Barron's 23 Better Bets (BBB) for Safer Dividend Investments in August

The article discusses the Barron's 23 Better Bets (BBB) report, which highlights safer dividend buys than T-bills. Out of the 16 highest-yielding stocks, eight are considered "safer" and are recommended for purchase. The report also notes that half of the BBB stocks are too expensive or have skinny dividends.

Investors seeking reliable income streams have a new set of recommendations from Barron’s 23 Better Bets (BBB) report. The August edition of the report highlights eight "safer" dividend buys among the 16 highest-yielding stocks, offering a compelling alternative to T-bills. Half of the BBB stocks, however, are deemed too expensive or have insufficient dividends, leaving investors with a clear choice.

According to the report, eight of the 16 highest-yielding BBB stocks are considered "safer" for purchase. These include Conagra Brands (CAG), Verizon (VZ), Bristol-Myers Squibb (BMY), Kimco Realty (KIM), Truist Financial (TFC), UDR Inc (UDR), Kinder Morgan (KMI), and Regions Financial (RF). These stocks are recommended for their ability to generate annual dividends that exceed their single share price, a key criterion for the "dogcatcher" ideal.

The report also notes that five of the top-ten BBB dogs show less than ideal status because their share prices exceed the projected annual dividends from $1,000 invested. This highlights the importance of selecting stocks whose dividends from $1,000 invested are greater than their single share price. The remaining eight BBB stocks have prices exceeding the dividend returned from $1,000 invested, with Truist Financial being the closest to the mark at $2.28.

Broker expectations for the top-ten BBB dogs by August 2026 range from 13.85% to 34.08% net gains, with Kinder Morgan (KMI) projected to net $192.76 and ONEOK (OKE) projected to net $340.83. The average net gain in dividend and price is estimated at 18.63% on $10,000 invested, with an average risk/volatility 36% less than the market as a whole.

The report also identifies five of the twenty-three BBB dogs with negative free cash flow margins, which are considered unsafe to buy. These include LyondellBasell, Federal Realty, Kinder Morgan, Williams Companies, and Entergy. The report advises investors to look for pull-back opportunities in these stocks to improve their dividend yield.

Investors are encouraged to monitor market conditions and be prepared to act when their targeted stock price moves to a sweet spot. The report notes that price drops, dividend increases, or dividend splits could get all ten BBB dogs back to "fair price" rates, making them more attractive for investors.

References:
[1] https://seekingalpha.com/article/4818176-8-safer-dividend-buys-in-barrons-23-better-bets-than-t-bills-august-report