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 February/March 2023 edition of Fortune Magazine.
“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 U.S. companies ranked by revenue, along with non-U.S. 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… 50 All-Stars, Korn Ferry asked 3,760 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, Adobe fell off the All-Star list but ranked No. 2 within the computer software 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 45 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 March 29 data, focused on 36 dividend producers. The full list of 50 is posted in the Afterword at the tail of this article.
Happily, five of the 45 publicly-traded WMA companies live up to my Dogcatcher ideal of paying annual dividends from a $1K investment exceeding their single share prices. Those five are: Bayerische Motoren Werks AG (OTCPK:BMWYY), Nordstrom Inc (JWN), Pfizer Inc (PFE), Bank of America Corp (BAC), and Singapore Airlines Ltd (SINGY). Many first-time investors regard this condition as a buy signal or, at least, a look-closer invitation.
Four of ten top 2023 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 April WMA top dogs was graded by Wall St. Wizards as 40% 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.) Ten probable profit-generating trades thereby projected to March 29, 2024 were:
CVS Health Corp (CVS) was projected to net $523.03, based on dividends, plus the median of the target price estimates from 22 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 35% less than the market as a whole.
Charles Schwab Corp (SCHW) was projected to net $459.79 based on dividends, plus the median of target estimates from 16 brokers, less transaction fees. The Beta number showed this estimate subject to risk/volatility 7% less than the market as a whole.
Southwest Airlines Co (LUV) was projected to net $434.20, based on the median of target estimates from 18 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 15% over the market as a whole.
Bank of America Corp was projected to net $388.45, based on dividends, plus the median of target price estimates from 24 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 40% more than the market as a whole.
Nordstrom Inc was projected to net $270.70, based on a median of target price estimates from 18 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 125% greater than the market as a whole.
Pfizer Inc was projected to net $267.90, 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 36% less than the market as a whole.
The Goldman Sachs Group (GS) was projected to net $251.85, based on dividends, plus the median of target price estimates from 23 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 42% greater than the market as a whole.
BlackRock Inc (BLK) was projected to net $237.08, based on the median of target prices from 16 analysts, plus annual dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 28% over the market as a whole.
3M Co. (MMM) was projected to net $223.29, 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 3% under the market as a whole.
JPMorgan Chase & Co (JPM) was projected to net $222.86, from dividends, plus the median of target price estimates from 25 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 13% greater than the market as a whole.
The average net gain in dividend and price was estimated at 32.79% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average risk/volatility 18% over the market as a whole.
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.”
Top yield ten February/March 2023 Fortune WMA stocks represented six of eleven Morningstar sectors in April.
First place went to the first of two industrials sector representatives, 3M Co . The other industrial placed eighth, United Parcel Service (UPS) .
In second place was the first of two consumer cyclical representatives, Bayerische Motoren Werke SA . The other placed fourth, Nordstrom Inc .
A single technology representative placed third, International Business Machines Corporation (IBM) .
Then two healthcare firms placed fourth and ninth, Pfizer Inc. , and CVS Health Corp .
Two financial services dogs claimed the fifth and tenth places: Morgan Stanley (MS) , and The Goldman Sachs Group .
The lone consumer defensive stock occupied sixth place: Unilever PLC (UL) . to complete the top ten February/March 2023 World’s Most Admired company stocks by yield for April.
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.
Yield (dividend / price) results provided by YCharts did the ranking for these ten dividend Fortune WMA stocks.
As noted above, top ten dividend WMA dogs screened 3/29/22 showing the highest dividend yields represented five of eleven in the Morningstar sector scheme.
$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 22.45% more gain than $5,000 invested as $.5K in all ten. The fifth lowest priced selection, CVS Health Corp Inc, was projected to deliver the best net gain of 52.3%.
The five lowest-priced top-yield Fortune WMA dividend dogs as of March 29 were: Nordstrom Inc; Bayerische Motoren Werke AG ; Pfizer Inc.; Unilever PLC; CVS Health Corp, with prices ranging from $15.62to $74.09.
Five higher-priced Fortune top-yield WMA dividend dogs as of March 29 were: Morgan Stanley; 3M Co; International Business Machines Corporation; United Parcel Service Inc; The Goldman Sachs Group, whose prices ranged from $86.24 to $320.72.
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.
If somehow you missed the suggestion of the three stocks ripe for picking at the start of the article, here is a repeat of the list at the end.
Five of the Fortune WMA all-star 50 live up to my Dogcatcher ideal of having annual dividends from a $1K investment exceed their single share prices. Some first-time dividend investors regard this condition as a buy signal, or at least a look-closer invitation.
Three of the top ten WMA shares are now priced less than the annual dividends paid out from a $1K investment as shown in the top chart. The middle chart compares those three at recent prices with the eight outliers. Fair pricing of all dogs conforming to the dogcatcher ideal are shown in the bottom chart).
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.
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 #1 from dividenddogcatcher.com.
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.
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