Fortune’s 48 World’s Most Admired Companies Excluded Ideal Dividend Dogs

Stock Market


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Foreword

This article is based on 50 All-Star World’s Most Admired companies based on admiring votes from inside and outside their industries as reported in the March 2022 edition of Fortune Magazine.

How Fortune determined the list

“As in the past, Fortune collaborated with Korn Ferry on this survey of corporate reputations. We began with a universe of about 1,500 candidates: the 1,000 largest US companies ranked by revenue, along with non-US companies in Fortune’s Global 500 database that have revenues of $ 10 billion or more. We winnowed the assortment to the highest revenue companies in each industry, a total of 640 in 28 countries. The top-rated companies were picked from that pool of 640; the executives who voted work at the companies in that group.

To determine the best-regarded companies in 52 industries, Korn Ferry asked executives, directors, and analysts to rate enterprises in their own industry on nine criteria, from investment value and quality of management and products to social responsibility and ability to attract talent. A company’s score must rank in the top half of its industry survey to be listed. (For complete rankings, visit fortune.com).

To select our 50 All-Stars, Korn Ferry asked 3,740 executives, directors, and securities analysts who had responded to the industry surveys to select the 10 companies they admired most. They chose from a list made up of the companies that ranked in the top 25% in last year’s surveys, plus those that finished in the top 20% of their industry. Anyone could vote for any company in any industry.

The difference in the voting rolls explains why some results can seem at odds with each other. For example, UnitedHealth Group (NYSE: UNH) fell off the All-Star list but ranked No. 1 within the insurance and managed care category when votes from only those in that industry were counted. ”

– Fortune editors

Any collection of stocks is more clearly understood when subjected to yield-based (dogcatcher) analysis. These 48 publicly traded companies out of 50 All-Stars for the World’s Most Admired list (WMA) dogs are perfect for the dogcatcher process. Here is the February 11 data, focused on 36 dividend producers. The full list of 50 is posted in the Afterword at the tail of this article.

Sadly, none of the 48 publicly-traded WMA companies live up to my Dogcatcher ideal of paying annual dividends from a $ 1K investment exceeding their single share prices. Many first-time investors regard this condition as a buy signal or, at the very least, a look-closer invitation.

Actionable Conclusions (1-10): Analysts Estimated 20.83% To 33.23% Net Gains For Ten Top WMA To March 2023

Three of ten top 2022 WMA stocks by yield were 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 March WMA top dogs was graded by Wall St. Wizards as 30% accurate.

Estimated dividends from $ 1000 invested in each of the highest yielding stocks plus their aggregated one-year analyst median target prices, as reported by YCharts supplied the data points. Note: target prices from less than two analysts were not applied. Thus, ten probable profit-generating trades projected to February 11, 2023 were:

Gains

YCharts

FedEx Corp. (FDX) was projected to net $ 332.30, based on dividends, plus the median of the target price estimates from twenty-seven analysts, less broker fees. The Beta number showed this estimate subject to risk / volatility 29% greater than the market as a whole.

BlackRock Inc. (BLK) was projected to net $ 318.10, based on the median of target prices from thirteen analysts, plus annual dividends, less broker fees. The Beta number showed this estimate subject to risk / volatility 20% over the market as a whole.

Accenture plc (ACN) was projected to net $ 304.73, based on the median of target estimates from twenty-three analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk / volatility 22% over the market as a whole.

Target Corp. (TGT) was projected to net $ 294.58, based on the median of target price estimates from thirty analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk / volatility 1% greater than the market as a whole.

Microsoft Corp. (MSFT) was projected to net $ 265.01, based on dividends, plus the median of target price estimates from forty-four analysts, less broker fees. The Beta number showed this estimate subject to risk / volatility 11% less than the market as a whole.

Walmart Inc. (WMT) was projected to net $ 240.32 based on dividends, plus the median of target estimates from thirty-four brokers, less transaction fees. The Beta number showed this estimate subject to risk / volatility 48% less than the market as a whole.

Merck & Co., Inc. (MRK) was projected to net $ 229.03, based on a median of target price estimates from twenty-two analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk / volatility 57% less than the market as a whole.

Starbucks Corp. (NASDAQ: SBUX) was projected to net $ 223.96, based on dividends, plus the median of target price estimates from twenty-nine analysts, less broker fees. The Beta number showed this estimate subject to risk / volatility 11% less than the market as a whole.

Lowe’s Companies Inc. (LOW) was projected to net $ 219.73, from dividends, plus the median of target price estimates from twenty-seven analysts, less broker fees. The Beta number showed this estimate subject to risk / volatility 32% greater than the market as a whole.

3M Co. (MMM) was projected to net $ 208.30, based on dividends, plus the median of target price estimates from nineteen analysts, less broker fees. The Beta number showed this estimate subject to risk / volatility 4% under the market as a whole.

The average net gain in dividend and price was estimated at 26.36% on $ 10k invested as $ 1k in each of these ten stocks. These gain estimates were subject to average risk / volatility 8% greater than the market as a whole.

Source: Open source dog art # 2 from dividenddogcatcher.com

Open source dog art # 2 from Dividend Dog Catcher

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”.

48 Fortune WMA Dogs Show March Target Gains

Pr Target List

YCharts

36 Fortune WMA Dogs Per March Yield

Yield List

YCharts

Actionable Conclusions (11-20): Top 10 Fortune WMA Dogs By Yield For March

Top yield ten February / March 2023 Fortune WMA stocks represented five of eleven Morningstar sectors.

A single technology representative placed first, International Business Machines Corporation (IBM) [1]

The first of three consumer defensive stocks occupied second place: Unilever PLC (NYSE: UL) [2]. The other consumer defensive firms placed seventh, and ninth, Coca-Cola Co. (KO) [7], and PepsiCo Inc. (PEP) [9].

In third place was the first of two industrials sector representatives, 3M Co. [3]. The other industrial placed sixth, United Parcel Service (UPS) [6].

Then two healthcare firms placed fourth and fifth, Pfizer Inc. (PFE) [4]and Merck & Co., Inc. [5].

Finally, The first of two financial services stocks occupied eighth place: JPMorgan Chase & Co. (JPM) [8]. The other Financial firm placed tenth, BlackRock Inc. [10]to complete the top ten February / March 2022 World’s Most Admired company stocks by yield.

Actionable Conclusions: (21-30) Top Ten WMA Dividend Dogs Showed 21.31% -32.94% Upsides While (31) No Lowly Down-siders Showed in This February / March Report

Up / Dnsides

YCharts

To quantify top dog rankings, analyst mean price target estimates provide a “market sentiment” gauge of upside potential. Added to the simple high-yield metrics, analyst median target price estimates became another tool to dig out bargains.

Analysts Forecast A 4.81% Disadvantage For The 5 Highest Yield, Lowest Priced Of Ten 2022 Fortune WMA Dividend Stocks Come 2023

Yield (dividend / price) results provided by YCharts did the ranking for these ten dividend Fortune WMA stocks.

10 By Price

YCharts

As noted above, top ten dividend CTW dogs screened 2/11/22 showing the highest dividend yields represented five of eleven in the Morningstar sector scheme.

Actionable Conclusions: Analysts Predicted 5 Lowest-Priced Of The Top Ten Highest-Yield Fortune WMA Dividend Dogs (32) Delivering 16.24% Vs. (33) 17.06% Net Gains by All Ten Come February 11, 2023

10 by Gains

YCharts

$ 5000 invested as $ 1k in each of the five lowest-priced stocks in the top ten dividend WMA kennel by yield were predicted by analyst 1-year targets to deliver 4.81% LESS gain than $ 5,000 invested as $ .5K in all ten. The tenth lowest priced selection, BlackRock Inc., was projected to deliver the best net gain of 31.81%.

10 by Price

YCharts

The five lowest-priced top-yield Fortune WMA dividend dogs as of February 11 were: Pfizer Inc .; Unilever PLC; Coca-Cola Co .; Merck & Co., Inc .; International Business Machines Corporation, with prices ranging from $ 50.78 to $ 132.69.

Five higher-priced Fortune top yield WMA dividend dogs as of February 11 were: JPMorgan Chase & Co .; 3M Co .; PepsiCo Inc .; United Parcel Service Inc .; BlackRock Inc., whose prices ranged from $ 153.92 to $ 772.49.

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 only 20% to 90% accurate on the direction of change and just 0% to 20% 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

If somehow you missed the suggestion of the five stocks ripe for picking at the start of the article, here is a repeat of the list at the end.

Not one of the Fortune WMA all-star 50 live up to my Dogcatcher ideal of having annual dividends from a $ 1K investment exceeded their single share prices. Some first-time dividend investors regard this condition as a buy signal, or at least a look-closer invitation.

Since none of the top ten WMA shares are now priced less than the annual dividends paid out from a $ 1K investment, the following charts compare those all ten at current prices (top chart) with the fair pricing of all ten top dogs conforming to that ideal (middle chart). The dollar and percentage differences between current and fair prices are detailed in the bottom chart.

Current vs Fair priced dividends WMA

Fortune / YCharts

Fortune World’s Most Reliable Companies Alphabetically by Ticker

50 Fortune WMA

Fortune

Stocks listed above were suggested only as possible reference points for your Fortune World’s Most Admired 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; finance.yahoo.com; analyst mean target price by YCharts. Dog art: Source: Open source dog art # 2 from dividenddogcatcher.com



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