Results from Yahoo Finance for the technology sector tallied as of market closing prices August 2 compared with analyst mean target gain results one year hence showed STMicroelectronics NV. (STM), a Swiss broadline semiconductor firm that designs, develops, manufactures, and markets various semiconductor integrated circuits and discrete devices worldwide, posting a 23.27% price upside.
Some might say STM smoked the field. Nine other technology dogs displayed upsides ranging from 8.1% to 14.8%.
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 Tech selections for July/August as follows:
Dog Metrics Pointed Out Ten Top Tech Stocks
Top ten tech sector stocks from Yahoo Finance screened to show the biggest dividend yields August 2 represented just three industries. Top technology sector stock, Windstream Corporation (WIN) was one of six Telecom services - domestic representatives. The others placed third, fourth, sixth, eighth, and tenth: Frontier Communications Corporation (FTR); Consolidated Communications Holdings (CNSL); CenturyLink, Inc. (CTL); BCE, Inc. (BCE); Hickory Tech Corp. (HTCO). Second dog, NTELOS Holdings Corp. (NTLS), was one of two wireless technology firms with Portugal Telecom (PT) taking the fifth slot. France Telecom - Orange (ORAN) in seventh was tops of two Telecom services - foreign representatives. The other foreign firm, Telecom Corporation of NZ (OTCQB:NZTCY), placed ninth.
Dividend vs. Price Results Compared to Dow Dogs
Below is a graph of the relative strengths of the top ten technology dogs by yield as of market close 8/2/2013 compared to those of the Dow. Dividend history from $10,000 invested as $1K in each of the ten highest yielding stocks and the total single share prices of those ten stocks created the data points shown in blue for dividend and green for price.
Actionable Conclusion (1): Technology Dogs Get Bullish as Dow Dogs Retreat
Technology sector top dividend yielders in August showed lower dividend from $10k invested as $1k in each of the top ten stocks, while aggregate single share price of those ten popped up. Dividend sagged at a rate of 7.7% after June while total single share price leaped up 20.4% in that 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 dig out bargains.
Actionable Conclusion (2): Wall Street Wizard Wisdom Willed A 9.37% Net Gain from Top 20 Techno Pups Come 2014
Top twenty dogs for the technology 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 1.76% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by 4.14% 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).
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 Forecast 2014 Techno DiviDog Stock Net Gains of 8.1% to 25.8%
Ten probable profit generating trades were revealed by Thompson/First Call in Yahoo Finance for 2014:
- STMicroelectronics NV netted $258.80 based on dividend plus a mean target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 90% greater than the market as a whole.
- Rogers Communications (RCI) netted $148.47, based on dividends plus a mean target price estimates by ten analysts less broker fees. The Beta number showed this estimate subject to volatility 40% less than the market as a whole.
- TELUS Corporation (TU) netted $141.04 based on dividend plus a mean target price estimate from twelve analysts less broker fees. The Beta number showed this estimate subject to volatility 36% less than the market as a whole.
- Windstream Corporation netted $138.82 based on dividends plus mean target price estimate from fourteen analysts less broker fees. The Beta number showed this estimate subject to volatility 15% less than the market as a whole.
- American Software, Inc. (AMSWA) netted $134.27 based on estimates from two analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 40% less than the market as a whole.
- Frontier Communications netted $115.86 based on a mean target price estimate from fourteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 22% less than the market as a whole.
- BCE, Inc. netted $105.00, based on dividends plus mean target price estimate from eleven analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 63% less than the market as a whole.
- Consolidated Communications Holdings, Inc. netted $100.16 based on dividend plus a mean target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 23% less than the market as a whole.
- Verizon Communications (VZ) netted $105.64 based on dividends plus the mean of annual price estimates from fifteen analysts less broker fees. The Beta number showed this estimate subject to volatility 82% less than the market as a whole.
- AT&T, Inc. (T) netted $81.76 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.
The average net gain in dividend and price was 13.24% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 31% 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 are suggested only as decent starting points for your sector 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.