This article reports tantalizing tales of technology sector stocks tallied as of market closing prices April 26 using the Dow dividend dog methodology. This report series started in the fall of 2011 using the dog methods to reveal possible buy opportunities in each of the eight major market sectors listed by Yahoo Finance: basic materials (BasMats), consumer goods (ConGo), financials (Fins), healthcare (Heal), industrial goods (IndiGo), services (Svcs), technology (Tec), and utilities (Utes).
Below, the dog theory picks reporting the highest yield (dividend / price) from Yahoo sectors were supplemented with one year mean target price estimates from broker analysts. Below then are my Arnold technology sector selections for April.
Dog Metrics Tag Ten Top Technology Stocks
The top ten technology sector stocks from Yahoo Finance showing the biggest dividend yields as of April 26 represented five industries. The top technology sector stock, Windstream Corporation (NASDAQ:WIN), was one of five Telecom services - domestic representatives. The others place fourth, fifth, eighth, and ninth: Frontier Communications Corporation (NASDAQ:FTR); Consolidated Communications Holdings (NASDAQ:CNSL); CenturyLink, Inc. (NYSE:CTL); Hickory Tech Corp. (HTCO). The second dog, NTELOS Holdings Corp. (NASDAQ:NTLS), was the lone wireless technology firm. France Telecom (FTE), in third was one of two Telecom services - foreign representatives. The other foreign firm, Telecom Corporation of New Zealand Limited (OTCPK:NZTCY), placed sixth. One semiconductor - broad line firm, Intersil Corporation (NASDAQ:ISIL), was slotted seventh. The lone diverse communication firm on the list was Telecom Argentina (NYSE:TEO), at number ten.
Dividend vs. Price Results Compared to Dow Dogs
Below is a graph of the relative strengths of the top ten technology dogs by yield as of market close 4/26/2013 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 dividends.
Actionable Conclusion (1): Technology Dogs Made Bear Moves as Dow Got Bullish
Technology dividend payers in April showed a well-defined bear sign with a higher dividend from $1k invested in each of the top ten stocks reported, while the aggregate single share price of those ten plunged. Dividends increased at a rate of 10.8% after March while the total single share price dropped 20.3% in that period.
The Dow dogs, meanwhile, remained totally bullish as prices popped up 7% and dividends sank 3.8%. The Dow extended an overbought condition in which the aggregated single share price exceeded the dividend from $1k invested in each stock by $140.52 or 38%.
Since sector dogs are not 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 flush out initial bargains.
Wizards of Wall Street Weighed In
One year mean target price set by analysts multiplied by the number of shares in a $1k investment were used to compare seven 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 were considered optimal to provide valid mean target price estimates.
Actionable Conclusion Too (2): Analysts Predicted 22.5% Net Gain from Top 20 Technology Dogs Come 2014
The top twenty dogs for the technology sector were graphed below to show relative strengths by dividend and price as of April 26, 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 the projected annual per share dividend amount to find the dividend return. Thereafter, the analyst mean target price was used to gauge the stock upsides to 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 the 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.
Yahoo projected a 7% lower dividend from $10K invested in this group while the aggregate single share price was projected to increase by over 7.1% 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 were considered optimal for a valid projection estimate. Estimates provided by one analyst were not applied (n/a).
Actionable Conclusion Three (3): Analysts Augur Seven 2014 Technology DiviDogs to Net 10.9% to 228.8% Gains
Seven probable profit generating trades revealed by Yahoo Finance for 2014 were:
- Partner Communications Co. (NASDAQ:PTNR) netted $2288.61, based on dividends plus a mean target price estimates by three analysts less broker fees;
- EarthLink Inc. (NASDAQ:ELNK) netted $512.49, based on dividends plus mean target price estimate from seven analysts;
- Windstream Corporation netted $271.12, based on dividends plus mean target price estimate from fourteen analysts less broker fees;
- Frontier Communications netted $215.29, based on a mean target price estimate from thirteen analysts combined with projected annual dividend less broker fees;
- Garmin Ltd. (NASDAQ:GRMN) netted $196.30, based on dividend plus a mean target price estimate from seven analysts less broker fees;
- Microchip Technology Inc. (NASDAQ:MCHP) netted $109.49, based on estimates from fifteen analysts plus dividends less broker fees;
- Intersil Corporation netted $98.34, based on dividends plus the mean of annual price estimates from fifteen analysts less broker fees.
The average net gain in dividends and price minus broker fees was 52.7% on $1k invested in each of these seven tech dogs.
The stocks listed above are suggested only as decent starting points for your sector dividend stock purchase research process. These are 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.