Wavetop/iStock via Getty Images
Wavetop/iStock via Getty Images
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.
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 Pro Picks are perfect for the dogcatcher process.
Here is March 5 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 NY2024 ProPicks collection.
The Ides of March 2020 plunge in the stock market took its toll on all stocks 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.
March 2024 shows a glimmer of light from one stock emerging as a dogcatcher ideal candidate. That was: BP PLC (BP). Its price settled at $11.80 below the annual dividend payout from a $1K investment.
Seven of the tops-by-yield ten Barron's NY 2024 Pro Picks (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 70% 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 Pro Picks projected to March 5, 2025, by that reckoning, were:
Source: YCharts.com
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.
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.
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.
Deere & Co. (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.
Oshkosh Corp. (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.
Oracle Corp. (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.
Wintrust Financial Corp. (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.
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.
RTX Corp. (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.
Canadian Natural Resources (CNQ) netted $87.46 based on dividends plus a median target price estimate from 4 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 53% greater than the market as a whole.
The average net-gain in dividend and price was 13.9% on $10k invested as $1k in each of these ten 2024 Barron's NY Pro Picks. This gain estimate was subject to average risk/volatility 11% greater than the market as a whole.
Source: Photo by Caleb Fisher on Unsplash
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".
Source: YCharts.com
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.
Source: YCharts.com
Top ten stocks selected 3/5/24 by yield represented fiver of eleven Morningstar sectors.
First place was secured by the first of three energy sector members, BP PLC [1]. The other two placed second and third, Diamondback Energy, Inc. [2], and Canadian Natural Resources Ltd [3].
Outside the sector spectrum, two exchange traded funds penetrated the top ten Barrons 2024 NY Pro-Picked list in fourth and fifth places, iShares Core Total USD Bond Market ETF (IUSB) [4], and iShares 1-5 Year invmt Grd Corp. Bd ETF (IGSB) [5].
Sixth place was secured by the first of two industrials, RTX Corp. [3]. The other industrial placed tenth, Oshkosh Corp. [10].
Then, two financial services providers, placed seventh and eighth, Everest Group Ltd [7], and Wintrust Financial Corp. [8].
Finally, one consumer cyclical member placed ninth, Evolution AB (OTCPK:EVGGF) [9], which completed the top ten Barron's NY 2024 Pro Picks for March.
Source: YCharts.com
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.
Ten top Barron's NY 2024 Pro Picks were culled by yield for this monthly update. Yield (dividend/price) results verified by YCharts did the ranking.
Source: YCharts.com
As noted above, top-ten Barron's NY2024 Pro Picked Dogs tagged 3/5/24, showing the highest dividend yields, represented five of eleven sectors in the Morningstar scheme.
Source: YCharts.com
$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Barron's NY 2024 Pro Pix by yield were predicted by analyst 1-year targets to deliver 10.25% LESS gain than $5,000 invested as $.5k in all ten. The very lowest-priced Barron's NY 2024 Pro Pick, BP PLC, was projected to deliver the best net gain of 20.52%.
Source: YCharts.com
The five lowest-priced top-yield Barron's NY 2024 ProPicks for March 5 were: BP PLC; iShares Core Total USD Bond Market ETF; iShares 1-5 Year Investment Grade Corporate Bond ETF; Canadian Natural Resources Ltd; RTX Corp, with prices ranging from $35.80 to $90.06
The five higher-priced top-yield Barron's NY2024 Pro Pix for March 5 were: Wintrust Financial Corp; Evolution AB; Diamondback Energy Inc; Oshkosh Corp; Everest Group Inc, whose prices ranged from $99.92 to $366.93.
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.
If somehow you missed the suggestion of the one stock ripe for picking at the start of the article, here is a repeat at the end:
Source: YCharts.com
In the current market advance, dividends from $1K invested in the stock listed above exceeded their single share prices as of 3/5/24.
As we near the fourth anniversary of the 2020 Ides of March dip, the time to snap up the top yield Barron's NY 2024 Pro Pick is now... unless another big bearish drop in price looms ahead. (At which time your strategy would be to add to your holdings.)
Since one of the top-ten Barron's NY2024 Pro Pix 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.
Source: YCharts.com
The top chart is an indicator of how low the nine 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.
The analysis above focuses primarily on the top yield 23 Barron's/Fortune NY2024 Pro-Picked selections. Below is the list of all the stocks including duplicate listings, alphabetically.
Source: Barron's.com, YCharts.com
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 NY 2023 Pro Pick 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; Yahoo Finance - Stock Market Live, Quotes, Business & Finance News; analyst mean target price by YCharts. DogPhoto by Caleb Fisher 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.