This end of month report tallied results from here as verified using Yahoo Finance data for healthcare sector stocks as of market closing prices November 1 along with analyst mean target price results one year hence. The comparison found 4 stocks exposing 12.86% to 17.16% price upsides.
Eli Lilly and Company (NYSE:LLY) the Indianapolis based drug manufacturer - major with 12.86% showed the lowest upside of those four. One step up, Merck & Co. Inc. (NYSE:MRK) the Whitehouse Station, NJ based drug manufacturer - major posted a 15.83% upside. Next to the best, Baxter International, Inc. (NYSE:BAX) a medical instruments and supplies company from Deerfield, IL showed 16.14% upside. At the top, Mine Safety Appliances Co. (NYSE:MSA) the Cranberry Twp., PA based Medical Appliances & Equipment firm pushed a 17.16% upside to lead those four. Six other Healthcare dogs back in the pack showed 5.11% to 11.82% price upsides.
On the downside, four stocks exhibited pending price slumps of 3.77% to 7.48% based on 1 yr. analyst mean target pricing. Kindred Healthcare, Inc. (NYSE:KND) a Louisville, KY based long-term care facilities firm presented the weakest 3.77% bearish sentiment while Meridian Bioscience, Inc. (NASDAQ:VIVO) a Cincinnati based diagnostic substances provider weighed 7.48% to the downside to most tempt hungry bears.
The charts above used one year mean target price set by brokerage analysts multiplied by the number of shares in a $1k investment to compare Healthcare sector stocks showing the highest upside and downside price potential into 2014 out of 20 selected by yield. The number of analysts providing price estimates was noted after the name of each stock. Three to nine analysts were considered optimal for a valid mean target price estimate.
This series of articles 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, consumer goods, financials, healthcare, industrial goods, services, technology, and utilities.
This report presumed yield (dividend / price) dividend dog methodology applied to any sector and compared that sector side by side with the Dow industrial index leaders. Below, the Arnold Healthcare Sector top dog selections for October were disclosed step by step.
Dog Metrics Filtered Out Ten Top Healthcare Stocks
Top ten healthcare sector dogs showing the biggest dividend yields by this screen as of November 1 represented four industries. Top healthcare sector stock was one of six drug manufacturers - major on this list: AstraZeneca PLC (NYSE:AZN). Nordion Inc. (NYSE:NDZ), second dog, represented the medical laboratories & research industry. In third place, Select Medical Holdings Corporation (NYSE:SEM) was one of two hospitals representatives. The other hospitals firm, Concord Medical Services Hldg Ltd. placed ninth. PetMed Express (NASDAQ:PETS), in fourth, represented drug delivery firms. The other five major drug manufacturers placed fifth through eighth, and tenth: GlaxoSmithKline (NYSE:GSK); Eli Lilly and Company; Merck & Co. Inc.; Sanofi SA (NYSE:SNY); Novartis AG (NYSE:NVS) completed the top ten healthcare dogs.
Dividend vs. Price Results Compared to Dow Dogs
The graph below of relative strengths of the top ten Healthcare sector dogs by yield as of market close 11/1/2013 compared to those of the Dow industrials index was prepared to show projected annual dividend history from $10,000 invested as $1k in each of the ten highest yielding stocks along with the total single share price of those ten stocks with the data points shown in green for price and blue for dividends.
Actionable Conclusion (1): Healthcare Very Bearish While Dow Dogs Dithered
The Healthcare collection of dividend payers reverted to a very bearish course after September as total single share price dropped 23.6% and aggregate dividend from $10k invested as $1k in each of the top ten healthcare dogs increased at a rate of 13% for the period. The healthcare pack exited overbought territory as aggregate single share price dropped below the dividend derived from $1K invested in each. The fully bearish market signal was emphasized by the author's use of a more inclusive stock screen for price and dividend data.
For the Dow dogs, meanwhile, projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs dropped just 0.6% since September, while aggregate single share price swooned 11%, ending a brief bullish track. The Dow dogs overbought condition in which aggregate single share price of the ten exceeded projected annual dividend from $1k invested in each of the ten shrank. The overhang was $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, then shrank down to $111 or 30% for October.
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 (2): Wall Street Wizard Wisdom Willed An 7.4% Net Gain from Top 20 Healthcare Dogs Come 2014
The top twenty dogs from the Healthcare sector were graphed below to show relative strengths by dividend and price as of November 1, 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 $20,000 invested as $1k in each of the 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 dividend graphed from the plus row in the chart below exhibiting the 7.39% net gain.
Factoring in a 1.05% loss from the four negative net stocks introduced above, a net gain of 6.34% results.
Yahoo projected a 4% lower dividend from $10K invested as $1k in ten dogs in this group while aggregate single share price for those ten was projected to increase by 5% 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 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 of 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 Ten 2014 Healthcare DiviDog Net Gains of 6.4% to 17.8%
Six of the ten top dividend yielding healthcare 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 financial sector as graded by Wall St. wizards was 60% accurate.
Ten probable profit generating trades were revealed by Thompson/First Call in Yahoo Finance for 2014:
Mine Safety Appliances Co. netted $178.30, based on dividends four analysts less broker fees. The Beta number showed this estimate subject to volatility 61% more than the market as a whole.
Merck & Co. Inc. netted $178.33 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 48% less than the market as a whole.
Baxter International, Inc. netted $171.18 based on estimates from fourteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 43% less than the market as a whole.
Eli Lilly and Company netted $147.92 based on dividends plus mean target price estimate from seventeen analysts less broker fees. The Beta number showed this estimate subject to volatility 68% less than the market as a whole.
Nordion Inc. netted $146.47 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 48% less than the market as a whole.
Abbott Labs (NYSE:ABT) netted $104.50 based on estimates from sixteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 34% less than the market as a whole.
Sanofi netted $104.50, based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 14% more than the market as a whole.
Select Medical Holdings netted $92.79 based on dividend plus a mean target price estimate from six analysts less broker fees. The Beta number showed this estimate subject to volatility 37% more than the market as a whole.
PetMed Express Inc. netted $77.77 based on dividends plus mean target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 49% greater than the market as a whole.
AbbVie Inc. (NYSE:ABBV) netted $63.74 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 593% more than the market as a whole.
The average net gain in dividend and price was 12.64% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 1% greater than the market as a whole.
Actionable Conclusion (4): (Bear Alert) Analysts Forecast 4 Healthcare DiviDogs to Post Net Losses of 2.8% to 9.3% By October 2014
Four probable losing trades revealed by Yahoo Finance for 2014 were:
Concord Medical Services (NYSE:CCM) lost $27.66, based on dividend and mean target price estimates from three analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 13% less than the market as a whole.
Kindred Healthcare, Inc. lost $28.52 based on dividends and the mean of annual price estimates from eight analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 175% greater than the market as a whole.
Bristol-Myers Squibb (NYSE:BMY) lost $60.78, based on dividends and a mean target price estimate by eighteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 71% less than the market as a whole.
Meridian Bioscience, Inc. lost $93.40 based on dividend and a mean target price estimate from seven analysts including broker fees. The Beta number showed this estimate subject to volatility 40% more than the market as a whole.
The average net loss in dividend and price was over 5.2% on $4k invested as $1k in each of these four dogs. This loss estimate was subject to average volatility 33% more than the market as a whole.
The net gain and loss 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.
Stocks listed above were suggested only as possible 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.
Disclosure: I am long JNJ, PFE, GE, INTC, MCD, MSFT, 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.