f

NEWSLETTERS

Five Bear-Market
Dividend Buys
To Whip Inflation

BY JOHN DOBOSZ
John
Dobosz
BIO
John Dobosz is editor of Forbes Premium  /doboszj
Income Report, which provides four new
income-generating options selling F /johndobosz
recommendations each week. Initial trades
are either buy writes or put sales on underlying  /forbesmoneymarkets
stocks selected for exceptional total return
potential. Follow-up covered call selling
recommendations are issued for long stock
positions after expiration. He is also editor of
Forbes Dividend Investor, which provides weekly
recommendations of high-yielding, value-priced
income stocks, REITs and MLPs.
Some bear markets move faster than others. Unlike the sudden shock of the S&P
500 Index plummeting 34% in less than one month in 2020 when the pandemic
triggered economic shutdown, this bear market has been an eight-month slide that
started last autumn.
The Russell 2000 Small Cap Index topped out on November 8, and the Dow
Jones Industrial Average and S&P 500 peaked two months later on January 3.
Small-caps and the Nasdaq went on to slip more than 32% from their highs, while
the Dow and S&P 500 fell 23% through mid-June.
Portfolios holding stocks with high
dividend yields have provided shelter

Long-term investors
from the storm, with WisdomTree High
Dividend (DHS) gaining ground on
welcome opportunities the year, and year-to-date declines

to buy stocks cheaply, of less than 1% for high-yield ETFs like

PowerShares High Yield Dividend
especially those that Achievers (PEY) and SPDR S&P 500 High

pay reliable and Dividend Low Volatility (SPHD). The old-

sizable dividends
school iShares Select Dividend (DVY) is
down 2.2% and the 4% yielding ALPS
Sector Dividend Dogs (SDOG) is down
3.4% since the start of 2022.
The dominant source of angst and uncertainty in the market surrounds the
Federal Reserve’s ongoing campaign of substantial interest rate hikes to combat
raging inflation and whether the monetary tightening throws the economy into
recession. Add to the mix a host of geopolitical risks and you have the recipe for
extreme volatility.

FORBES.COM/NEWSLETTERS 3
 Long-term investors welcome opportunities like these to buy stocks cheaply,
especially those that pay reliable and sizable dividends. The year ahead may be
terrible for stocks or we could be on the verge of the next bull market.
Regardless of what the stock market has in store in the next several months,
stocks have always gone up over time, through wars, pandemics, terrorist attacks,
recessions and depressions. It’s not too hard to hang on for capital gains if along
the way dividends are paying you 4%, 5% or more per year on your investment.
If you can afford to collect dividend checks and be patient, the five stocks
presented in this report are priced at levels that strongly suggest substantial future
appreciation. Don’t buy anything without doing your own research and determining
whether it’s suitable for your financial situation.
Stocks in the Forbes Dividend Investor portfolio yield 4.8% on average and have
returned -0.25% in 2022. Total return since yearend 2015, 2016, 2017, 2018 and 2019
is higher than any of the most popular dividend funds. Click here for instant access
to the FDI portfolio with three new buys in home heating, banking and a business
development company.

FORBES.COM/NEWSLETTERS 4
3M Company (MMM)
Market Cap: $74 billion
Yield: 4.6%
52-Week Range: $125.60-$203.21

Saint Paul, Minnesota-based 3M was founded in 1902 as Minnesota Mining and

Manufacturing, and today it’s a global conglomerate with 58% of its sales of
more than 60,000 products taking place outside of the U.S. 3M is organized
into four business segments. Safety and Industrial sells adhesives, tapes,
abrasives, automotive components and roofing granules. Transportation and
Electronics includes aerospace and transportation, Healthcare encompasses
medical and surgical supplies, and transdermal drug delivery. The Consumer

MMM

FORBES.COM/NEWSLETTERS 5
segment covers home care, home improvement, stationery and office products.
3M screams value by all measures that I consider, including price multiples of
sales, book value, earnings and cash flow. Even with a potential recession dead
ahead, revenue this year for 3M is expected to grow 1.2% to $35.8 billion, with
earnings up 5.5% to $10.67 per share, giving the stock a 12.2 forward price-earnings
ratio—30% below its five-year average P/E of 17.4. If 3M were to trade at this
average P/E ratio, it would be a $185 stock.
Another important ratio for value investors is enterprise value (market
capitalization plus debt) divided by earnings before interest, taxes, depreciation
and amortization. With enterprise value at 9.1 times Ebitda, 3M is priced 25% below
its five-year average EV/Ebitda ratio.
Expected cash flow this year is $8.69 per share, which easily covers $5.96 in
annual dividends. Over the past ten years, the quarterly dividend has grown 10%
annually to its current rate of $1.49 per share, and its 4.6% yield offers shareholders
a decent return while they wait for the market to ascribe a value to the shares
that’s more in line with history.

FORBES.COM/NEWSLETTERS 6
Intel (INTC)
Market Cap: $156 billion
Yield: 3.8%
52-Week Range: $35.54-$57.46

Intel trades at a 28% discount to its five-year average price-to-sales multiple

based on year-ahead sales. Even with diminished forecasts for coming quarters,
revenue this year is expected to rise 1% from 2021. Intel’s forward enterprise
value-to-Ebitda ratio of 5.5 is 22% below the 7.1 five-year average. Brilliant minds
like Intel founders Gordon Moore and Andy Grove are no longer be at the helm
of the company, but Intel’s leaders have managed to steer the semiconductor
supertanker successfully since its launch in 1968.

INTC

FORBES.COM/NEWSLETTERS 7
 Intel pays a quarterly dividend of $0.365 per share. Even as the chipmaker plows
back a staggering $0.26 of every dollar of sales into capital expenditures—like
building a new semiconductor foundry in Ohio—it still managed to generate free
cash flow of $2.39 per share over the past 12 months, which is more than ample to
cover annual dividends of $1.46 per share and to maintain 6% annual increases in
the payout, as it has done for the past decade. Dividend investors have been paid
well this century, with the quarterly dividend growing 15% annually since May 2000.

FORBES.COM/NEWSLETTERS 8
 Let John Dobosz Show You How
To Earn Extra Income!
Forbes Dividend Investor provides weekly
recommendations of high-yielding, value-priced
income stocks, REITs and MLPs that trade at
discounts to historical average multiples of price,
sales, cash flow and book value.

The strategy is to buy companies with sustainable and rising

dividends when yields are abnormally high and valuations
abnormally low, in order to achieve dual objectives of
superior income and total return.

Stocks in the Forbes Dividend Investor portfolio yield 4.8%

on average. Since its inception in 2012 the recommendations
made in Forbes Dividend Investor are up 319%. In 2021, the
model portfolio produced a total return of 25.5%.

With the country facing uncertain times and more

turbulence most likely ahead, now might be the perfect
time to add dividend-paying companies to your
investing strategy.

Click here to get started

LyondellBasell Industries NV (LYB)
Market Cap: $29 billion
Yield: 5.4%
52-Week Range: $83.09-$117.22

LyondellBasell is a major producer of polyethylene, the world’s largest producer

of polypropylene and the second-largest producer of propylene oxide. The
company’s chemicals are used in various consumer and industrial end products
such as automobile parts, surgical gowns, children’s toys, wind turbines and
water pipes. With offices in Houston, London and Rotterdam, LyondellBasell was
created in 2007 as the tie up of several companies, including Atlantic Richfield
and Germany’s Hoechst, which refine and produce plastic resins and other

LYB

FORBES.COM/NEWSLETTERS 10
specialty chemicals. Today it is one of the largest plastics, chemicals and
refining companies in the world.
Sales have grown 9.6% annually over the past five years and earnings growth
has been 12.9% a year. Revenue in 2022 is expected to rise 13.7% to $52.5 billion,
with earnings dipping 1.8% to $16.53 per share, giving LYB a price-earnings ratio of
5.4. That’s 37% below its five-year average P/E of 8.5. LYB also trades 40% below
its average price-sales ratio since 2016.
LyondellBasell yields a rich 5.4%, and free cash flow of $19.70 per share over the
past 12 months is more than four times $4.76 per year in regular dividends and leaves
room for more special dividends like the one for $5.20 per share just paid in June.

FORBES.COM/NEWSLETTERS 11
Ethan Allen Interiors (ETD)
Market Cap: $528.5 million
Yield: 6.1%
52-Week Range: $19.60-$28.04

Danbury, Connecticut-based Ethan Allen makes furniture and home accessories

that it sells through a network of retail stores and via wholesale networks.
Despite peppy growth, shares trade at substantial discounts to five-year average
valuation multiples on measures such as price- to-earnings, price-to-sales, price-
to-book value and price-to-cash flow.
Revenue this year is expected to grow 15% to $787.4 million, with earnings
jumping 48% to $3.51 per share, giving the furniture maker a 5.9 P/E ratio. That’s
56% below Ethan Allen’s five-year average P/E of 13.4 times year-ahead earnings.

ETD

FORBES.COM/NEWSLETTERS 12
 Ethan Allen has paid off all its nearly $200 million in long-term debt since 2010,
making the company debt-free today. Free-cash flow of $2.24 per share over the
past 12 months amply covers $1.28 in annual dividends. The company often pays
special dividends in addition to the regular quarterly payout of $0.32, which was
hiked 10% in the second quarter, and has grown 13% annually since Ethan Allen
started paying dividends in 1996.
In the current supply chain crunch halting the flow of many imported
consumer goods from China and throughout Asia, Ethan Allen enjoys a measure
of protection as it manufactures in North America, with production locations in
Vermont, New Jersey, North Carolina and Mexico.

FORBES.COM/NEWSLETTERS 13
Greif (GEF-B)
Market Cap: $2.4 billion
Yield: 4.5%
52-Week Range: $53.45-$71.30

Delaware, Ohio-based Greif produces a comprehensive line of rigid industrial packaging

products that include plastic drums, bulk containers, transit protection products and
water bottles. Greif is passing rising costs on to consumers, hiking prices 7% for its
protective packaging products used in shipping and storage. Revenue this year is
expected to rise 16% to $6.5 billion, with earnings jumping 36% to $7.61 per share.
At 8.1 times earnings, Greif trades at a 38% discount to its five-year average
P/E ratio. In fact, it trades at discounts to all five of the value metrics I evaluate to

GEF-B

FORBES.COM/NEWSLETTERS 14
assess value for stocks. If GEF-B were to trade at its average price-sales ratio since
2016 of 0.48, up from its current 0.39, it would be an $76 stock.
Greif’s free cash flow of $5.69 per share over the past 12 months provides a 206%
coverage ratio for $2.76 annually in quarterly dividends, good for a 4.5% yield. The
class B shares of Greif increase and decrease dividends in the same proportion as
A shares, and the dividend will always be 1.5 times higher than those on A shares.
They are also the voting shares of the corporation.

FORBES.COM/NEWSLETTERS 15