Key Points
- The institutions are buying high-yielding dividend growth names like Consolidated Edison.
- Fastenal is another and is about to become a Dividend Aristocrat.
- Scotts Miracle-Gro is the highest-yielding name on this list but it comes with some risk.
With the outlook for 2023 in such dire straits, institutional activity and the support they give to a market will be more important than ever. The institutional activity in Consolidated Edison (NYSE: ED), Fastenal (NASDAQ: FAST), and Scotts-Miracle Gro (NYSE: SMG) suggest not only a high and growing level of support but solid support in high-yielding dividend growth stocks which is another criterion in high demand. The takeaway is that near-term headwinds may impact the price action in these names but long-term fundamentals are in place to deliver annualized double-digit total returns for investors.
Insiders And Institutions Buy Consolidated Edison
Consolidated Edison is one of the nation’s largest utility operators and a near-Dividend King with 47 years of consecutive annual dividend increases in its history. The stock is also a high-yielding 3.6% compared to the average 3.1% or so paid by the Utilities Sector so it is easy to understand why both the institutions and insiders have been buying the stock. The insiders don’t own much of the company, less than 0.4%, but they have been steady buyers of it for the last 3 consecutive quarters. The institutions own a much larger 65% and have been net buyers for 8 of the last 9 consecutive quarters.
The analyst's activity in Consolidated Edison was mixed in Q3 2022 but the takeaways are supportive of price action if not bullish. The analysts rate the stock a Hold which is up from a Reduce rating last year but the consensus price target is below the recent action. The mitigating factor is that recent price target changes have the stock trading closer to fair value than not and the last major change was to the upside. Turning to the chart, it looks like ConEd is trading in a wide range but bouncing from support with an upside bias in the market. This could take it up to the $90 or $100 level over the next several quarters if the trends don’t change.
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Fastenal, An Aristocrat In The Making
Fastenal is an S&P 500 member with 24 consecutive annual dividend increases and a 25th on the way. When it makes the next increase it will become a Dividend Aristocrat and be included in a new family of index-tracking stocks, funds, and derivatives. This alone will be supportive of the price action and the institutions are buying the stock as well. The institutions have been net buyers for 7 of the last 8 consecutive quarters and own about 78% of the stock as it is. In regard to the dividend, Fastenal is yielding about 2.5% with the shares near a 1-year low and the technical outlook changing.
The analyst's activity in Fastenal has been light so far in 2022 and helping to reduce volatility if nothing else. The consensus of 7 analysts is a Hold with a price target near $52 and both have been steady over the past year. Turning to the chart, the market has corrected from a high but recently bounced from major support. The price action may retest the lows but sideways action and not downward is the most likely scenario over the next few quarters.
The Scotts Miracle-Gro Company Is Growing A Dividend
The Scotts Miracle-Gro Company has had its share of ups and downs over the past 2 years but it has weathered the storm and grown its dividend. The yield is a high yield near 5% with shares trading at a multi-year low although there is some risk. The company’s gamble on the marijuana industry is not paying off and leading to some changes within the company. A dividend suspension is not expected but the company may slow or halt its dividend increases while it works on operational quality. As for the institutions, they have been net buyers of the stock for 5 of the last 6 quarters and own about 67% of the company.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Scotts Miracle-Gro (SMG) | $68.52 | +1.8% | 3.85% | -99.30 | Hold | $77.50 |
| Utilities Select Sector SPDR Fund (XLU) | $76.43 | +1.6% | 2.70% | 23.76 | Moderate Buy | $76.43 |
| Fastenal (FAST) | $74.82 | +1.1% | 2.09% | 37.22 | Hold | $77.40 |
| Consolidated Edison (ED) | $90.03 | +1.1% | 3.69% | 16.95 | Hold | $99.96 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
