PM - Of 11 Ideal Inflation-Busting May Dividend Dogs Buy 3
2023-05-23 05:44:13 ET
Summary
- March-April, 2022, UBS, Kiplinger, and Barron's analysts/reporters listed five-sets of stocks sorted=as: “Inflation-Busters.” Those five articles revealed 47 equities, with 42 paying dividends. This over one-year-old list continues to beat-back rampant inflation.
- Article-titles were, ’24 PricingPowerPerformers’ [UBS]; ‘7 REITS Raising-Dividends’ [KIP]…; '10 Stocks for Rising Interest-Rates’ [KIP]…; ‘5 Stocks to Stave-off Sizzling Inflation”[KIP]…; ‘6 Dividend Stocks Whip Inflation…[Barron’s]’.
- Come May 2023, those 47 top inflation busting-stocks ranged 0.05% to 13.66% in annual yield and ranged -7.61% to 54.44% in one-year price-target-upsides per brokers as of 5/19/23-24.
- Top-ten Inflation-Busting Dividend stocks boasted net gains from 25.82% to 61.85% per YCharts forward-looking data 5/19/23.
- $5k invested in the May lowest-priced five of ten top-yield Inflation-Busters showed 12.14% more net gain than from $5k invested in all ten. Little (lower-priced) stocks led by near one and one-quarter length in this ‘inflation busting’ pack for May.
Foreword
This article is based on five UBS, Kiplinger, and Barron's articles, aimed at finding "Inflation Busting" stocks since 2022. The author believes these stock suggestions are prescient into the year 2024 as banks and crypto exchanges succumb to rising interest rates. The title and links to the articles follow:
"With inflation pressures surging, pricing power relative to cost exposures will be a key theme and source of [absolute outperformance] for global equity markets," writes the UBS Equity Strategy team. -by: Dan Burrows April 14, 2022
REIT dividends are expected to post double-digit percentage growth this year, making the yield-friendly sector all the more attractive. -by: Lisa Springer April 13, 2022
10 Stocks for Rising Interest Rates
The Federal Reserve has signaled in no uncertain terms that interest rates will head higher in 2022. Here are 10 of the best stocks for this environment. -by: Jeff Reeves April 4, 2022
5 Stocks To Stave Off Sizzling inflation
Income investors like utility stocks for their stability and generous dividends. Here are 12 top-rated ones to watch in the new year. -by: Dan Burrows February 10, 2022
6 Dividend Stocks Whip Inflation
The hot new investment theme isn't socially nuanced crypto space finance or metaverse charging networks for virtual vehicles. It's dividends-cash payments to shareholders.
To find more dividend growers, Barron's used an approach inspired by the Federal Reserve's so-called dot plot, or path of expected interest rate hikes . They screened the S&P 500 for companies that analysts predict will increase payments nicely in the years ahead. They came up with six. -by: Jack Hough Updated April 24, 2022 / Original April 22, 2022
Any collection of stocks is more clearly understood when subjected to yield-based (dog catcher) analysis, this collection of UBS, Kiplinger, and Barron's articles, aimed at identifying "Inflation-Busting", stocks is perfect for the dogcatcher process. Below are the May 19, 2023 "Inflation-Busters" as parsed by YCharts.
The prices of 11 of these 47 UBS, Kiplinger, and Barron's dividend selections, made the possibility of owning productive dividend shares from this collection more viable for first-time investors.
Those 11 Dogcatcher Ideal "Inflation Busting" stocks for May are: Arbor Realty Trust Inc. ( ABR ); Ares Capital Corp. ( ARCC ); BHP Group Ltd. ( BHP ); British American Tobacco p.l.c. ( BTI ); AllianceBernstein Holding ( AB ); Fifth Third Bancorp ( FITB ); VICI Properties Inc. ( VICI ); Pfizer Inc. ( PFE ); Navient Corp. ( NAVI ); HP Inc. ( HPQ ); The AES Corp. ( AES ).
Those eleven all live up to the ideal of having their annual dividends from a $1K investment exceed their single share prices. Many investors see this condition as "look closer to maybe buy" opportunity.
In a ranking of three-year price gains of the top 30 Inflation busters by yield, three of the Ideal selections stood out: BHP Group, Pfizer Inc., and AllianceBernstein.
Which of the 11 are 'safer' dividend dogs? To find the answer find my 'Safer' April Dividend Dogcatcher follow-up detailing these UBS, Kiplinger, and Barron's "Inflation Busting", stocks in Seeking Alpha's Dividend Dogcatcher Investing Group appearing on or about May 27.
Actionable Conclusions (1-10): Analysts Estimated 25.82% To 61.85% ' Inflation Busting' Dividend Stocks To May 2024
Five of ten top "Inflation Buster" dividend stocks by yield were also 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, the yield-based forecast for these April dogs was graded by Wall St. Wizards as 50% accurate.
Estimated dividends from $1000 invested in each of the highest yielding "Inflation Buster" stocks, added to the median of aggregate one-year target prices from analysts (as reported by YCharts), generated the following results. Note: one-year target prices by lone analysts were not included. Ten probable profit-generating trades projected to May, 2024 were:
British American Tobacco was projected to net $618.53 based on dividends, plus the median of target estimates from 3 brokers, less transaction fees. The Beta number showed this estimate subject to risk/volatility 45% less than the market as a whole.
CVS Health Corp. ( CVS ) was projected to net 505.15 based on the median of target price estimates from 22 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 38% less than the market as a whole.
Alexandria Real Estate Equities Inc. ( ARE ) was projected to net $431.63, based on dividends, plus the median of target price estimates from 9 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 7% under the market as a whole.
The AES Corp. was projected to net $429.88, based on dividends, plus the median of target price estimates from 10 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 6% less than the market as a whole.
NexPoint Residential Trust ( NXRT ) was projected to net $367.96, based on dividends, plus median target price estimates from 7 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 8% over the market as a whole.
Arbor Realty Trust Inc. was projected to net $321.72, based on the median of target price estimates from 5 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 94% greater than the market as a whole.
Fifth Third Bancorp was projected to net $321.48, based on the median of estimates from 22 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 17% greater than the market as a whole.
Pfizer Inc. was projected to net $320.97, based on dividends, plus the median of target price estimates from 21 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 36% under the market as a whole.
American Tower Corp. ( AMT ) was projected to net $300.42, based on the median of target estimates from 17 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 43% less than the market as a whole.
Philip Morris International ( PM ) was projected to net $258.15, 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 32% under the market as a whole.
The average net gain in dividend and price was estimated at 38.76% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility 9% 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".
47 Inflation Busters For 2023-24 Per May Analyst Target Data
47 Inflation Busters 2023-24 By May Yields
Actionable Conclusions (11-20): Ten Top Inflation Busters By Yield For May 2023-24
Top ten 2023-24 "Inflation Busting" stocks by yield in May represented six of eleven Morningstar sectors. First place went to the first of two real estate sector representatives, Arbor Realty Trust Inc. [1]. The other placed eighth, VICI Properties Inc. [8].
Three slots were claimed by financial services sector members: Ares Capital Corp. [2]; AllianceBernstein Holding LP [5]; Fifth Third Bancorp [7].
Third place was claimed by the single basic materials rep in the top ten, BHP Group Ltd. [4].
Two consumer defensive stocks took the fourth and sixth slots on this list, British America Tobacco PLC [4], and Philip Morris International Inc. [6].
Then. a lone consumer cyclical member placed ninth, Hasbro Inc. ( HAS )[9]. Finally the top healthcare sector representative placed tenth, Pfizer Inc. [10], to complete the top ten "Inflation Busters" for 2023-24 dividend pack as of May 19.
Actionable Conclusions: (21-30) Ten Top "Inflation Buster" Dividend Payer s For 2023-24 Showed 24.01%-54.40% Upsides While (31) One -3.08% Down-sider Was Recorded For May
To quantify top dog rankings, analyst median price target estimates provided a "market sentiment" gauge of upside potential. Added to the simple high-yield metrics, median analyst target price estimates became another tool to dig out bargains.
Analysts Forecast A 12.14% Advantage For 5 Highest Yield, Lowest Priced, of 10 Inflation Busting Stocks for May 2023-24
Ten top UBS, Kiplinger, and Barron's dividend selections, aimed at finding the "Inflation Busters" for 2023-24 were culled by yield 5/19/23 for this update. Yield (dividend / price) results provided by YCharts did the ranking.
As noted above, top ten UBS, Kiplinger, and Barron's dividend selections, aimed at finding the best Inflation Buster stocks, as screened 5/19/23, showing the highest dividend yields, represented six of eleven in the Morningstar sector scheme.
Actionable Conclusions: Analysts Predicted 5 Lowest-Priced Of The Top Ten Highest-Yield Inflation Buster Dividend Stocks for 2023-24 (32) Delivering 33.53% Vs. (33) 29.90% Net Gains by All Ten Come May 2024
$5000 invested as $1k in each of the five lowest-priced stocks in the top ten UBS, Kiplinger, and Barron's dividend selections, aimed at finding the "Inflation Busters" for 2022-23 by yield, were predicted, by analyst 1-year targets, to deliver 12.14% more gain than $5,000 invested as $.5k in all ten. The fifth lowest-priced selection, British American Tobacco PLC, was projected to deliver the best net gain of 61.85%.
Source: YCharts.com
The five lowest-priced top-yield UBS, Kiplinger, and Barron's dividend selections, aimed at finding "Inflation Busters" as of May 19 were: Arbor Realty Trust Inc; Ares Capital Corp; Fifth Third Bancorp; VICI Properties Inc. ( VICI ); British American Tobacco PLC, with prices ranging from $12.30 to $33.16.
Five higher-priced UBS, Kiplinger, and Barron's dividend selections, aimed at finding "Inflation Busters" as of May 19 were: AllianceBernstein Holding LP, Pfizer Inc., BHP Group Ltd., Hasbro Inc., Philip Morris International Inc., whose prices ranged from $34.42 to $93.19.
The 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 only15% to 85% accurate on the direction of change and just 0% to 15% accurate on the degree of change.
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.
Afterword
This article features 47 UBS, Kiplinger, and Barron's "Inflation Buster" selections for 2022-23. The article focuses on the top 30, or so, dividend payers. Thus, nearly one-third of the original list of companies is neglected. Therefore, below is the complete list of 47 stocks grouped by source.
Sources: Kiplinger.com, Barrons.com, YCharts.com
If somehow you missed the suggestion of which stocks are ripe for picking at the start of this article, here is a reprise of the list at the end:
The prices of 11 of these 47 Kiplinger, and Barron's dividend selections, as "Inflation Buster", stocks for 2023-24 made the possibility of owning productive dividend shares from this collection more viable for first-time investors.
Those 11 Dogcatcher ideal "inflation Busting" dividend stocks for May are:
Those 11 all live up to the ideal of having their annual dividends from a $1K investment exceed their single share prices. Many investors see this condition as "look closer to maybe buy" opportunity.
In a ranking of three-year price gains of the top 30 Inflation busters by yield, three of the Ideal selections stood out: BHP Group, Pfizer Inc, and AllianceBernstein.
How All Ten Top "Inflation Buster" 2023-24 Stocks Could Become Ideal Fair Priced Dogs
Since eight of the top ten Kiplinger, and Barron's "Inflation Buster", stocks for 2023 are now priced less than the annual dividends paid out from a $1K investment, the above charts compare those eight plus two at recent prices.
The dollar and percentage differences between recent and fair prices are detailed in the top chart. The recent prices are shown in the middle chart with the fair pricing of all ten top dogs conforming to the dogcatcher ideal are detailed in the bottom chart.
With renewed downside market pressure to 23.53%, it is possible for all ten highest-yield UBS, Kiplinger & Barron's Inflation Busting Dividend stocks, to become fair-priced with their annual yield (from $1K invested) meeting or exceeding their single share prices. This pack got a huge head-start with eight of ten already fair priced.
Stocks listed above were suggested only as possible reference points for your 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 Thomson/First Call in YahooFinance. Dog image:Open source dog art from dividenddogcatcher.com.
For further details see:
Of 11 Ideal Inflation-Busting May Dividend Dogs, Buy 3