Barron’s Round Table New-Year 2024 Dividend Dogs

Foreword

This article is based on two January Barron’s Weekly articles aimed at revealing 36 select stocks for the New Year 2024. Those two articles were:

Interest rates will come down, but [Barron’s] panelists don’t see another magnificent year for stocks. Eight picks to beat the odds.

With a few exceptions, the members of the 2024 Barron’s Roundtable expect the stock market to disappoint, with the index delivering returns of minus-5% to plus-5% for the full year. No, they don’t see a ruinous recession, and yes, they expect the Federal Reserve to lower interest rates at some point during the year. Their main worry is that stocks are too richly valued, leaving little margin for error.

Roundtable Panelists

Barron’s 2024 Roundtable panelists:

Todd Ahlsten

CIO and lead portfolio manager, Parnassus Core Equity fund,

Parnassus Investments, San Francisco.

Scott Black

Founder and president, Delphi Management, Boston.

Abby Joseph Cohen

Professor of Business, Graduate School of Business,

Columbia University, New York.

Sonal Desai

CIO and portfolio manager, Franklin Templeton Fixed Income,

San Mateo, Calif.

Henry Ellenbogen

CIO and managing partner, Durable Capital Partners,

Chevy Chase, Md.

Mario Gabelli

Chairman and CEO, Gabelli Funds, Greenwich, Conn.

David Giroux

CIO, T. Rowe Price Investment Management and portfolio

manager, Capital Appreciation fund, T. Rowe Price, Baltimore.

Rajiv Jain,

Chairman and CIO, GQG Partners, Fort Lauderdale, Fla.

John W. Rogers Jr.

Founder, chairman, co-CEO, and CIO, Ariel Investments, Chicago.

William Priest

Executive chairman and co-CIO, Epoch Investment Partners,

New York.

Meryl Witmer

General partner, Eagle Capital Partners, New York.

By

Lauren R. Rublin

Updated January 22, 2024/Original January 19, 2024

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

Here is February 8 updated YCharts data for 23 dividend paying stocks of 36 screened and the 1 living up to the dogcatcher ‘ideal’ in this collection. These made-up the Barron’s New-Year 2024 Tips collection.

The Ides of March 2020 plunge in the stock market took its toll on all stocks nearly four years ago. However, the 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.

February, 2024 shows a glimmer of light from one stock emerging as a dogcatcher ideal candidate. That was: BP p.l.c. (BP). Its price settled at $10.89 below the annual dividend payout from a $1K investment.

Actionable Conclusions (1-10): Brokers Estimated Top-Ten Barron’s New-Year 2024 Tips Might Net 6.9% to 27.58% Gains By February 2025

Five of the tops-by-yield ten Barron’s New Year 2024 Tips (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 50% 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 2024-25 data points. However, one year target-prices by lone analysts were not counted. The resulting ten probable best profit-generating 2024 Barron’s New-Year Tips projected to February 8, 2025, by that reckoning, were:

Everest Group, Ltd. (EG) netted $275.78 based on the median of target estimates from 13 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 43% less than the market as a whole.

BP PLC netted $224.62 based on the median of target estimates from 17 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 31% less than the market as a whole.

Diamondback Energy, Inc. (FANG) netted $203.81 based on the median of target estimates from 30 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 90% greater than the market as a whole.

Wintrust Financial Corporation (WTFC) netted $203.04 based on the median of target prices estimated by 12 analysts, plus estimated dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 22% greater than the market as a whole.

Oshkosh Corporation (OSK) netted $104.91 based on estimates from 25 analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 6% greater than the market as a whole.

Deere & Company (DE) netted $104.91 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 6% greater than the market as a whole.

Global Payments Inc. (GPN) netted $98.82 based on the median of target estimates from 35 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility equal to the market as a whole.

RTX Corporation (RTX) netted $76.97 based on the median of target estimates from 24 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 8% less than the market as a whole.

Intel Corporation (INTC) netted $71.88 based on dividends plus a median target price estimate from 37 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 2% greater than the market as a whole.

Oracle Corporation (ORCL) netted $69.01 based on estimates from 30 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 2% greater than the market as a whole.

The average net-gain in dividend and price was 14.34% on $10k invested as $1k in each of these ten 2024 Barron’s New-Year Tips. This gain estimate was subject to average risk/volatility 5% 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 26 Barron’s New-Year 2024 Tips 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 23 Barron’s Mid-Year 2024 Tips By Yield

Actionable Conclusions (11-20): Ten Top Stocks By Yield Are Barron’s New-Year 2024 Tips Dividend Dogs

Top ten stocks selected 2/8/24 by yield represented four of eleven Morningstar sectors.

First place was secured by the first of three energy sector members, Diamondback Energy, Inc. The other two placed second and third, Canadian Natural Resources Limited (CNQ) and BP PLC.

Two financial services providers, placed fourth and fifth as ETFs: iShares Core Total USD Bond Market ETF (IUSB) [4], and iShares 1-5 Year Investment Grade Corporate Bond ETF (IGSB) [5], then two more financials placed seventh and eighth, Everest Group Ltd [7], and Wintrust Financial Corp [8].

Sixth place was secured by the first of two industrials member, RTX Corp [6], the other industrial placed tenth, RELX PLC (RELX) [10].

Then, one consumer cyclical member placed ninth, Evolution AB (OTCPK:EVGGF) [9], which completed the top ten Barron’s New-Year 2024 Tips Dividend Dogs for February.

Actionable Conclusions: (21-30) Ten Barron’s New Year 2024 Watchlist Stocks Showed 6.53% to 26.61% Upsides To February, 2025, With (31) One -8.50% 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 39.39% Disadvantage For 5 Highest Yield, Lowest Priced of Top-Ten Barron’s New Year 2024 Stocks To February, 2025

Ten top Barron’s New Year 2024 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 New Year 2024 Dogs selected 2/8/24, showing the highest dividend yields, represented four of eleven sectors in the Morningstar scheme.

Actionable Conclusions: Analysts Estimated The 5 Lowest-Priced Of Ten Highest-Yield Barron’s NewYear 2024 Stocks (33) Delivering 6.67% Vs. (34) 11.01% Net Gains by All Ten by February, 2025

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Barron’s New Year 2024 Stocks by yield were predicted by analyst 1-year targets to deliver 39.39% LESS gain than $5,000 invested as $.5k in all ten. The eighth lowest-priced Barron’s New Year 2024 stock, Everest Group Ltd, was projected to deliver the best net gain of 27.58%.

The five lowest-priced top-yield Barron’s NewYear 2024 Watchlist stocks for February 8 were: BP PLC; RELX PLC; iShares Core Total USD Bond Market ETF; iShares 1-5 Year Investment Grade Corporate Bond ETF; Canadian Natural Resources Ltd, with prices ranging from $36.21 to $60.58

The five higher-priced top-yield Barron’s New Year 2024 Stocks for February 8 were: RTX Corp; Wintrust Financial Corp; Evolution AB;Diamondback Energy Inc; Everest Group Inc, whose prices ranged from $91.04 to $354.56.

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 stock listed above exceeded their single share prices as of 2/8/24.

As we near the fourth anniversary of the 2020 Ides of March dip, the time to snap up the top yield Barron’s New-Year 2024 Tips 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 New-Year 2024 Tip Prices

Since one of the top-ten Barron’ New-Year 2024 dog shares is priced less than the annual dividends paid out from a $1K investment, the following top chart shows the dollar and percentage shift required for nine at recent prices to achieve 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 eight 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 36 Barron’s New-Year 2024 Tip Stocks by Source

The analysis above focuses primarily on the top yield 23 Barron’s/Fortune New-Year 2024 Watchlist selections. Below is the list of all the stocks including duplicate listings, by alphabetically by ticker symbol alphabetically.

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; Yahoo Finance – Stock Market Live, Quotes, Business & Finance News; analyst mean target price by YCharts. Dog Photo by Farzan Lelinwalla on Unsplash.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.