Seeking Alpha
Dividend investing, growth, momentum
Profile| Send Message| ()  

This article reports results from Chuck Carnevale's Super 29 Index calculated as of April 4, 2013 projecting gain results one year hence. Seeking Alpha reader requests prompted this first installment in a new series of index-specific articles reporting dividend yield plus price upside results for twelve popular stock indices: Dow 30; S&P 500; Aristocrats; Russell 1000; NASDAQ; NYSE International 100; Mergent Dividend Achievers; Champions; Contenders; Challengers; Carnevale's Power 25; Carnevale's Super 29.

The online investors tutorial, Investor Glossary, recently offered this brief description of dividend dog methodology: "...[I]nvented to find the 10 stocks of the 30-stock Dow Jones Industrial Average with the highest yield (dividend / price) and invest equally in each, [t]he Dow dividend theory also requires that you repeat this process once a year.

Below, the Arnold Carnevale Super 29 Index top dog selections for April were disclosed.

Dog Metrics Ranked Carnevale Super 29 Index Stocks by Yield

April 2, 2012, Seeking Alpha blogger, respected stock analyst, and creator of Fastgraphs, Chuck Carnevale, published 29 Dividend Champions That Beat The Market, Inflation & 2 Recessions Since 2001. He listed top 29 blue chip dividend growth stocks that: (1) consistently raised dividends for 37 years (or more); (2) were at or below fair market value in 2001; (3) outperformed the S&P 500 on a total return basis.

Carnevale's Super 29 top ten stocks showing the biggest projected dividend yields as of April 4, 2013 included firms representing five of nine market sectors. Top stock revealed by Yahoo Finance data, was the lone representative of the service sector, Bowl America Class A (BWL.A). The only financial firm in the top ten, United Bankshares Inc. (UBSI) was second dog.

Third dog on the Super 29 list went to one of three basic materials firms, Northwest Natural Gas Co. (NWN). The other basic materials firms placed eighth and tenth, Nucor Corp. (NUE), and RPM International (RPM). Fourth place was filled by one of three utilities, Consolidated Edison (ED). The other utilities, Connecticut Water Service Inc. (CTWS), and California Water Service (CWT), were seventh and ninth on this top ten list. The balance of the top ten consisted of two consumer goods firms, Diebold Inc. (DBD) in fifth and Leggett & Platt Inc. (LEG) in sixth to complete the top ten Super 29 dogs.

Chuck's full list of 29 stocks has four service, two healthcare, six consumer goods, two financial, three basic materials, six industrial goods, four utilities, no technology, and one conglomerate representing eight of nine market sectors.

Dividend vs. Price Results Compared to Dow Dogs

Below is a graph of the relative strengths of the top ten Carnevale Super 29 dogs by yield as of market close 4/4/2013 compared to those of the Dow. Historic projected annual dividend history from $1000 invested in each of the ten highest yielding stocks and the total single share prices of those ten stocks created the data points shown in green for price and blue for dividend.

(click to enlarge)

Actionable Conclusion: Carnevale Super 29 Index Dogs Flashed Bear Market Signal as Dow Went Bullish

The Carnevale Super 29 top April dividend payers resumed a bearish course. In the past month aggregate single share ten dog price moved down 13%. Aggregate dividend from $10k invested in each of those top ten dogs popped up 1.1% since last month.

In the Dow dogs, meanwhile, annual dividend from $1k invested in each of the ten dropped over 1.1% since March, while aggregate single share price jumped over 5.3%. The Dow dogs extended their overbought condition as aggregate single share price of the ten continued to exceed projected annual dividend from $1k invested in each of the ten by over $121 or 32%.

Since Carnevale Super 29 dogs attempt to achieve all the blue chip high quality equivalents of the Dow list, an additional gauge of upside potential was added to the simple high yield metric used to cull bargains.

Wall Street Wizards Weighed In

One year mean target price set by brokerage analysts multiplied by the number of shares in a $1k investment were used to compare ten stocks showing the highest upside price potential into 2014 out of 20 selected by yield. The number of analysts providing price estimates was noted after the name for each stock. Three to nine analysts was considered optimal for a valid mean target price estimate.

Actionable Conclusion Too: Analysts Calculate Over 6.5% Net Gain from Top 20 Carnevale Super 29 Dogs In 2014

Top twenty dogs from Chuck Carnevale's Super 29 index were graphed below to show relative strengths by dividend and price as of April 4, 2013 and those projected by analyst mean price target estimates to the same date in 2014.

A hypothetical $1000 investment in each equity was divided by the current share price to find the number of shares purchased. The shares number was then multiplied by projected annual per share dividend amounts to find the dividend return. Thereafter the analyst mean target price was used to gauge the stock price upsides and net gains including dividends less broker fees as of 2014.

Historic prices and actual dividends paid from $1000 invested in the ten highest yielding stocks and the aggregate single share prices of those twenty stocks divided by 2 created data points for 2013. Projections based on estimated increases in dividend amounts from $1000 invested in the twenty highest yielding stocks and aggregate one year analyst target share prices from Yahoo Finance divided by 2 created the 2014 data points green for price and blue for dividends.

(click to enlarge)

Yahoo projected a 3.2% lower dividend from $10K invested in this group while aggregate single share price was projected to increase nearly 3.1% in the coming year. The number of analysts contributing to the mean target price estimate for each stock was noted in the last column on the charts. Three to nine analysts was considered optimal for a valid estimate.

Actionable Conclusion Three: Analysts Forecast 10 Carnevale Super 29 Dogs To Net 5.7% to 17% By April 2014

Ten probable profit generating trades revealed by Yahoo Finance for 2014 were:

(click to enlarge)

Nucor Corp. netted $170.11 based on dividends plus mean target price estimate from eight analysts less broker fees;

Connecticut Water Service netted $136.03, based on dividends plus a mean target price estimate by thirteen analysts less broker fees;

ABM Industries Inc. (ABM) netted $123.12 based on dividends plus mean target price estimate from twelve analysts less broker fees;

Illinois Tool Works (ITW) netted $110.75 based on a mean target price estimate from seven analysts combined with projected annual dividend less broker fees;

Stanley Black & Decker (SWK) netted $99.79, based on dividend plus mean target price estimates from six analysts less broker fees;

Mine Safety Appliances Co. (MSA) netted $90.84 based on estimates from twelve analysts plus dividends less broker fees;

RPM International netted $86.46 based on dividends plus the mean of annual price estimates from four analysts less broker fees;

Leggett & Platt Inc. netted $57.54 based on dividends plus mean target price estimate from four analysts less broker fees;

California Water Service netted $54.19 based on estimates from twelve analysts plus dividends less broker fees;

Procter & Gamble Co. (PG) netted $39.21 based on a mean target price estimate from nine analysts combined with projected annual dividend less broker fees.

The average net gain in dividend and price was over 9.6% on $1k invested in each of these ten dogs.

The stocks listed above were suggested only as decent starting points for your index dog dividend stock purchase research process. These were not recommendations.

Disclaimer: This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation or endorsement to buy or sell any security. Prices and returns on equities in this article except as noted are listed without consideration of fees, commissions, taxes, penalties, or interest payable due to purchasing, holding, or selling same.

Source: 10 Carnevale Super 29 Index Dogs Show 5.7% To 17% Net Gains In April