UVV - July Dividend Kings: 5 Buys 4 To Watch

2023-06-29 15:35:24 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 50 Dividend Kings screened as of June 27, 2023, represented nine of eleven Morningstar Sectors. Broker targeted-top-ten net-gainers ranged 20.35%-40.04% topped-by ABM Industries, and Gorman-Rupp.
• By yield, MO tops-all. Top-ten Kingly July yields from NFG, BKH, ABBV, NWN, FRT, CDUAF, MMM, UVV, LEG, & MO averaged 5.4%.
• Dividend Kings showed top-ten broker-estimated target-price upsides from: CBSH CWT, CINF, NWN, ABBV, NFG. ADM, TGT, ABM, and GRC, averaging 26.79%.
• $5k invested June 27 in the five top-yield, lowest-priced, Kings showed 26.22% LESS net-gain than from $5k invested in all top ten. Bigger (higher-priced) equities led these Dividend Kings by over two and one-half lengths.

Foreword

As supplement to this article, please note that Dogs of the Dow has published a 2023 list detailing the latest 50 Dividend Kings. The article, entitled 2023 Dividend Kings List , is on-line now. Yes, VFC is no longer a dividend king, and four new ones have emerged. Warning: you may have to click on a second link under Live Dividend Stock Screens at the bottom of the Dogs of the Dow landing page to bring up “Dividend Kings List.”

While most of this collection of 50 Kings is too pricey to justify their skinny dividends, five of the top-ten, by yield, 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 Altria Group Inc ( MO ), Leggett & Platt Inc ( LEG ), Universal Corp ( UVV ), Canadian Utilities Ltd ( CDUAF ), Northwest Natural Holding Co ( NWN ), to stay fair-priced with their annual-yield (from $1K invested) meeting or exceeding their single-share prices.

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

MMM is $21.61 overweight, FRT needs to lose $27.92, BKH can drop $10.28 and NFG can shed $5.98 in price to join the ideal five.

As we pass the three-year and one quarter mark of the 2020 Ides of March dip, the time to snap-up those five 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 20.35% To 40.05% Top-Ten Kingly Net Gains To July 2024

Four 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 June 27 forecast for Kings (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 following 2023-24 data points. (Note: target-prices from lone-analysts were not used.) Ten probable profit-generating trades projected to July, 2027 were:

Gorman-Rupp Co ( GRC ) was projected to net $400.54, based on dividends, plus the median of target price estimates from 2 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 20% under the market as a whole.

ABM Industry Inc ( ABM ) was projected to net $376.84 based on target price estimates from 6 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate is subject to risk/volatility 10% greater than the market as a whole.

Target Corp ( TGT ) was projected to net $325.60, based on dividends, plus the median of target price estimates from 31 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 3% greater than the market as a whole.

Archer-Daniels-Midland ( ADM ) netted $286.56 based on a median target price estimate from 15 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 19% less than the market as a whole.

National Fuel Gas Co was projected to net $283.35, based on the median of target price estimates from 4 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 32% less than the market as a whole.

Northwest Natural Holding Co ( NWN ) was projected to net $276.73, based on a median of target estimates from 6 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 41% less than the market as a whole.

AbbVie Inc ( ABBV ) was projected to net $275.23, based on the median of target price estimates from 25 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 42% less than the market as a whole.

Cincinnati Financial Corp ( CINF ) was projected to net $260.97, based on the median of target price estimates from 4 analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 38% less than the market as a whole.

California Water Service Group ( CWT ) was projected to net $205.94 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 52% less than the market as a whole.

Federal Realty Investment Trust was projected to net $203.48, 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 20% less than the market as a whole.

The average net gain in dividend and price was estimated to be 28.95% on $10k invested as $1k in each of these ten stocks. The average Beta ranking showed these estimates subject to risk/volatility 21% 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" and "Princes."

Top 50 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 50 Dividend Kings By Yield

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

Top ten Kings selected 6/27/23 by yield represented seven of eleven Morningstar sectors. In first place was Altria Group Inc. [1], the tops of two consumer defensive representatives listed. The other placed third, Universal Corp [3].

Then, one consumer cyclical representative took second place, Leggett & Platt Inc [2]. The lone industrials sector representative placed fourth, 3M Co [4].

In fifth place, was the first of three utilities , Canadian Utilities Ltd [5]. Thereafter, in seventh and ninth places, were Northwest Natural Holding Co [7], and Black Hills Corp [9].

Sixth place was claimed by the lone real estate representative, Federal Realty Investment Trust [6]. Then, the lone healthcare representative in the top ten placed eighth, AbbVie Inc [8].

Finally, to complete these June top-ten Kings, by yield, the lone energy representative in the top ten placed tenth, National Fuel Gas Co [10].

Actionable Conclusions: (21-30) Top Ten Kings Showed 18.23% To 38.48% Upsides Into July 2023; (31) On The Downside Were Two -1.31% and 4.86% 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 26.22% Disadvantage For 5 Highest Yield, Lowest Priced, of Top-Ten Dividend Kings By July, 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 8/27/23 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 12.54% Vs. (33) 16.99% Net Gains by All Ten by July, 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 26.22% LESS gain than $5,000 invested as $.5k in all ten. The sixth lowest-priced top-yield King stock, National Fuel Gas, was projected to deliver the best net gain of 28.33%.

The five lowest-priced top-yield Dividend Kings as of June 27 were: Canadian Utilities Ltd; Leggett & Platt Inc; Northwest Natural Holding Co; Altria Group Inc; Universal Corp, with prices ranging from $26.19 to $50.30

The five higher-priced top-yield Dividend Kings for June 27 were: National Fuel Gas Co; Black Hills Corp; Federal Realty Investment Trust; 3M Co, and AbbVie Inc, whose prices ranged from $50.64 to $132.60.

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 5 (as of 6/27/23) realized the ideal of offering annual dividends from a $1K investment exceeding their single share prices: six of the top-ten, by yield, 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.

In the current market adjustment, it is now possible for Altria Group Inc, Universal Corp, Leggett & Platt Inc, Canadian Utilities Ltd , Northwest Natural Holding Co, to stay fair-priced with their annual-yield (from $1K invested) meeting or exceeding their single-share prices.

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

MMM is $21.61 overweight, FRT needs to lose $27.92, BKH can drop $10.28 and NFG can shed $5.98 in price to join the ideal five.

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

Since six 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 four others are within $11 to $61 of being there. The middle chart compares the six ideals with four at recent prices. Fair pricing (when all ten top dogs conform to the ideal) is displayed in the bottom chart.

June Dividend Kings Alphabetical 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.

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