Seeking Alpha
Dividend investing, growth, momentum
Profile| Send Message|
( followers)  

Results from the Morningstar/YChart (M/Y) technology sector tallied as of market closing prices August 21 compared with analyst mean target gain results one year hence highlighted Silicon Motion Technology (NASDAQ:SIMO), a fabless Taiwan semiconductor diversified electronics industry firm, showing a 36.65% price upside. Nine more m/y tech sector stocks rode along flashing 10.15% to 26.74% price upsides.

The chart above used 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 exhibiting the highest yield (dividend / price) from Yahoo sectors with one year mean target price estimates reported from broker analysts.

Note my Arnold m/y technology selections for July/August:

Dog Metrics Mark Top M/Y Technology Dogs

Top ten technology sector stocks from YChart screens showing the biggest dividend yields August 21 represented seven industries. The top technology sector dog, Nam Tai Electronics (NTE), was the lone electronic components representative. Two semiconductor firms, Silicon Motion Technology , and Intersil Corporation (NASDAQ:ISIL) placed second and eighth. One electronic gaming firm, Giant Interactive Group (NYSE:GA) was third by yield. Internet content firms, United Online (NASDAQ:UNTD), and SouFun (NYSE:SFUN), placed fourth and fifth. American Software, Inc. (NASDAQ:AMSWA) and Compuware Corporation (NYSE:CW) in the sixth and eighth slots represented the software applications industry. Two scientific instrument firms placed seventh and tenth: Landauer, Inc. (NYSE:LDR), and Garmin Ltd. (NASDAQ:GRMN) to complete the top ten m/y tech dogs.

Dividend vs. Price Results Compared to Dow Dogs

Below a graph of the relative strengths of the prime ten m/y technology dogs by yield as of market close 8/21/2013 was compared to a graph 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.


(Click to enlarge)

Actionable Conclusion (1): M/Y Technology Dogs Chased Bulls as Dow Dogs Cowed

M/Y technology dividend dogs continued a very bullish price course as aggregate single share price lurched up 110% since April. Jul/Aug dividend from $10k invested as $1K in each of the top ten m/y tech stocks, dropped down at a rate of near 40% since April. This bullish change was caused by the ascendancy of new tech stocks to the top tier in the M/Y screen as well as smoking price appreciation of many component stocks.

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 Wizards Wrest 13.17% Net Gain from Top 20 M/Y Technology Dogs by 2014

Top twenty dogs for the M/Y technology 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.


(Click to enlarge)

Yahoo projected 8.9% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by 8.9% 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 Gain M/Y Technology Dogs to Net 13% to 40% Come 2014

Ten probable profit generating trades revealed by Yahoo Finance for 2014 were:


(Click to enlarge)

Silicon Motion Technology netted $400.81 based on dividends plus the mean of annual price estimates from five analysts less broker fees. The Beta number showed this estimate subject to volatility 1215% greater than the market as a whole.

STMicroelectronics (NYSE:STM) netted $286.98, based on dividends plus a mean target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 78% more than the market as a whole.

Comtech Telecommunications Corporation (NASDAQ:CMTL) netted $243.37 based on dividends plus the mean of annual price estimates from five analysts less broker fees. The Beta number showed this estimate subject to volatility 19% more than the market as a whole.

American Software, Inc. netted $217.80, based on dividends plus a mean target price estimate from two analysts less broker fees. The Beta number showed this estimate subject to volatility 26% less than the market as a whole.

Siliconware Precision Industries (NASDAQ:SPIL) netted $205.33, based on dividends plus a mean target price estimate from two analysts less broker fees. The Beta number showed this estimate subject to volatility 40% more than the market as a whole.

Seagate Technology Inc. (NASDAQ:STX) netted $192.86, based on dividends plus a mean target price estimate from twenty analysts less broker fees. The Beta number showed this estimate subject to volatility 196% greater than the market as a whole.

Giant Interactive Group netted $167.82 based on one year target price estimates from ten analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 97% more than the market as a whole.

Microchip Technology Inc. (NASDAQ:MCHP) netted $165.12 based on estimates from fourteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 14% more than the market as a whole.

Compuware Corporation (NASDAQ:CPWR) netted $160.74 based on mean target price estimates from four analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 43% more than the market as a whole.

SouFun netted $130.73 based on dividends plus a mean target price estimate from six analysts less broker fees. The Beta number showed this estimate subject to volatility 132% greater than the market as a whole.

The average net gain in dividend and price was 21.72% on $10k invested as $1k each in these ten top tech 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.

Disclosure: I am long 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.

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.

Source: Silicon Motion Yanked 10 August M/Y Technology Dogs Up 10% To 37%