Results from Yahoo Finance tallied as of market close prices July 25, compared with analyst mean target price projections one year hence showed Corrections Corporation of America (CXW) a management services industry firm from the services market sector locking up a 33.7% price upside to lead the Russell 1000 Index. Apparently managing prisons can be profitable.
The above chart showed one year mean target price set by brokerage analysts matched against July 25 closing price to compare 10 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 article reported results of the Russell 1000 Index as one of 14 in a series of index-specific articles devoted to dividend yield and price upside results. Prompted by Seeking Alpha reader requests, the series has supplied results for these stock indices: Dow 30; Barron's 15 Gems; Russell 2000; S&P 500; S&P Aristocrats; Russell 1000; NASDAQ; NYSE International 100; Mergent Dividend Achievers; Champions; Contenders; Challengers; Carnevale's Power 25; Carnevale's Super 29.
This report presumed yield (dividend / price) dividend dog methodology applied to any index and compared that index side by side with the Dow. Below, the Arnold Russell 1000 Index top dog elections for July were disclosed step by step.
Dog Metrics Parsed Russell 1000 Index Stocks by Yield
Russell Investments states that the Russell 1000 Index offers investors access to the extensive large-cap segment of the U.S. equity universe, representing approximately 90% of the U.S. market.
Seven of the top 10 stocks in this index paying the big dividends since June were financial sector firms: American Capital Agency (AGNC) led the financials taking the top five slots. Hatteras Financial Corporation (HTS); Annaly Capital Management Inc. (NLY); Two Harbors Investment (TWO); Chimera Investment Corp (CIM) followed in second through fifth place. Two technology firms captured the six and eight spots: Windstream Corp (WIN), and Frontier Communications (FTR). The only basic materials firm, Seadrill Limited (SDRL) was 10th. The remaining two financial representatives took the seventh and ninth slots: MFA Financial Inc (MFA), and Ares Capital Corp (ARCC) and completed the Russell 1000 top 10 dogs list.
Dividend vs. Price Results Compared to Dow Dogs
Below is a graph of the relative strengths of the top 10 Russell 1000 dogs by yield as of market close 7/25/2013, compared with those of the Dow. Historic projected annual dividend history from $1000 invested in each of the 10 highest-yielding stocks and the total single share prices of those 10 stocks created the data points shown in green for price and blue for dividend.
Actionable Conclusion: Russell 1000 Dogs Wander as Dow Dogs Retreat
The July Russell 1000 collection of dividend payers dithered showing a mixed signal as dividends from 1K invested in each and aggregate single share price of the 10 both increased. In the past month Russell top 10 dog dividend increased over 9% while the price popped up 10%.
For the Dow dogs, meanwhile, annual dividend from $1k invested in each of the top 10 increased just 0.03% since June, while aggregate single share price dropped over 8%. Dow dogs decreased their overbought condition in which aggregate single share price of the 10 exceeded the projected annual dividend from $1k invested in each of the 10 by over $198 or 53% in June was shrunk to $152.51 or 41% in July.
Since Russell index 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 cull out bargains.
Actionable Conclusion Two: Wall Street Wizards Conjure Over 16% Net Gain from Top 20 Russell 1000 Dogs In 2014
Top 20 dogs from the Russell 1000 index were graphed below to show relative strengths by dividend and price as of July 25, 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 10 highest-yielding stocks and the aggregate single share prices of those 20 stocks divided by 2 created data points for 2013. Projections based on estimated increases in dividend amounts from $1000 invested in the 20 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 over 7.5% 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 estimate.
A beta (risk) ranking for each analyst rated stock was provided in the far right column on the above chart. A beta of 1 meant the stock's price would move with the market. Less than 1 showed lower than market movement. Higher than 1 showed greater than market movement. A negative beta number indicated the degree of a stock's movement opposed to market direction.
Actionable Conclusion Three: Analysts Forecast 10 Russell 1000 DiviDogs to Net 11.6% to 37.4% By June 2014
Ten probable profit-generating trades revealed by Yahoo Finance for 2014 were:
Corrections Corporation of America (CXW) netted $374.38 based on a mean target price estimate from four analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 53% less than the market as a whole.
American Capital Agency (AGNC) netted $359.38, based on dividend plus mean target price estimates from 17 analysts less broker fees. The Beta number showed this estimate subject to volatility 75% less than the market as a whole.
Donnelley R R & Sons Co (RRD) netted $310.13 based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 47% greater than the market as a whole.
Annaly Capital Management Inc. netted $241.78 based on dividends plus the mean of annual price estimates from 17 analysts less broker fees. The Beta number showed this estimate subject to volatility 61% less than the market as a whole.
Starwood Property Trust Inc. (STWD) netted $238.05 based on a mean target price estimate from five analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 16% less than the market as a whole.
Windstream Corporation netted $230.30, based on dividends plus a mean target price estimate by 14 analysts less broker fees. The Beta number showed this estimate subject to volatility 15% less than the market as a whole.
Hatteras Financial Corp netted $206.51 based on estimates from 10 analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 61% less than the market as a whole.
MFA Financial Inc. netted $191.46 based on dividends plus mean target price estimate from 12 analysts less broker fees. The Beta number showed this estimate subject to volatility 70% less than the market as a whole.
Frontier Communications netted $170.14 based on dividends plus mean target price estimate from 15 analysts less broker fees. The Beta number showed this estimate subject to volatility 21% less than the market as a whole.
FirstEnergy Corp (FE) netted $116.43 based on dividends plus the mean of annual price estimates from 16 analysts less broker fees. The Beta number showed this estimate subject to volatility 79% less than the market as a whole.
The average net gain in dividend and price was over 24.38% on $1k invested in each of these 10 dogs. This gain estimate was subject to average volatility 40% less than the market as a whole.
Net gain estimates above did not factor-in any taxes resulting from distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.
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.