This article reports results from the NASDAQ Dividend Achievers 50 Index calculated as of June 14, 2013 projecting gain results one year hence. Seeking Alpha reader requests prompted this 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; NASDAQ Dividend Achievers; Champions; Contenders; Challengers; Carnevale's Power 25; Carnevale's Super 29.
Investor Glossary, posted 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. This report presumed dividend dog methodology applied to any index and compared that index side by side with the Dow.
Below, the Arnold NASDAQ Dividend Achievers 50 Index top dog selections for June were disclosed.
Dog Metrics Ranked 30 of the Achievers 50 Stocks by Yield
The NASDAQ Dividend AchieversTM 50 Index was chosen from here. Indxis, the publisher, (which recently licensed its product to NASDAQ) said Dividend AchieversTM 50 Index constituents were revealed as follows:
"Select US companies with at least ten consecutive years of increasing regular dividends must be listed on the NYSE or NASDAQ. Master Limited Partnerships(MLPs) and Real Estate Investment Trusts (REITs) are excluded from the Index. US Companies must have a minimum average daily cash volume of US$500,000 per day for the November and December prior to each Annual Reconstitution date. Rank the US companies in descending based on their current dividend yield as of the last trading date in December. Select the 50 US companies with the highest current dividend yield as of the last trading date in December."
Dividend Achievers top ten stocks paying the biggest dividends as of May/June included equities representing four of nine market sectors. The top stock as revealed by Yahoo Finance data, Vector Group Ltd. (VGR) was from the consumer goods sector. A second consumer goods firm, Altria Group Inc (MO), placed seventh on the list. The best yielding of four financial stocks, Mercury General Corp (MCY) took second on this list. The other three financial stocks fell into third, sixth, and eighth places: Old Republic International (ORI); United Bankshares, Inc. (UBSI); People's United Financial (PBCT). Three utility firms took fourth, ninth, and tenth places: PPL Corporation (PPL); Southern Company (The) (SO); Avista Corp. (AVA). The lone technology stock, AT&T Inc. (T) in the fifth slot completed the top ten Dividend Achievers.
Dividend vs. Price Results Compared to Dow Dogs
Relative strengths of the top ten NASDAQ Dividend Achievers dogs were graphed by yield below as of market close 6/14/2013 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.
Actionable Conclusion (1): Dividend Achievers Mixed as Dow Dogs Stay Bullish
NASDAQ Dividend Achievers top June dividend payers showed a mixed signal since April. Achievers dividend from $10k invested in each stock dropped 10% and aggregate single price of those stocks also dropped 12%.
For the Dow dogs, meanwhile, projected annual dividend from $1k invested in each of the top ten dropped over 2.2% since April, while aggregate single share price popped up over 13.6%. Dow dogs increased their overbought condition as aggregate single share price of the ten exceeded projected annual dividend from $1k invested in each of the ten by over $198 or 53%.
Since NASDAQ Dividend Achievers 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 find bargains.
Wall Street Wizard Wisdom Worked
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 Two (2): Analysts Calculate Over 7.4% Net Gain from Top 20 NASDAQ Dividend Achievers Dogs In 2014
Top twenty dogs from the NASDAQ Dividend Achievers index were graphed below to show relative strengths by dividend and price as of June 14, 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.
Yahoo projected a 5.8% lower dividend from $10K invested in this group while aggregate single share price was projected to increase over 3.7% 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 (3): Analysts Forecast 10 Dividend Achievers Dogs to Net 7.4% to 16.7% By June 2014
Ten probable profit generating trades revealed by Yahoo Finance for 2014 were:
- PPL Corp. netted $167.44 based on dividends plus mean target price estimate from fifteen analysts less broker fees;
- Vectren Corp. (VVC) netted $108.77 based on dividends plus the mean of annual price estimates from five analysts less broker fees;
- United Bankshares, Inc. netted $102.11 based on dividends plus mean target price estimate from thirteen analysts less broker fees;
- Middlesex Water Co. (MSEX) netted $98.25 based on dividends plus the mean of annual price estimates from two analysts less broker fees;
- Southern Company (The) netted $91.71 based on dividends plus mean target price estimate from fourteen analysts less broker fees;
- ConocoPhillips (COP) netted $89.13 based on dividends plus mean target price estimate from seventeen analysts less broker fees;
- AT&T Inc. netted $79.97 based on dividends plus the mean of annual price estimates from twenty-seven analysts less broker fees;
- Consolidated Edison, Inc. (ED) netted $$79.97 based on dividends plus mean target price estimate from fourteen analysts less broker fees;
- Altria Group Inc. netted $78.65 based on a mean target price estimate from twelve analysts combined with projected annual dividend less broker fees;
- SCANA Corp. (SCG) netted $74.62 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 9.7% 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.