Dividend Stocks From Aristocrats to Safe and High Yields

By pjain      Published April 26, 2020, 8:39 p.m. in blog Invest   

Safer but not Aristocrats

Look to comfort foods and addictions

Keep to the fundamentals that people require while at home...food, entertainment, cable or Internet, phones and those sin items..chocolate, beers and wine. People will continue to smoke since they are addicted. Yup some slow down but there will always be required

Focus on Dividend ETFs and Indexes

  • AAII Dividend Investing portfolio.

Dividend aristocrats by Sector

  • Note: @= 53 dividend aristocrats - have increased their dividends every year for at least 25 straight years.
  • 90% are L-cap stocks
  • y=1.9% as of Feb'2020 - must have risen as Covid-19

Consumer Foods

ADM r5 @ M20b y4% pay60% de=0.5 5y$-5%e-9% c36 b34


CAH y3.8%

SJM y3.4%

KO x @ M200b y3.6% pay87% de=2.3 5y$-4%e+5% c45 b42.5 m 37

HRL x @ M=26b y2% p46% de=.05 5y$.5%e10% c46 b43 m40

MKC x @ M=21b y1.6% p44% de=1.3 5yr$5%e10% c154 b147 m130

PEP r5 @

SYY x @

WMT phe @


Consumer Staples

BF.B @

Brown Forman


CL @

PG @




LEG @3.24% furnishings

  • leggett & Platt

MDP Publish y7%





MO x - us tobacco\


Travel, Hotels, Gambling - risky on Covid-19

Theaters Xx

MCS X y5.4% ytd-60%

Marcus has low” risk of cutting dividends, closed all its theaters so it isn’t generating any revenue. But the company owns 62% of its theaters, giving it an advantage over competitors. He sees a low risk to the dividend being cut given the significant flexibility in cap-ex spending with the company’s owned theaters (that could make the annual cash flow shortfall minimum).

CNK X y12% ytd-65% de-1.5 pay=85%

Cinemark Holdings medium risk of div cut, is another theater operator with no revenue as long as its theaters are closed. estimates the company’s 2020 free cash flow won’t cover its dividend.

NCMI X y25% ytd-60%

• National CineMedia medium risk of div cut, produces pre-show advertisements used in movie theaters, so it is earning no revenue as theaters remain closed. estimates the company’s free cash flow this year will be less than its dividend payout.

AMC X y=?3.3% ytd=-50%

Cut its dividend by 85% last month. But B. Riley FBR projects that free cash flow will still not cover this year’s remaining payout.

Theme Parks

SIX x y=7% ytd-70%

Six Flags Entertainment medium-high risk of div cut,


FUN y16.5% ytd-60%

Cedar Fair - all parks closed - NO REVENUE - Even if the company is able to reopen theme parks in mid-May, B. Riley FBR projects its 2020 free cash flow will only cover half the dividend.

Luxury Goods - RVs, Motorcycles


Luxury Goods - Marine

BC y2.7% ytd-40%

Brunswick low” risk of cutting dividends, has suspended production of boats and engines, but has continued to produce parts and accessories. Wold sees little risk to the dividend because of the company’s efforts to reduce debt and cut expenses before the coronavirus crisis, and also because his free cash flow projections for 2020 and 2021 are well above the dividend.

MPX y6% ytd-40%

• Marine Products hasn’t cut production, but B. Riley FBR expects a 15% decline in sales over the next 12 months, and another 10% decline over the subsequent 12-month period. The firm expects free cash flow to cover the dividend this year and next year. However, “a potential recession could drive the company’s board to take another look at the dividend,” Wold wrote.

Media, Advertising

  • more appealing to own the ad networks, like Google and Facebook - more growth
  • Ad agencies at risk as TV\, digital is automated, also direct and automated placements reduce need for them!
  • Ad networks and big advertising/PR/marketing services agencies, but they are generally economically sensitive

WPP top

OMC 2ndAd

Why would I buy a $75 stock not really going up much down the road with a 2.5% Div..

Omnicom Group the giant advertising agency conglomerate built on three core advertising agencies (including BBDO and DDB) who merged in the mid-1980s to form the group, which has since expanded, sucked in more agencies and services — Omnicom and Publicis tried to merge but it fell through.

Omnicom has indeed raised the dividend very aggressively in recent years on the back of strong earnings growth, helping the stock to double in the last five years and maintain, yes, a pretty healthy payout ratio (it is in the 40-50% range, where it has mostly been since they resumed dividend growth in 2010). They actually paid dividends before 1990, too, according to their financials, but they were paltry — they raised it a few times over the years, but not routinely every year as so many companies like to do (and as so many dividend growth investors like to see), until 2010 when they started bumping it more sharply as we emerged from the financial crisis… the payout was 60 cents a year in 2009, before the hiking began, and is at $2 a year now and will likely, it seems, be lifted again at some point in the next couple quarters. Likewise, the trailing earnings per share has gone from about $2.50 four years ago to $4.20 today.

CORE GROWTH : The 1990s were spectacular for Omnicom as it grew during the heady internet days, but more recently, for the last 15 years or so, it has more or less done as well as the S&P 500 — though with a lot more volatility — and, as with the S&P, close to half of that performance has come from dividends. So it might not sound like a staid, stable stock, and it’s certainly had some wild moves over the years, but over time it’s done as well as the market and, usually, slightly better.

FCF: Free cash flow is not terribly impressive over time, so I’m not sure why they focused on that in the ad — free cash flow per share for Omnicom is about the same as it was five and ten years ago — but earnings growth has been good, so that has continued to drive the stock higher.


IPG Interpublic Group

Interpublic (IPG), which is about half the size of Omnicom, has a considerably lower return on equity and a similar dividend payout ratio and yield, but has much higher earnings growth last quarter and trades at a PE of 25, versus 18 for OMC. Both are growing, IPG much less steadily but (on average) faster.

Durables and Real Estate



GPC 3.1%



ABBV @ 5%







WBA @ 3.4%

Materials and Chemicals

AMCR y4.5% containers/pkg



NUE @ 3.1%


PX @


---- Energy, Oil, Gas

  • Oil is a YIELD trap - WTI at $20 - could go single digits - very little storage, us is landlocked!

CVX @ y7.5% ytd-60%

  • More conservative management - did not payup like oxy for anadarko - earliest to cut capex
  • Chevron has the strongest positioning in the integrated oil sector," with one of the lowest production break-even points and "the strongest balance sheet by far.

  • Safest div in oil? continued to raise their annual dividends through the 2008-2009 financial crisis. Both managed to do the same when oil pries crashed 67%, from a high (for that cycle) of $107.68 on June 13, 2014 through a cycle bottom of $26.05 on Feb. 11, 2016.

Chevron paid out $9b in dividends in 2019.

  • Steal at discounted prices because of the companies’ high quality. Pavel Molchanov, an analyst with Raymond James, said two weeks ago that it would be “virtually unthinkable” for either company to cut their dividend.

XOM x @ y9.5% ytd-60%

  • Safest div in oil? continued to raise their annual dividends through the 2008-2009 financial crisis. Both managed to do the same when oil pries crashed 67%, from a high (for that cycle) of $107.68 on June 13, 2014 through a cycle bottom of $26.05 on Feb. 11, 2016.

  • Exxon paid $14.65 billion in dividends during 2019,

---- Utilities

ED R5 @ 3.4%

Eversource Energy

Xcel Energy


WEC Energy Group


Public Service Enterprise Group

DTE Energy


NFG National Fuel Gas y3.9%


SKT x 9% tangierOutlets

O x 3.7%

NNN x y3.85%

FRT @ 3.3%



T @

VZ - not aristocrat - may be safer than T

Insurance - less economic activity, may benefit as less claims in Covid-19


ORI y3.6% titleIns

Financials, Regionals - smallBiz hurt bad, NMI\ not active traders



PBCT y4.35%

CFR y3% Cullen/Frost Bankers

OZK 3.4%

UBSI y3.8%

Financials Asset managers - avoid - hurt move to passives



BEN y4.3%

---- Industrials and Defense

MMM @ 3.2%




GD @









UPS class B


Tech, Semi with Divs

DLB y1.6% ytd-22%

Dolby Laboratories can “push through any potential spending slowdown” because its Dolby Vision and Dolby Atmos systems have become “de facto standards” as the company has achieved an “annual doubling of volumes” for the past three years.

XPER-TIVO merger X r5 y6% ytd-30% M=0.7b inc=-65m/$280m de=0.6 5yr0% e-20%

Xperi Semi licensing audio/radio - imax * medium risk of div cut, sees low” risk of cutting dividends. “multiple upside scenarios,” and also wrote that B. Riley FBR’s free cash flow projections are “well ahead” of where they need to be to cover annual dividend payments.

IDCC y3.1% ytd-20%

  • InterDigital ~90% license revenues are derived from fixed-fee license agreements — mainly with Apple, Samsung and LG — that are not impacted by unit volumes or timing


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