In brief:
- JPMorgan unveils its 50 stock picks for 2021
- S&P 500 should rally to 4,500 next year
- In this article, we analyze the JPM dividend stock picks for 2021
S&P 500 index to 4,500 in 2021?
JPMorgan is very bullish on stocks in 2021. JPM’s US Equity Strategist Dubravko Lakos-Bujas says the benchmark S&P 500 should rally another 9% to 4,000 early next year. The benchmark index could climb to 4,500 by the end of the year. This is an upside potential of +20% from today’s levels and triple the forecast of Bank of America’s which is 6% for the S&P 500.
JPM dividend stock picks for 2021
JPMorgan’s top 50 growth and value stock picks for 2021, contains 13 dividend stocks worth considering and even some dividend aristocrats stocks. The table below lists some key-data and in ascending order those dividend stocks and how much upside/downside they offer based on Wallstreet’s analysts’ end-of-2021 price targets, based on Friday’s close.
Source: JPMorgan Chase, MoneyInvestExpert analysis
Below more details on the dividend aristocrats selected by JPM Chase for 2021.
Caterpillar
Ticker: CAT
Sector: Industrials
Strategy: Value
Dividend Aristocrat: Yes
JPM Case: “We believe CAT’s earning power and FCF conversion over this upcoming cycle, supported by a new US construction cycle, continue to merit our Overweight rating. … we view CAT as the biggest winner of a potential federal infrastructure bill.” — Ann Duignan (Source: JPMorgan Chase)
Our Valuation: Caterpillar’s current dividend yield of 2.25% is -28% below its 5-year average. The 5-year average dividend yield is 3.12% (see red-line in the chart). This indicates the stock looks overvalued today.
Price target: $173.75
Upside to target: -4%
Coca-Cola
Ticker: KO
Sector: Consumer staples
Strategy: Value
JPM Case: “We believe KO still offers investors a unique combination of top-line growth and gross margin expansion.” — Andrea Teixeira
Dividend Aristocrat: Yes
Our Valuation: Coca-Cola Company’s current dividend yield of 3.02% is -5% below its 5-year average. The 5-year average dividend yield is 3.17% (see red-line in the chart). This indicates the stock looks reasonably valued today.
Price target: $57.24
Upside to target: 7%
Abbvie Inc
Ticker: ABBV
Sector: Healthcare
Strategy: Value
JPM Case: “ABBV remains one of our favorite names in the group as we see ongoing upside from Skyrizi and Rinvoq (where we highlight a number of line extension catalysts over the next 12 months) as well as an improving mid/late-stage pipeline.” — Chris Schott
Dividend Aristocrat: Yes
Our Valuation: AbbVie Inc.’s current dividend yield of 4.43% is 20% above its 5-year average. The 5-year average dividend yield is 3.69% (see red-line in chart). This indicates the stock may be undervalued today.
Price target: $115.71
Upside to target: 11%
Other Sources of Dividend Investment Ideas
There are several lists to quickly screen for businesses that regularly pay rising dividends.
- The Dividend Aristocrats Index is based on 64 companies part of the S&P 500 and with 25+ years of consecutive dividend increases.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of less than 20 businesses with 50+ years of consecutive dividend increases.
- The MoneyInvestExpert Defensive Aristocrats is a performance-based top-10 selection of the Dividend Aristocrats to outperform the market in the long-term.
- Portfolio lists like the Berkshire Hathaway Portfolio or Bill Gates’stock portfolio can be a source.
- For the European focused investors, there is also the list of European Dividend Aristocrats.
- Dividend Champions are not necessarily members of the S&P 500 index, have increased their dividend for 25 or more consecutive years.
- 100+ years of dividend, the list of stocks that pay over 100 years of dividend can be a list of inspiration.
- Blue Chips stocks from the US or the European ones.
Next to selecting the right dividend stocks, important principles for successful long-term investing are Disciple, Diversification, Defensive & indeed Dividend. Read more about this in our free e-book.
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