Price results from Yahoo Finance tallied as of market close prices September 17 were compared to analyst mean target price projections one year hence. The resulting chart of that data showcased ten top stocks exhibiting 6% to 16% price upsides. AT&T Inc. (NYSE:T) the ubiquitous telco of the technology sector with 5.64% showed the lowest upside of the top ten. Coca Cola Co. (NYSE:KO) the omnipresent soft beverage industry firm from the consumer goods sector exhibited a 16.19% price upside to lead the S&P 500 Aristocrats Index.
The chart above used the one year mean target price set by brokerage analysts matched against September 17 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 article reported results of the S&P 500 Aristocrats Index as one of fourteen in a series of index-specific articles devoted to dividend yield and price upside results. Seeking Alpha reader requests prompted this series of index-specific articles reporting dividend yield plus price upside results for this baker's dozen of stock indices: Dow 30; S&P 500; S&P Aristocrats; Russell 1000; NASDAQ 100; NYSE International 100; Mergent Dividend Achiever; Champions; Contenders; Challengers; Carnevale's Power 25; Carnevale's Super 29; lastly a small index first vetted in July, called Barron's 15 Gems.
This report presumed yield (dividend / price) dividend dog methodology applied to any index and compared that index side by side with the Dow. Below, the Arnold S&P 500 Aristocrats Index top dog elections for September were disclosed step by step.
Dog Metrics Sorted S&P 500 Aristocrats Index Stocks by Yield
McGraw Hill, publisher if this index, states, "The S&P 500® Dividend Aristocrats index measures the performance of large cap, blue chip companies within the S&P 500 that have followed a policy of increasing dividends every year for at least 25 consecutive years."
September Aristocrats placed seven of nine business sectors into the top ten by yield. The lone technology dog, AT&T led the pack. One of two financial firms, HCP, Inc. (NYSE:HCP), was second. The other financial, Cincinnati Financial (NASDAQ:CINF), placed fifth. The lone utility, Consolidated Edison Inc. (NYSE:ED) was third. Three consumer goods firms placed fourth, seventh, and eighth: Leggett & Platt (NYSE:LEG), Clorox Co. (NYSE:CLX), and Kimberly-Clark (NYSE:KMB). One service sector firm, Sysco Corporation (NYSE:SYY), was sixth. Healthcare firm, AbbVie Inc. (NYSE:ABBV) placed eighth. Chevron Corp. (NYSE:CVX) in tenth place completed the top ten S&P 500 Aristocrats dog list by yield.
Dividend vs. Price Results Stacked Up Against Dow Dogs
A graph of the relative strengths of the top ten Aristocrats dogs by yield is shown below as of market close 9/17/2013 compared to those of the Dow. Projected annual dividend history from $10,000 invested as $1k in each of the ten highest yielding stocks and the total single share price of those ten stocks created the data points shown in green for price and blue for dividend.
Actionable Conclusion 1: S&P Aristocrats Muddle As Dow Dogs Charge & Both Stay Overbought
September Aristocrats continued a bullish price course set since October, 2012. Total single share price has increased nearly 30% since then including 3% since July. The top ten Aristocrats stocks failed to confirm a bull market, however, as aggregate dividend from $10k invested as $1k in each dog rose 3.3% since July. The Aristocrats dogs maintained their overbought condition as aggregate single share price of the ten exceeded projected annual dividend from $1k invested in each by about $209 or 54%.
For the Dow dogs, meanwhile, annual dividend from $10k invested as $1K in each of the top ten dropped 1.5% since August, while aggregate single share price hopped up 6%, ending a bear track since June. Dow dogs increased 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, compressed to $125 or 33% in August then expanded to $161 or 43% for September.
To quantify the top dog rankings, analyst mean price target estimates provide a "market sentiment" gauge of upside potential and so were added to the simple high yield "dog" metric used to sniff out bargains.
Actionable Conclusion 2: Wall St. Wizards Envision 6.77% Net Gain from Top 20 Aristocrats Dogs By 2014
Top twenty dogs from the S&P 500 Aristocrats index were graphed below to show relative strengths by dividend and price as of September 17, 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 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 each of 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 5% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by nearly 6% in the coming year. The number of analysts contributing to the mean target price estimate for each stock was noted in the ext to the last column on the charts. Three to nine analysts was 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 numbers indicated the degree of a stocks movement opposed to market direction.
Actionable Conclusion 3: Analysts Suspect 10 S&P 500 Dividend Aristocrats Dogs to Net 3% to 12.8% By July 2014
Five of the top yielding dividend S&P 500 Aristocrats dogs were verified as being among the top ten gainers for the coming year by analyst 1 year target prices. So this month the dog strategy as graded by Wall St. wizards is 50% accurate.
Ten probable profit generating trades revealed by Yahoo Finance for 2014 were:
Coca-Cola Co. netted $170.77 based on dividends plus a mean target price estimate from fifteen analysts less broker fees. The Beta number showed this estimate subject to volatility 70% less than the market as a whole.
HCP Inc. netted $145.71 based on a mean target price estimate from twelve analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 33% less than the market as a whole.
PepsiCo Inc. (NYSE:PEP) netted $115.68 based on dividends plus a mean target price estimate from fifteen analysts less broker fees. The Beta number showed this estimate subject to volatility 71% less than the market as a whole.
Consolidated Edison Inc. netted $111.87 based on dividends plus a mean target price estimate from fourteen analysts less broker fees. The Beta number showed this estimate subject to no volatility relative to the market as a whole.
Leggett & Platt netted $90.39 based on target price estimates from two analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 5% more than the market as a whole.
AT&T Inc. netted $87.16 based on dividends plus a mean target price estimate from twenty-four analysts less broker fees. The Beta number showed this estimate subject to volatility 67% less than the market as a whole.
McDonald's Corp. (NYSE:MCD) netted $83.25 based on dividends plus the mean of annual price estimates from twenty-one analysts less broker fees. The Beta number showed this estimate subject to volatility 71% less than the market as a whole.
Chevron Corp. netted $79.57, based on dividend plus mean target price estimates from twenty-one analysts less broker fees. The Beta number showed this estimate subject to volatility 12% more than the market as a whole.
Target Corp. (NYSE:TGT) netted $79.25 based on dividends plus a mean target price estimate from twenty analysts less broker fees. The Beta number showed this estimate subject to volatility 40% less than the market as a whole.
Exxon Mobil Corp. (NYSE:XOM) netted $77.59 based on dividends plus a mean target price estimate from eighteen analysts less broker fees. The Beta number showed this estimate subject to volatility 15% less than the market as a whole.
The average net gain in dividend and price was just over 10.4% on $1k invested in each of these ten dogs. This gain estimate was subject to average volatility 45% 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 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.