 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 38% greater than the market as a whole.

3M Co. was projected to net $198.96 based on target price estimates from 17 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate is subject to risk/volatility 2% less than the market as a whole.

Johnson & Johnson ( JNJ ) was projected to net $185.24, based on the median of target price estimates from 22 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 42% under the market as a whole.

The average net gain in dividend and price was estimated to be 24.42% on $10k invested as $1k in each of these ten stocks. The average Beta ranking showed these estimates subject to risk/volatility 17% under 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."

Top 45 Dividend Kings 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 49 Dividend Kings By Yield

Actionable Conclusions (11-20): Ten Top Stocks By Yield Are The December Dogs Of The Dividend Kings

Top ten Kings selected 11/22/23 by yield represented seven of eleven Morningstar sectors. In first place was Altria Group Inc. [1], the tops of two consumer defensive representatives in the top ten. The other placed fifth, Universal Corp. [5].

Then, one consumer cyclical representative took second place, Leggett & Platt Inc. [2]. A lone industrials sector representative placed third, 3M Co. [3].

In fourth place, was the first of three utilities , Canadian Utilities Ltd. [4]. Thereafter, in sixth and seventh places, were Northwest Natural Holding Co. [6], and Black Hills Corp. [7].

Finally, eighth place was claimed by the lone real estate representative, Federal Realty Investment Trust [8], and ninth place went to the lone healthcare sector member, AbbVie Inc. [9].

Finally, one Energy representative was in the tenth slot, National Fuel Gas Co. [10] to complete these December top-ten Kings, by yield.

Actionable Conclusions: (21-30) Top Ten Kings Showed 24.61% To 37.22% Upsides Into December 2023; (31) On The Downside Were Two At -3.61% & -5.05%

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 4.75% Disadvantage For 5 Highest Yield, Lowest Priced, of Top-Ten Dividend Kings By December, 2024

Ten top Kings were culled by yield for their monthly update. Yield (dividend/price) results verified by YCharts did the ranking.

As noted above, top ten Kings selected 11/22/23 showing the highest dividend yields represented seven of eleven in the Morningstar sector scheme.

Actionable Conclusions: Analysts Estimated The 5 Lowest-Priced Of Ten Highest-Yield Dividend Kings (32) Delivering 16.28% Vs. (33) 17.09% Net Gains by All Ten by December, 2024

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Dividend Kings kennel by yield were predicted by analyst 1-year targets to deliver 4.75% LESS gain than $5,000 invested as $.5k in all ten. The third lowest-priced top-yield King stock, Northwest Natural Holding Co., was projected to deliver the best net gain of 30.92%.

The five lowest-priced top-yield Dividend Kings as of November 22 were: Canadian Utilities Ltd., Leggett & Platt Inc., Northwest Natural Holding Co., Altria Group Inc., National Fuel Gas Co., with prices ranging from $22.46 to $51.11

The five higher-priced top-yield Dividend Kings by the November 22 accounting were: Black Hills Corp., Universal Corp., Federal Realty Investment Trust, 3M Co., and AbbVie Inc., whose prices ranged from $51.19 to $138.47.

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

The following 6 (as of 11/22/23) realized the ideal of offering annual dividends from a $1K investment exceeding their single share prices: five of the top-ten, by yield, plus one out on those top ten, live up to the ideal of offering annual dividends (from a $1K investment) exceeding their single share prices, and there are four more to watch.

The four to watch are: Black Hills Corp., National Fuel Gas, 3M Corp., Federal Realty Investment Trust.

BKH is $1.21 overpriced, NFG can shed $6.64, MMM is $17.92 overweight, and FRT needs to lose $26.09 in price to join the ideal six.

As we blog past the three-year and three quarter mark of the 2020 Ides of March dip, the time to snap-up those ten lingering top-yield dividend King 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.)

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

Since five 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 five others are within $1.21 to $59.71 of being there. The middle chart compares the five ideals with five at recent prices. Fair pricing (when all ten top dogs conform to the ideal) is displayed in the bottom chart.

December Dividend Kings by Years Increasing Dividends

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; Yahoo Finance - Stock Market Live, Quotes, Business & Finance News; analyst mean target price by YCharts. Dog art: Open source dog art from dividenddogcatcher.com.

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