Results from the Morningstar/YChart (M/Y) technology sector tallied as of market closing prices June 28 compared with analyst mean target gain results one year hence featured Himax Technologies (HIMX), a Taiwan semiconductor-specialized industry firm, showing a 60.92% price upside.
The chart above used one year mean target price set by brokerage analysts matched against June 28 closing price to compare ten sector 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 for a valid mean target price estimate.
This report series started applying dog dividend methodology in February prompted by Seeking Alpha reader requests. It complemented reports of possible dividend yield based buy opportunities from eight major market sectors as listed by Yahoo Finance posted since the fall of 2011.
So, responding to both the Seeking Alpha reader request and Ycharts.com migration to an eleven sector list, this report series provided three actionable conclusions about the highest yield (dividend / price) stocks from the Morningstar/YChart (M/Y) sectors: basic materials; communication services; consumer cyclical; consumer defensive; energy; financial services; healthcare; industrials; real estate; technology; utilities.
Note the Arnold M/Y Tech selections for May/June:
Dog Metrics Point Out Top M/Y Technology Dogs
Top ten technology sector stocks from YCharts screens showing the biggest dividend yields June 26 represented seven industries. The top technology sector dog, Nam Tai Electronics (NTE), was one of two electronic components representatives. Venture Corporation (OTC:VEMLY) the second electronic components firm placed third. Two internet content firms, SouFun (SFUN), and United Online (UNTD), placed second and seventh. Indra Sistemas, S.A., Serie A (OTC:ISMAY) and Compuware Corporation (CW) in the fourth and tenth slots represented the software applications industry. Two semiconductor firms placed fifth and sixth: Intersil Corporation (ISIL), and Silicon Motion Technology Corporation (SIMO). Finally, Giant Interactive Group (GA) an electronic gaming firm took seventh place. And Garmin (GRMN) a scientific instruments firm placed ninth to complete the top ten m/y tech dogs.
Dividend vs. Price Results Compared to Dow Dogs
Below a graph of the relative strengths of the prime ten m/y technology dogs by yield as of market close 6/28/2013 was compared to a graph 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): M/Y Technology Dogs & Dow Were Both Bullish
M/Y technology dividend dogs took a very bullish price course as aggregate single share price lurched up 60% since April. May/June Dividend from $1k invested in each of the top ten m/y tech stocks, dropped Down at a rate of 25.7% last month. This bullish change was primarily caused by the ascendancy of new tech stocks to the top tier in the M/Y screen.
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 pull out initial bargains.
Actionable Conclusion Two (2): Wall Street Wizard Wisdom Was Weighed to Gauge a 16.34% Net Gain from Top 20 Tech Dogs Come 2014
Top twenty dogs for the M/Y technology sector were graphed below to show relative strengths by dividend and price as of June 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 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 of $20 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 9.9% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by over 11% 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 10 Top Gain M/Y Technology Dogs to Net 10.58% to 63.7% Come 2014
Ten probable profit generating trades revealed by Yahoo Finance for 2014 were:
- Himax Technologies netted $637.09 based on estimates from four analysts plus dividends less broker fees;
- Silicon Motion Technology netted $234.20 based on dividends plus the mean of annual price estimates from five analysts less broker fees;
- SouFun netted $321.66 based on dividends plus a mean target price estimate from four analysts less broker fees;
- STMicroelectronics (STM) netted $301.47, based on dividends plus a mean target price estimate from five analysts less broker fees;
- Compuware Corporation (CPWR) netted $237.25 based on mean target price estimates from six analysts plus dividends less broker fees;
- Landauer Inc. (LDR) netted $205.42, based on dividends plus a mean target price estimate from two analysts less broker fees;
- American Software, Inc. (AMSWA) netted $176.78, based on dividends plus a mean target price estimate from two analysts less broker fees;
- Comtech Telecommunications Corporation (CMTL) netted $166.31 based on dividends plus the mean of annual price estimates from five analysts less broker fees;
- Computer Programs & Systems, Inc. (CPSI) netted $128.15, based on dividends plus a mean target price estimate from eight analysts less broker fees;
- Intersil Corporation (ISIL) netted $63.12 based on one year target price estimates from fifteen analysts plus dividends less broker fees.
The average net gain in dividend and price was 27.14% on $1k invested in each of these ten top tech dogs.
The stocks listed above were suggested only as decent starting points for your M/Y sector 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.