Results from the Carnevale Power 25 Index calculated as of July 30, 2013, projecting gains one year hence showed industrial sector waste management industry firm Republic Services Inc. (NYSE:RSG) leading the index with a 14.10% price upside.
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 ten Carnevale Power 25 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.
Below are the Arnold Carnevale Power 25 Index top dog selections for July.
Dog Metrics Ranked Carnevale Power 25 Stocks by Yield
Respected stock analyst, Seeking Alpha blogger and creator of Fastgraphs, Chuck Carnevale, published Our 25 Dividend Growth Stocks Are Dirt Cheap in November, 2011. He listed top 25 blue chip dividend growth stocks that: (1) were available at current valuations; (2) were significantly below their historical norms; (3) and remained profitable through the great recession of 2008 and 2009.
Carnevale's top ten Power 25 stocks were ranked by yields calculated as of July 30 to reveal the top ten. Price and dividend data was sourced from Yahoo.com.
The top ten included firms representing seven of nine market sectors. The top stock as revealed by Yahoo Finance data was one of two basic materials firms, Alliance Resource (ARLP). Chevron Corp. (NYSE:CVX), the other basic materials firm, placed sixth.
The balance of the top ten Power 25 included two in the service sector - RR Donnelley & Sons (NASDAQ:RRD), in second, while Sysco Corporation (NYSE:SYY), the other service firm, placed fifth. Two technology representatives, Intel Corporation (INTC) and Microsoft Corporation (NASDAQ:MSFT), placed third and tenth. One healthcare firm, Novartis AG (NVS), placed fourth. One utility, Nextera Energy (NEE), ranked seventh. A lone industrial goods firm, Republic Services Inc. (RSG) was eighth. A single consumer goods firm, Procter & Gamble (PG), placed ninth completing the top ten Power 25 dogs.
The full list of Carnevale's Power 25 had five service, five healthcare, three consumer goods, one financial, three basic materials, five industrial, one utility, one technology and no conglomerates representing market sectors.
Dividend vs. Price Results Compared to Dow Dogs
Below is a graph of the relative strengths of the top ten Carnevale Power 25 dogs by yield as of market close 7/30/2013 compared to those of the Dow. Historic projected annual dividend history from $1,000 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): Carnevale Power 25 Muddle as Dow Gets Bearish
Power 25 top ten dogs' dividends dropped 7% while price also dropped over 11%. The Power 25 dogs overbought condition shrank slightly. Aggregate single share price of the ten exceeded projected annual dividends from $1k invested in each of the ten by over $255 or 64% in June. The gap narrowed to $211 or 57% for July.
For the Dow dogs, meanwhile, the 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 dividends 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 Carnevale's Power 25 dogs attempt to achieve all 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 bargains.
Actionable Conclusion (2): Wall Street Wizard Wisdom Was Weighed to Calculate A 6.39% Net Gain from Top 20 Carnevale Power 25 Dogs
Top twenty dogs from Chuck Carnevale's Power 25 index were graphed below to show relative strengths by dividend and price as of July 30, 2013, and those projected by analyst mean price target estimates to the same date in 2014.
A hypothetical $1,000 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 $1,000 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 $1,000 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 4.45% lower dividend from $10K invested in this group while aggregate single share price was projected to increase over 4.8% 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 were 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 opposite of market direction.
Actionable Conclusion Three: Analysts Forecast 10 Carnevale Power 25 Dogs to Net 6.6% to 15.1% By June 2014
Ten probable profit generating trades revealed by Yahoo Finance for 2014 were:
Republic Services Inc. (RSG) netted $151.45 based on dividends plus mean target price estimate from six analysts less broker fees. The Beta number showed this estimate subject to volatility 43% less than the market as a whole.
Microsoft Corporation (MSFT) netted $105.27 based on dividends plus mean target price estimate from thirty-one analysts less broker fees. The Beta number showed this estimate subject to volatility 10% less than the market as a whole.
Donnelley RR & Sons Inc. (RRD) netted $104.67 based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 74% more than the market as a whole.
General Dynamics Corp (NYSE:GD) netted $102.12, based on dividends plus a mean target price estimate from fifteen analysts less broker fees. The Beta number showed this estimate subject to volatility 14% more than the market as a whole.
Home Depot Inc. (NYSE:HD) netted $96.41 based on estimates from twenty-one analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 5% less than the market as a whole.
Novartis AG ADR (NYSE:NVS) netted $95.30 based on dividends plus the mean of annual price estimates from six analysts less broker fees. The Beta number showed this estimate subject to volatility 44% less than the market as a whole.
Procter & Gamble Co. (NYSE:PG) netted $91.51 based on a mean target price estimate from sixteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 66% less than the market as a whole.
AFLAC Inc. (NYSE:AFL) netted $81.73 based on a mean target price estimate from eighteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 67% more than the market as a whole.
Pepsico Inc. (NYSE:PEP) netted $77.40, based on dividend plus mean target price estimates from fifteen analysts less broker fees. The Beta number showed this estimate subject to volatility 74% less than the market as a whole.
Chevron Corporation (CVX) netted $66.02 based on estimates from twenty-one analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 12% more than the market as a whole.
The average net gain in dividend and price was over 9.7% on $1k invested in each of these ten dogs. This gain estimate was subject to average volatility 17% 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 are 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.
Disclosure: I am long DD, GE, INTC, JNJ, MCD, MSFT, 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.