This article reported results from consumer goods sector stocks tracked down as of closing prices June 28 using dividend dog methodology. This report series started in the fall of 2011 by applying dog dividend methodology to reveal possible buy opportunities in each of 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).
Briefly, Investor Glossary, an online investor primer, recently offered this 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.
Recently the author has supplemented dow dividend dog theory picks from Yahoo sectors with one year mean target price estimates reported by yahoo from broker analysts.
Below, the Arnold ComGo Selections for May/June were disclosed.
Dog Metrics Flushed Out Ten Top Consumer Goods Stocks by Yield
Top ten consumer goods stocks showing the biggest dividend yields per the Yahoo screen as of June 28 represented six industries. Tops was Vector Group (NYSE:VGR), one of five firms from the cigarettes industry. Other top ten dogs in the same cigarettes industry group were: Reynolds (NYSE:RAI) third; Lorillard, Inc (NYSE:LO), fifth, Altria (NYSE:MO) sixth; Philip Morris International (NYSE:PM) eighth. The one personal products firm listed, CCA Industries, Inc. (NYSEMKT:CAW) placed second. The only business equipment firm listed, Pitney Bowes (NYSE:PBI) was fourth dog. Ennis, Inc. (NYSE:EBF) an office supplies firm was slotted seventh. Representing auto parts, Superior Industries International (NYSE:SUP) was eighth. Packaging firm, Sonoco Products Co. (NYSE:SON) placed tenth to complete the top ten June ConGo dog list by yield.
Dividend vs. Price Results Compared to Dow Dogs
The graph below of the relative strengths of the top ten consumer goods dogs by yield as of market close 6/28/2013 compared to those of the Dow was prepared to show projected annual dividend history from $1000 invested in each of the ten highest yielding stocks and the total single share price of those ten stocks created the data points shown in green for price and blue for dividends.
Actionable Conclusion (1): ConGo Dogs Dropped in Dividend and Price as Dow Stayed Bullish
The May/June consumer goods collection of dividend payers concluded a bullish price course set since January. Since April total single share price dropped (bearishly) 5.4%. Aggregate dividend from $10k invested in each of the top ten ConGo stocks, also dropped (bullishly) since April at a rate of 5.4%
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%. The Dow dogs bull run 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 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 sniff out bargains.
Wall Street Wizard Wisdom Was Weighed
One year mean target price set by analysts multiplied by the number of shares in a $1k investment were used to compare nine 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 See 8.18% Net Gain from Top 20 Dogs Come 2014
Top twenty dogs for the consumer goods sector were graphed below to show relative strengths by dividend and price as of June 28, 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 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 4.2% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by 5.5% 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 projection estimate. Estimates provided by one analyst were not applied (n/a).
Actionable Conclusion Three (3): Analysts Forecast 2014 ConGo DiviDog Stock Net Gains of 5.6% to 18.9%
Ten probable profit generating trades revealed by Yahoo Finance for 2014 were:
- Pitney Bowes netted $189.13, based on dividends plus a mean target price estimate by four analysts less broker fees;
- Philip Morris International netted $162.98 based on the mean of target price estimates from fifteen analysts plus dividends less broker fees;
- Ennis Inc. netted $140.77, based on dividends plus mean target price estimate from two analysts less broker fees;
- Unilever NV (NYSE:UN) netted $140.77, based on estimates from three analysts combined with projected annual dividend less broker fees;
- Unilever plc (NYSE:UL) netted $108.06 based on estimates from three analysts plus dividends less broker fees;
- Procter & Gamble (NYSE:PG) netted $103.91 based on dividends plus a mean target price estimate from seventeen analysts less broker fees;
- Altria Group netted $95.18 based on a mean target price estimate from eleven analysts combined with projected annual dividend less broker fees;
- Mattel, Inc. (NASDAQ:MAT) netted $79.98 based on estimates from ten analysts plus dividends less broker fees;
- General Mills Inc. (NYSE:GIS) netted $58.30 based on estimates from eighteen analysts plus dividends less broker fees;
- Kimberly Clark Corporation (NYSE:KMB) netted $56.08 based on estimates from seventeen analysts plus dividends less broker fees.
The average net gain in dividend and price less broker fees was over 11.4% on $1k invested in each of these ten dogs.
The stocks listed above are suggested only as decent starting points for your consumer goods dividend stock purchase research process. These are not recommendations.
Disclosure: I am long DD, GE, INTC, JNJ, MCD, PFE, T, VZ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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.