Industrial sector results tallied from Morningstar/YChart (M/Y) as of market closing prices August 21 compared with analyst mean target gain results one year hence showed Diana Containerships (DCIX) exhibiting a 52.85% price upside. Nine more m/y industrial sector stocks exhibited 8.9% to 32.6% price upsides.
The chart above used the one year mean target price set by brokerage analysts matched against August 21 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 February prompted by Seeking Alpha reader requests. It complemented reports of possible dividend yield based buy opportunities from eight major market sectors as listed by Yahoo Finance posted since the fall of 2011.
So, responding to both the Seeking Alpha reader requests and Ycharts.com migration to an eleven sector list, this report series provided three actionable conclusions about the highest yield (dividend / price) stocks from the Morningstar/YCharts (M/Y) sectors: basic materials; communication services; consumer cyclical; consumer defensive; energy; financial services; healthcare; industrials; real estate; technology; utilities.
Below the author compared Dow dividend dog theory picks with one year mean target price estimates reported from broker analysts to reveal the following Arnold M/Y industrials selections for July/August:
Dog Metrics Featured Ten M/Y Industrial Sector Dogs
Ten industrials sector stocks showing the biggest M/Y screened dividend yields August 21 represented five industries. Top industrials stock by dividend yield represented the integrated shipping & logistics industry: Diana Containerships. Six shipping and ports industry firms placed in second through fifth, eighth, and ninth positions: Navios Maritime Partners (NMM); Capital Product Partners (CPLP); Ship Finance International (SFL); Knightsbridge Tankers (VLCCF); Nordic American Tankers (NAT); Teekay Offshore Partners (TOO). Staff outsourcing firm, Compass Diversified Holdings Shares of Beneficial Interest (CODI), placed sixth. A business services firm placed seventh: Collectors Universe (CLCT). Industrial distribution firm, Macquarie Infrastructure (MIC) took tenth place to complete the top ten M/Y industrials July/August dogs.
Dividend vs. Price Results Compared to Dow Dogs
Below is a graph of the relative strengths of the top ten M/Y industrials dogs by yield as of market close 8/21/2013 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): M/Y Industrials Chased Bulls while Dow was Cowed
The m/y industrials collection of dividend payers showed a bull market signal as aggregate dividend from $10k invested in each of the top ten industrials dogs dropped 16.4% while aggregate single share price leaped up 65.5% since June as several new higher priced dogs with yields moved into the top ten.
For the Dow dogs, meanwhile, annual dividend from $1k invested in each of the top ten increased 3.6% since July, while aggregate single share price dropped 2.6%, continuing a bear track since June. 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, then shrunk to $153 or 41% in July, and kept compressing to $125 or 33% in August.
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 Two (2): Wall Street Wizard Wisdom Whispered 18.68% Net Gain from Top 20 Industrials Dogs Come 2014
Top twenty dogs for the M/Y industrials sector were graphed below to show relative strengths by dividend and price as of August 21, 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 of $20 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 10.4% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by over 10.8% 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 was considered optimal for a valid projection estimate. Estimates provided by one analyst were not applied (n/a).
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 stock price movement opposite market direction.
Actionable Conclusion Three (3): Analysts Forecast 10 Top M/Y Industrials DiviDogs to Net 15.3% to 66.4% by 2014
Ten probable profit generating trades revealed by Yahoo Finance for 2014 were:
Diana Containerships netted $663.94 based on estimates from five analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 35% greater than the market as a whole.
Navios Maritime Acquisition (NNA) netted $360.05 based on dividends plus a mean target price estimate from SIX analysts less broker fees. The Beta number showed this estimate subject to volatility 41% less than the market as a whole.
Fly Leasing (FLY) netted $310.74 based on dividends plus a mean target price estimate from six analysts less broker fees. The Beta number showed this estimate subject to volatility 25% less than the market as a whole.
Capital Product Partners (CPLP) netted $295.43 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 71% more than the market as a whole.
Macquarie Infrastructure (MIC) netted $294.67, based on dividends plus a mean target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 24% greater than the market as a whole.
Corrections Corp (CXW) netted $281.73 based on dividends plus the mean of annual price estimates from four analysts less broker fees. The Beta number showed this estimate subject to volatility 37% less than the market as a whole.
Ship Finance International (SFL) netted $373.53 based on a mean target price estimate from six analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 49% less than the market as a whole.
Susser Petroleum Partners (SUSP) netted $199.66 based on target estimates from nine analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 34% less than the market as a whole.
Costamare, Inc. (CMRE) netted $182.90 based on target estimates from six analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 36% greater than the market as a whole.
Compass Diversified Holdings (CODI) netted $152.65, based on dividends plus a mean target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 28% greater than the market as a whole.
The average net gain was estimated to be near 30% on $10k invested as $1k each in these ten intrepid industrial dogs.
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 M/Y 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.