About Large Cap Value
A value ranking for large cap stocks from YCharts puts together complementary strategies found during their stock research. As a value ranking, it looks at the price of a stock relative to a number of measurements that determine intrinsic firm value. Only the largest 10% of companies based on market cap are allowed in this portfolio.
What it is: The Value Score is a composite score. It tells you how much you are getting in terms of profits, cash flows, assets, sales, etc. for the stock price that you pay. It is a relative measurement, so it says nothing about the overall level of the market. Rather, it answers the question: “Given the current market level, which stocks give you the most current value for your dollar of investment?” Tens are the most value, and 1s are the least.
How to use it: Use it to find companies that are selling at a low price relative to their assets and profits.
Limitations of the Value Score: Watch out for companies with a lot of uncertainty or bad prospects for the future (e.g. Pharma companies with expiring patents, industries on the decline, etc.).
About the Ben Graham Formula
The Ben Graham Formula strategy contains ultra-stable stocks that will infrequently lose money if held over a long period of time. It was developed based on a screen in Graham’s book, “The Intelligent Investor.” For those who have read the book, it is the “Defensive Investor” screen. It selects stocks that are large in terms of sales and total assets, have a strong track record of earnings and dividend payments, have a reasonable current ratio and level of long-term debt, and have a low valuation given by PE Ratios and Price to Book Value ratios. -YCharts
While 9 out of this collection of 57 All-Star-Value Dividend stocks are too pricey to justify their skinny dividends, 48 of the 57, by yield, live up to the ideal of offering annual dividends (from a $1K investment) exceeding their price per share.
This list of January All-Star-Value stocks did not discard two stocks showing outlandish yield numbers, namely ZIM and LPG.
In the current market swing, the dividends from $1k investments in 48 of the fifty-seven stocks listed above, met or exceeded their single share prices as of 1/5/23.
As we are now nearly ten months past the second anniversary of the 2020 Ides of March dip, the time to snap up some the 48 top-yield All-Star Value dogs is now… unless another big bearish drop in price looms ahead. (At which time, your strategy would be to add to your position in any of these you then hold.)
Actionable Conclusions (1-10): Analysts Estimate 39.6% To 89.79% Top Ten All-Star-Value Net Gains To January 2024
Five of the ten top picks by yield were verified as also 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 forecast for All-Star-Value derived dividend dogs (as graded by Brokers) was 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 2023-24 data-points. (Note: target prices by lone-analysts were not used). Ten probable profit-generating trades projected to January 5, 2024 were:
ZIM Integrated Shipping Services Ltd. (ZIM) was projected to net $897.85, based on the median of target price estimates from 7 analysts, plus dividends, less broker fees. A Beta number was not available for ZIM.
Mativ Holdings Inc. (MATV) netted $712.39 based on a median target price estimate from 2 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 34% less than the market as a whole.
Petroleo Brasileiro S.A. – Petrobras (PBR) was projected to net $607.49, based on dividends, plus the median of target price estimates from 16 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 41% greater than the market as a whole.
Sociedad Quimica y Minera de Chile S.A. (SQM) was projected to net $558.26, based on the median of target price estimates from 16 analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 11% less than the market as a whole.
Dorian LPG Ltd. (LPG) was projected to net $531.33, 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 17% greater than the market as a whole.
ICL Group Ltd (ICL) was projected to net $529.46, 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 10% greater than the market as a whole.
Coterra Energy Inc. (CTRA) was projected to net $485.15, 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 75% under the market as a whole.
Energy Transfer LP (ET) was projected to net $445.20, 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 76% greater than the market as a whole.
Bancolombia S.A. (CIB) was projected to net $398.29 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 16% more than the market as a whole.
Diamondback Energy Inc. (FANG) was projected to net $395.95, based on a median target price estimates from 30 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 100% over the market as a whole.
The average net-gain in dividend and price was estimated to be 55.61% on $10k invested as $1k in each of these ten stocks. The average Beta showed these estimates subject to risk/volatility 31% greater than 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”.
Top 50 All-Star-Value Picks 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 50 All-Star-Value Picks By Yield
Actionable Conclusions (11-20): Ten Top Stocks By Yield Are The January Dogs of The All-Star-Value Pack
Top ten All-Star-Value stocks selected 1/5/23 by yield represented seven of eleven Morningstar sectors. First place was secured by the lone industrials representative in the top ten, ZIM Integrated Shipping Services Ltd. .
The first of four energy sector representatives placed second, Dorian LPG Ltd . The others placed sixth, eighth, and tenth, Petroleo Brasileiro SA – Petrobras , Pioneer Natural Resources Co. (PXD) , and Coterra Energy Inc. .
Then one consumer defensive member placed third, Embotelladora Andina S.A. (AKO.B) .
The lone technology member, placed fourth, Himax Technologies Inc. (HIMX) .
Then, one basic materials representative placed fifth, ICL Group Ltd . Thereafter a utilities representative placed seventh, Kenon Holdings Ltd. (KEN) .
Finally, one financial services representative placed ninth, Owl Rock Capital Corp. (ORCC)  to complete this All-Star-Value top ten, by yield, for January.
Actionable Conclusions: (21-30) Ten All-Star-Value Dividend Stocks Showed 31.26% To 65.01% Upsides To January, 2024, With (31) One -13.36% 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 8.42% Disadvantage For 5 Highest Yield, Lowest Priced of Top-Ten All-Star-Value Dogs To January 2024
Ten top All-Star-Value stocks were culled by yield for this monthly update. Those (dividend/price) results provided by YCharts did the ranking.
As noted above, top-ten All-Star-Value Dogs selected 1/3/23, showing the highest dividend yields, represented seven of eleven sectors in the Morningstar scheme.
Actionable Conclusions: Analysts Estimated The 5 Lowest-Priced Of Ten Highest-Yield All-Star-Value Dividend Stocks (33) Delivering 39.78% Vs. (34) 43.44% Net Gains by All Ten by January, 2024
$5000 invested as $1k in each of the five lowest-priced stocks in the top ten All-Star-Value dividend pack, by yield, were predicted by analyst 1-year targets to deliver 8.42% LESS gain than $5,000 invested as $.5k in all ten. The seventh lowest-priced All-Star-Value top-yield stock, ZIM Integrated Shipping Services Ltd., was projected to deliver the best net gain of 60.58%.
The five lowest-priced top-yield All-Star-Value dividend stocks for January 5 were: Himax Technologies Inc; ICL Group Ltd; Petroleo Brasileiro SA Petrobras; Embotelladora Andina SA; Owl Rock Capital Corp., with prices ranging from $6.66 to $11.98
The five higher-priced top-yield All-Star-Value dividend stocks for January 5 were: Dorian LPG Ltd; ZIM Integrated Shipping Services Ltd.; Coterra Energy Inc.; Kenon Holdings Ltd.; Pioneer Natural Resources Co., whose prices ranged from $15.96 to $227.13.
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 20% to 85% accurate on the direction of change and just 0% to 15% accurate on the degree of change.
If somehow you missed the suggestion of the forty-eight stocks ripe for picking at the start of the article, here is a repeat of the list at the end:
In the current market bounce, dividends from $1K invested in the forty-eight stocks listed above met or exceeded their single share prices as of 1/5/23.
As we are nearly ten months past the second anniversary of the 2020 Ides of March dip, the time to snap up some top-yield All-Star-Value dogs is now… unless another big bearish drop in price looms ahead. (At which time your strategy would be to add to your holdings.)
To learn which of these 48 ideally-priced opportunities are “safer” to buy (namely which have ready cash to pay their dividends). Use the last bullet in the Summary above to navigate to my dividend dogcatcher follow-up article after December 14 in the SA Marketplace.
Recent vs Break-Even Top Ten All-Star-Value Stock Prices
Since all of the top-ten All-Star-Value Dividend shares are now priced less than the annual dividends paid out from a $1K investment, the following top chart shows the dollar and percent variants to all ten top dogs conforming to (but not exceeding) the dogcatcher ideal.
Those at recent prices are the subject of the middle chart with the break-even pricing of all ten delivered in the bottom chart.
You could look at the top chart as an indicator of how high each stock might rise or fall in the coming year or two. However, it also shows how much the price must rise or fall (in either dollars or percentage) before it exactly conforms the standard of dividends from $1K invested equalling the current single share price.
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 All-Star-Value Dividend dog 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 silhouette: Open source dog art from dividenddogcatcher.com.