24 Barron’s Pro-Picked 2024 Mid-Year Dividend Dogs: Buy 2 In July

Foreword

This article is based on the July 15 Barron’s Weekly article aimed at revealing 48 select stocks for the Mid-Year 2024. That article was:

From Nvidia to Mercedes: 48 Picks for the Rest of the Year, From Barron’s Roundtable Pros

By

Lauren R. Rublin

July 12, 2024, 11:48 am EDT

“You can never be too rich, but can you be too thin? That’s just what many investors have wondered about the current bull market’s exceedingly narrow foundation, composed of just a handful of mega cap tech stocks leading the artificial-intelligence revolution. Their concerns were validated somewhat on Thursday, after a weak inflation report raised the odds that the Federal Reserve will lower interest rates in September. The pivot, so to speak, kicked off a wrenching rotation into long-neglected sectors of the market, some of which had their best day in years.

While one day’s trading doesn’t make a trend, the members of the Barron’s Roundtable can only hope. Most are value-oriented investors with an abiding fondness for well run, cash-rich companies, many of them midsize and smaller, whose manifold virtues have been ignored and underpriced almost since the day “Magnificent” became a modifier of “Seven.” It isn’t that these and other investors are cheering for Nvidia and its ilk to fall; they are merely waiting, seemingly eternally, for the rest of the market to rise.

As is our annual custom, we checked in with the members of the Roundtable by phone over the past two weeks to get their take on how the world has changed since all 11 met in person on Jan. 8 in New York. In the process, we collected 48 investment picks for the second half of this year and beyond—some reiterated from January, but many more new. If narrow markets either broaden or die, it is comforting to know that so many quality stocks, so attractively priced, are waiting in the wings.” —Barron’s Lauren R. Rublin

Roundtable Panelists & Picks

Barron’s Mid-Year 2024 Roundtable panelists and their stock picks for this article:

Todd Ahlsten

CIO and lead portfolio manager, Parnassus Core Equity fund,

Parnassus Investments, San Francisco

Company / Ticker

Price 7/10/24

Alphabet / GOOGL

$191.18

Broadcom / AVGO

1,744.69

Salesforce / CRM

252.59

Source: Bloomberg

Scott Black

Founder and president, Delphi Management, Boston

Company / Ticker

Price 7/10/24

SLB / SLB

$45.28

RenaissanceRe Holdings / RNR

219.16

Source: Bloomberg

Abby Joseph Cohen

Professor of Business, Graduate School of Business,

Columbia University, New York

Company / Ticker

Price 7/10/24

Samsung Electronics / 005930.Korea

KRW87,800

SPDR Portfolio S&P 500 Value / SPYV

$49.12

National Vision Holdings / EYE

12.12

iShares FTSE 250 / MIDD.UK

GBP19.55

Source: Bloomberg

Sonal Desai

CIO and portfolio manager, Franklin Templeton Fixed Income,

San Mateo, Calif.

Company / Ticker

Price 7/10/24

Franklin High Yield Tax-Free Income / FHYVX

$8.98

Putnam Strategic Intermediate Municipal / PAMYX

14.05

Franklin Income / FRIAX

2.32

iShares Core Total USD Bond Market / IUSB

45.44

iShares 1-5 Year Investment Grade Corporate Bond / IGSB

51.38

Eaton Vance Emerging Markets Debt Opportunities / EADOX

7.84

Franklin Floating Rate Daily Access / FDAAX

7.74

ClearBridge Value Trust / LMNVX

128.42

Source: Bloomberg

Henry Ellenbogen

CIO and managing partner, Durable Capital Partners,

Chevy Chase, Md.

Company / Ticker

Price 7/10/24

Coupang / CPNG

$21.37

West Pharmaceutical Services / WST

321.35

Source: Bloomberg

Mario Gabelli

Chairman and CEO, Gabelli Funds, Greenwich, Conn.

Company / Ticker

Price 7/10/24

Atlanta Braves Holdings / BATRK

$40.53

National Fuel Gas / NFG

54.51

Campbell Soup / CPB

45.57

Source: Bloomberg

David Giroux

CIO, T. Rowe Price Investment Management and portfolio

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

Company / Ticker

Price 7/10/24

Aurora Innovation / AUR

$2.91

Danaher / DHR

242.20

Revvity / RVTY

106.69

Source: Bloomberg

Rajiv Jain

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

Company / Ticker

Price 7/10/24

TotalEnergies / TTE

$68.14

Petrobras / PBR

15.14

Shell / SHEL

72.93

SAP / SAP

202.29

Nestlé / NSRGY

103.54

Adani Enterprises / ADE.India

INR3,096.00

Adani Ports & Special Economic Zone / ADSEZ.India

1,487.80

ITC / ITC.India

451.45

PetroChina / 857.Hong Kong

HKD8.01

China Shenhua Energy / 1088.Hong Kong

34.55

Banco BTG Pactual / BPAC3.Brazil

BRR15.39

International Holdings / IHC.UAE

AED412.90

Nvidia / NVDA

$134.91

ASML Holding / ASML

1,098.95

John W. Rogers Jr.

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

Company / Ticker

Price 7/10/24

Paramount Global / PARA

$11.70

Mattel / MAT

16.31

Boyd Gaming / BYD

55.10

Madison Square Garden Entertainment / MSGE

34.80

Source: Bloomberg

William Priest

Executive chairman and co-CIO, Epoch Investment Partners,

New York

Company / Ticker

Price 7/10/24

Meta Platforms / META

$534.69

Broadcom / AVGO

1,744.69

Keyence / 6861.Japan

JPY75,830

Sony Group / 6758.Japan

14,845

Source: Bloomberg

Meryl Witmer

General partner, Eagle Capital Partners, New York

Company / Ticker

Price 7/10/24

Mercedes-Benz Group / MBG.Germany

€63.97

Rush Enterprises / RUSHA

$41.84

Source: Bloomberg

Any collection of stocks is more clearly understood when subjected to this yield-based (dog catcher) analysis, these Barron’s Mid-Year 2024 Pro Picks are perfect for the dogcatcher process.

Here is the July 17 updated YCharts data for 24 dividend paying stocks of 48 screened and the 1 living up to the dogcatcher ‘ideal’ in this collection. These made-up the Barron’s Mid-Yr 2024 Pro-Picks collection.

The Ides of March 2020 plunge in the stock market took its toll on all stocks over four and one-quarter 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.

July 2024 shows two glimmers of light from two stocks emerging as a dogcatcher ideal candidates. They were: Petrobras (PBR) in the top ten by yield and Paramount Global (PARA) just outside the top ten. PBR price settled at 9.26 times below the (declared) annual dividend payout from a $1K investment. Whereas. PARA’s price was just 1.35 times below its annual dividend from $1K invested.

Actionable Conclusions (1-10): Brokers Estimated Top Ten Barron’s Pro Mid-2024 Picks Might Net 19.46% to 35.09% Gains By July 2025

Five of the top-by-yield ten, Barron’s Mid-Yr 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 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 Mid-Year Pro Picks projected to July 17, 2025, by that reckoning, were:

Schlumberger Ltd (SLB) netted $350.86 based on the median of target estimates from 30 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 3% greater than the market as a whole.

Rush Enterprises, Inc. (RUSHA) netted $281.36 based on the median of target estimates from 2 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 2% greater than the market as a whole.

Petroleo Brasileiro SA Petrobras netted $278.90 based on the median of target estimates from 13 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 42% more than the market as a whole.

ASML Holding N.V. (ASML) netted $249.38 based on the median of target price estimates from 12 analysts plus dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 49% greater than the market as a whole.

West Pharmaceutical Services (WST) netted $242.10 based on estimates from 9 analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 1% less than the market as a whole.

National Fuel Gas Co (NFG) netted $216.34 based on estimates from 3 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 38% less than the market as a whole.

Salesforce, Inc. (CRM) netted $210.16 based on the median of target prices estimated by 45 analysts, plus estimated dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 29% greater than the market as a whole.

TotalEnergies SE (TTE) netted $208.19 based on the median of target estimates from 9 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 37% less than the market as a whole.

Broadcom Inc. (AVGO) netted $201.08 based on the median of target estimates from 38 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 17% greater than the market as a whole.

Nestle S.A. (OTCPK:NSRGY) netted $194.58 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 46% less than the market as a whole.

The average net-gain in dividend and price was 24.33% on $10k invested as $1k in each of these ten 2024 Barron’s Mid-Year Pro-Picks. This gain estimate was subject to average risk/volatility 2% 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 30 Barron’s Mid-Yr 2024 Pro 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 30 Barron’s Mid-Yr 2024 Pro Picks By Yield

Actionable Conclusions (11-20): Ten Top Stocks By Yield Are Dogs of Barron’s Mid-Yr 2024 Pro Picks

Top ten equities selected 7/17/24 by yield represented three of eleven Morningstar sectors and three ETFs.

First place was secured by the first of four energy sector members, Petrobras [1]. The other three placed second, third, and ninth, TotalEnergies SE [2], Shell plc (SHEL) [3], and Schlumberger Ltd [9].

Outside the sector spectrum, three exchange-traded funds penetrated the top ten Barron’s 2024 Mid-Yr Pro-Picked list in fourth, fifth and tenth places, iShares Core Total USD Bond Market ETF (IUSB) [4], and iShares 1-5 Year Investment Grade Corp Bond ETF (IGSB) [5], and SPDR® Portfolio S&P 500 Value ETF (SPYV) [10].

Sixth place was secured by the lone utilities representative, National Fuel Gas Co [6].

Finally, two consumer staples members placed seventh, and eighth: Nestlé SA [7], and Campbell Soup Co (CPB) [8] which completed the top ten Barron’s Mid-Year 2024 Pro-Picks for July.

Actionable Conclusions: (21-30) Ten Barron’s Mid-Year 2024 Pro Picks Showed 16.93% to 33.83% Upsides To July 17, 2025, With (31) One 0.44% 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 7.18% Disadvantage For 5 Highest Yield, Lowest Priced of Top Ten Barron’s Mid-Yr 2024 Pro Picks To July 2025

Ten top Barron’s Mid-Yr 2024 Pro-Picks were culled by yield for this monthly update. Yield (dividend/price) results verified by YCharts did the ranking.

As noted above, the top-ten Barron’s Mid-Yr 2024 Pro-Picked Dogs tagged 7/17/24, showed the highest dividend yields, represented ten of eleven sectors and ETFs in the Morningstar scheme.

Actionable Conclusions: Analysts Estimated 5 Lowest-Priced Of Ten Highest-Yield Barron’s Mid-Yr 2024 Pro Picks (33) Delivering 13.66% Vs. (34) 14.72% Net Gains by All Ten by July 2025

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Barron’s Mid-Yr 2024 Pro-Pix by yield were predicted by analyst 1-year targets to deliver 7.18% LESS gain than $5,000 invested as $.5k in all ten. The fourth lowest-priced Barron’s Mid-Yr 2024 Pro-Pick, Schlumberger Ltd, was projected to deliver the best net gain of 35.09%.

The five lowest-priced top-yield Barron’s Mid-Yr 2024 Pro-Picks for July 17 were: Petrobras; Campbell Soup; Schlumberger; iShares Core Total USD Bond Market ETF; SPDR® Portfolio S&P 500 Value ETF, with prices ranging from $14.95 to $50.49

The five higher-priced top-yield Barron’s Mid-Yr 2024 Pro-Pix for July 17 were: iShares 1-5 Year Investment Grade Corporate Bond ETF; National Fuel Gas; TotalEnergies SE; Shell PLC; Nestlé, whose prices ranged from $51.57 to $105.83.

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 two stocks ripe for picking at the start of the article, here is a repeat at the end:

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.)

Recent vs Fair Top Ten Barron’s Mid-Year 2024 Pro-Pick Prices

Since one of the top-ten Barron’s MY2024 Pro-Pick 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 nine non-ideal stocks must adjust to become fair-priced. Which means conforming to the standard of dividends from $1K invested exceeding the current single share price.

All 48 Barron’s Mid-Yr 2024 ProPixStocks Alphabetically

The analysis above focuses primarily on the top yield 23 Barron’s/Fortune NY2024 Pro-Picked selections. Below is the list of all 48 stocks, by alpha/numeric listing.

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 Pro-Pick 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 Mel Elías 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.

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