Results from the Dividend Achievers 50 Index calculated as of July 29, 2013 projecting price upside results one year hence showed Pitney Bowes (NYSE:PBI) the business equipment for mail firm posted a 10% upside to lead a pack of just six dogs this month.
The chart above used one year mean target price set by brokerage analysts multiplied by the number of shares in a $1k investment to compare six Mergent Dividend Achievers 50 Index 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.
Since the dividend achiever index only lists stocks with a pedigree of paying increasing dividends for ten or more years, PBI is a lame dog by virtue of cutting its dividend in half just after the December 2012 selection of the Achiever 50 index stocks. Even as a disqualified dog, Pitney Bowes, however leads this pack of six.
This article reported results for the Mergent Dividend Achievers 50 Index as one of fourteen 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 100; 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, are the Arnold Dividend Achievers 50 Index top dog selections for July as disclosed step by step.
Dog Metrics Filtered Dividend Achievers 50 Index Stocks by Yield
The NASDAQ Dividend AchieversTM 50 Index was chosen from here. Indxis, the publisher, (that recently licensed its product to NASDAQ) said 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 July included equities representing five of nine market sectors. The top stock as revealed by Yahoo Finance data, Vector Group Ltd. (NYSE:VGR) was one of three from the consumer goods sector. The other consumer goods firms, Altria Group Inc (NYSE:MO), and Pitney Bowes, Inc. placed fifth and sixth on the list. The best yielding two of four financial stocks, Mercury General Corp (NYSE:MCY), and Old Republic International (NYSE:ORI), took second and third on this list. The other two financial stocks placed in ninth, and tenth places: United Bankshares, Inc. (NASDAQ:UBSI); People's United Financial (NASDAQ:PBCT). One technology firm, AT&T (NYSE:T) fell into fifth place. Two utility firms in seventh and eighth places, completed the top ten Dividend Achievers: PPL Corporation (NYSE:PPL); Southern Company (The) (NYSE:SO).
Dividend vs. Price Results Compared to Dow Dogs
Below is a graph of the relative strengths of the top ten Dividend Achievers dogs by yield as of market close 7/29/2013 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 Bullish as Dow Dogs Retreat
Dividend Achievers top June dividend payers showed a bullish signal since June. Achievers top ten dog dividend from $10k ($1k invested in each stock) dropped 6% as aggregate single price of those stocks crept up 0.3%.
For the Dow dogs, meanwhile, annual dividend from $1k invested in each of the top ten 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 ten exceeded projected annual dividend from $1k invested in each of the ten by over $198 or 53% in June was shrunk to $152.51 or 41% in July.
Since 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.
Actionable Conclusion (2): Wall Street Wizard Wisdom Worked to Calculate Just 5.56% Net Gain from Top 20 Dividend Achiever Dogs In 2014
Twenty dogs from the Dividend Achievers index were graphed below to show relative strengths by dividend and price as of July 29, 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 0.9% lower dividend from $10K invested in this group while aggregate single share price was projected to increase a mere 1.2% 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 stocks movement opposite of market direction.
Actionable Conclusion (3): Analysts Forecast 6 Dividend Achievers Dogs to Net 4.6% to 12.7% By July 2014
Six probable profit generating trades revealed by Yahoo Finance for 2014 would have been five but for dividend cutting lame dog PBI being included until the annual readjustment comes in December 2013:
Pitney Bowes, Inc. netted $126.88 based on dividends plus mean target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 74% greater than the market as a whole.
Altria Group Inc. netted $80.64 based on a mean target price estimate from ten analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 64% less than the market as a whole.
AT&T Inc. netted $75.88 based on dividends plus the mean of annual price estimates from twenty-three analysts less broker fees. The Beta number showed this estimate subject to volatility 76% less than the market as a whole.
PPL Corp. netted $73.09 based on dividends plus mean target price estimate from sixteen analysts less broker fees. The Beta number showed this estimate subject to volatility 86% less than the market as a whole.
ConocoPhillips (NYSE:COP) netted $64.54 based on dividends plus mean target price estimate from ten analysts less broker fees. The Beta number showed this estimate subject to volatility equal to the market as a whole.
United Bankshares, Inc. netted $45.72 based on dividends plus mean target price estimate from six analysts less broker fees. The Beta number showed this estimate subject to volatility 19% greater than the market as a whole.
The average net gain in dividend and price was over 7.7% on $1k invested in each of these six dogs. This gain estimate was subject to average volatility 22% less than the market as a whole.
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.