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

Results from a consolidation of Chuck Carnevale's Power 25 & Super 29 Indices constituents listed as of market closing prices September 27 were compared to analyst mean target price projections one year hence. The chart of that data shown below featured ten stocks exhibiting 6% to 26% price upsides. Alliance Resource Partners LP (NASDAQ:ARLP) the Tulsa, OK based industrial metals minerals industry firm from the basic materials sector with 6.52% showed the lowest upside of those ten. Donnelley RR & Sons Inc. (NASDAQ:RRD) a Chicago based business services industry firm from the services sector exhibited a 26.18% price upside to lead the newly named Carnevale's Solid 40 index.

The chart above used one year mean target price set by brokerage analysts multiplied by the number of shares in a $1k investment to compare ten Carnevale's Solid 40 Index 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 for Chuck Carnevale's indices as two of fourteen in a series of index-specific articles devoted to dividend yield and price upside results. Prompted by Seeking Alpha reader requests, the series has supplied results for these stock indices: Dow 30; S&P 500; S&P Aristocrats; Russell 1000; NASDAQ 100; NYSE International 100; Dividend Achievers; Champions; Contenders; Challengers; Carnevale's Power 25; Carnevale's Super 29; Barron's 15 Gems; Russell 2000.

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 Carnevale Power 25 & Super 29 Indices top dog selections for September were disclosed step by step.

Dog Metrics Measured Carnevale's Index Stocks by Yield

(1) Power 25 (top 20)

Respected stock analyst, Seeking Alpha blogger, and creator of Fastgraphs, Chuck Carnevale, published Our 25 Dividend Growth Stocks Are Dirt Cheap in November, 2011. He listed top 25 blue chip dividend growth stocks that: (1) were available at current valuations; (2) were significantly below their historical norms; (3) remained profitable through the great recession of 2008 and 2009.

Carnevale's top ten Power 25 stocks were ranked by yields calculated as of September 27 to reveal the top ten. Price and dividend data was sourced from Yahoo.com.

The top ten included firms representing seven of nine market sectors. The top stock as revealed by Yahoo Finance data, was one of two basic materials firms, Alliance Resource; Chevron Corp. (NYSE:CVX) the other basic materials firm placed sixth.

The balance of the top ten Power 25 included: two in the service sector, RR Donnelley & Sons, in second, while Sysco Corporation (NYSE:SYY), the other service firm, placed fifth. Two technology representatives, Intel Corporation (NASDAQ:INTC), and Microsoft Corporation, placed third and tenth. One healthcare firm, Novartis AG (NYSE:NVS) placed fourth. One utility, Nextera Energy (NYSE:NEE) ranked seventh. A lone industrial goods firm, Republic Services Inc. (NYSE:RSG) was eighth. A single consumer goods firm, Procter & Gamble (NYSE:PG) placed ninth completing the top ten Power 25 dogs.

The full list of Carnevale's Power 25 had five service, five healthcare, three consumer goods, one financial, three basic materials, five industrial, one utility, one technology and no conglomerates representing market sectors.

(2) Super 29 (top 20)

April 2, 2012, Seeking Alpha blogger, respected stock analyst, and creator of Fastgraphs, Chuck Carnevale, published 29 Dividend Champions That Beat The Market, Inflation & 2 Recessions Since 2001. He listed top 29 blue chip dividend growth stocks that: (1) consistently raised dividends for 37 years (or more); (2) were at or below fair market value in 2001; (3) outperformed the S&P 500 on a total return basis.

Carnevale's Super 29 top ten stocks showing the biggest projected dividend yields as of September 27, 2013 included firms representing five of nine market sectors. Top stock revealed by Yahoo Finance data, was the only services firm in the top ten, Bowl America Class A (NYSEMKT:BWL.A). The lone representative of the financial sector, United Bankshares Inc. (NASDAQ:UBSI) was second dog.

Third place on the Super 29 list was filled by one of two basic materials firms, Northwest Natural Gas Co. (NYSE:NWN). The other basic materials firm Nucor Corp. (NYSE:NUE), placed eighth.

Fourth dog was one of three utilities, Consolidated Edison (NYSE:ED). The other utilities, Connecticut Water Service Inc. (NASDAQ:CTWS), and California Water Service (NYSE:CWT), were seventh and tenth on this top ten list. The balance of the top ten consisted of three consumer goods firms, Leggett & Platt Inc. (NYSE:LEG) in fifth, Diebold Inc. (NYSE:DBD) in sixth, and Procter & Gamble Co. in ninth to complete the top ten Super 29 dogs.

Chuck's full list of 29 stocks has four service, two healthcare, six consumer goods, two financial, three basic materials, six industrial goods, four utilities, no technology, and one conglomerate representing eight of nine market sectors.

Dividend vs. Price Results Compared to Dow Dogs

Relative strengths of the top ten Carnevale Power 25 dogs and the Carnevale Super 29 dogs by yield as of market close 9/27/2013 compared to those of the Dow were graphed below. 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)


(Click to enlarge)

Actionable Conclusion (1): Carnevale Power 25 & Super 29 Cowered From Bears as Dow Got Bullish

Power 25 top ten dog dividend jumped up 6% while price dropped over 2.4%. The Power 25 dogs overbought condition shrank. Aggregate single share price of the ten exceeded projected annual dividend from $10k invested as $1k in each of the ten by over $255 or 64% in June; narrowed to $211 or 57% in July/August; then shrank to $174 or 44% for September.

The Carnevale Super 29 top September dividend payers reversed their bullish price course. Since July/August aggregate ten dog single share price dropped X%. To reinforce the message, aggregate dividend from $10k invested in each of those top ten dogs increased almost X%. Aggregate single share price of the ten dropped back under projected annual dividend from $10k invested as $1k in each to end an overbought condition.

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, compressed to $125 or 33% in August then expanded to $161 or 43% for September.

The consolidation of Chuck Carnevale's Power 25 & Super 29 Indices constituents listed as of market closing prices September 27 were ranked by yield as follows and named Carnevale's Solid 40:

To quantify the top dog rankings, analyst mean price target estimates provided a "market sentiment" gauge of upside potential and so were added to the simple high yield "dog" metric used to dig out bargains.

Actionable Conclusion Two (2): Wall St. Wizards Willed an 8.6% Net Gain from Top 20 Carnevale's Solid 40 Index Dogs By 2014

Top twenty dogs from Chuck Carnevale's newly minted Solid 40 index were graphed below to show relative strengths by dividend and price as of September 27, 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 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 a 6.7% lower dividend from $10K invested in this group ($1k each) while aggregate single share price was projected to increase 7.2% in the coming year. The number of analysts contributing to the mean target price estimate for each stock was noted in the next 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 number indicated the degree of a stocks movement opposite of market direction.

Actionable Conclusion (3): Analysts Forecast 10 Carnevale's Solid 40 Dogs to Net 8.9% to 30.7% By September 2014

Four of the ten top dividend yielding Solid 40 index dogs were verified as being among the ten gainers for the coming year based on analyst 1 year target prices. So this month the dog strategy for the Solid 40 index as graded by Wall St. wizards is 40% accurate.

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


(Click to enlarge)

Donnelley RR & Sons Inc. netted $307.44 based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 77% more than the market as a whole.

Republic Services Inc. netted $166.37 based on dividends plus mean target price estimate from six analysts less broker fees. The Beta number showed this estimate subject to volatility 46% less than the market as a whole.

Nextera Energy Inc. netted $123.62 based on dividends plus mean target price estimate from twenty-one analysts less broker fees. The Beta number showed this estimate subject to volatility 64% less than the market as a whole.

Procter & Gamble Co. netted $118.97 based on a mean target price estimate from seventeen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 66% less than the market as a whole.

Connecticut Water Service netted $115.71, based on dividends plus a mean target price estimate by three analysts less broker fees. The Beta number showed this estimate subject to volatility 60% less than the market as a whole.

Consolidated Edison netted $114.54 based on estimates from fourteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to no volatility.

Alliance Resource Partners netted $106.86 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 2% less than the market as a whole.

Leggett & Platt Inc. netted $106.48 based on a mean target price estimate from two analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 5% more than the market as a whole.

Chevron Corporation netted $95.95 based on estimates from twenty-one analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 16% more than the market as a whole.

Johnson & Johnson (NYSE:JNJ) netted $89.19, based on dividend plus mean target price estimates from sixteen analysts less broker fees. The Beta number showed this estimate subject to volatility 44% less than the market as a whole.

The average net gain in dividend and price was over 9.7% on $1k invested in each of these ten dogs. This gain estimate was subject to average volatility 17% 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.

Source: 10 Carnevale Solid 40 DiviDogs Quest 6% To 26% Sept. Upsides