Results from Yahoo Finance for utilities sector stocks tallied as of market closing prices August 2 compared with analyst mean target gain results one year hence featured Inergy, L.P. (NRGY), a Kansas City, MO headquartered integrated energy master limited partnership firm from the gas utilities industry, showing a 31.75% price upside.
Nine other utilities displayed upsides ranging from 2.64% to 16.55%.
The chart above used one year mean target price set by brokerage analysts matched against August 2 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 the fall of 2011 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).
Note the Arnold Utes selections for July/August as follows:
Dog Metrics Metered Ten Top Utilities Sector Stocks
Ten top utilities sector stocks that showed the biggest dividend yields August 2 per Yahoo Finance data represented four industries: electric; gas; diversified; foreign. Top dog, Atlantic Power Corporation (NYSE:AT) was tops of four electric firms listed. The other electrics were in fifth, seventh, and tenth places: FirstEnergy Corporation (NYSE:FE); PEPCO (NYSE:POM); TECO Energy (NYSE:TE). One diversified utility, TransAlta Corp. (NYSE:TAC) was listed second. Suburban Propane Partners (NYSE:SPH) in the third slot was the top yielding of four gas firms. The others placed fourth, sixth, and eighth: Amerigas Partners (NYSE:APU); National Grid plc (NYSE:NGG); Gas Natural (NYSEMKT:EGAS). One foreign utility, CPFL Energia (NYSE:CPL) was listed ninth to complete the utilities dog list.
Dividend vs. Price Results Compared to Dow Dogs
Below is a graph of the relative strengths of the top ten utilities dogs by yield as of market close 8/2/2013 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 dividends.
Actionable Conclusion (1): Utilities & Dow Dogs Retreat from Bears
The July/August Utes collection of dividend payers cowed as aggregate single share price dropped 6.8% since June while dividend from $10k invested as $1k in each of those ten dogs increased 0.7% for the period.
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%, showing the first bear tack of the year. 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 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.
Actionable Conclusion (2): Wall Street Wizard Wisdom Weighed An 9.46% Net Gain from Top 20 Utilities Dogs Come 2014
Top twenty dogs for the utilities sector were graphed below to show relative strengths by dividend and price as of August 2, 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 3.5% lower dividend from $10K invested in this group while aggregate single share price of the ten was projected to increase by 2.5% in the coming year. The number of analysts contributing to the mean target price estimate for each stock was noted in the nest to 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).
A beta (risk) ranking for each 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 price movement opposite of market direction.
Actionable Conclusion (3): Analysts Foretell 2014 Utilities DiviDogs to Net 5.6% to 34.25%
Ten top estimated profit generating trades in utilities were revealed by Thompson/First Call in Yahoo Finance for 2014:
Inergy, L.P. netted $342.53 based on dividends plus a mean target price estimate from seven analysts less broker fees. The Beta number showed this estimate subject to volatility 1% more than the market as a whole.
Atlantic Power Corporation netted $238.99, based on dividends plus mean target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 62% less than the market as a whole.
TransAlta Corp netted $187.60 based on dividends plus a mean target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 66% less than the market as a whole.
Brookfield Infrastructure Partners (NYSE:BIP) netted $136.22 based on estimates from eight analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 47% less than the market as a whole.
First Energy Corp. netted $115.44 based on estimates from sixteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 84% less than the market as a whole.
National Grid plc netted $93.02, based on dividend plus mean target price estimates from two analysts less broker fees. The Beta number showed this estimate subject to volatility 73% less than the market as a whole.
Duke Energy Corporation (NYSE:DUK) netted $68.78 based on estimates from eighteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 96% less than the market as a whole.
Southern Company (NYSE:SO) netted $67.73 based on estimates from sixteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 5% opposite the market as a whole.
PPL Corporation (NYSE:PPL) netted $64.87 based on estimates from sixteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 86% less than the market as a whole.
TECO Energy netted $55.93 based on estimates from ten analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 12% less than the market as a whole.
The average net gain in dividend and price was 13.71% on $1k invested in each of these ten utilities dogs. This gain estimate was subject to average volatility 63% less than the market as a whole.
Net gain estimates above did not factor-in any foreign or domestic tax problems 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 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.
Disclosure: I am long AT, DD, GE, INTC, 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.