This end of month report tallied results from here as verified using Yahoo Finance data for the services sector as of market closing prices November 1 along with analyst mean target price results one year hence. The comparison found 3 firms expecting 21.65% to 30.68% price upsides.
Diana Containerships Inc (DCIX) a Greek basic shipping firm at 21.65% showed the lowest upside of those three. Macquarie Infrastructure Co (MIC) a New York headquartered basic materials wholesaler at 22.19% showed the mid-best upside. Finally, Marchex Inc. (MCHX) a Seattle headquartered marketing services firm exhibited a 30.68% price upside to lead the November 1 services sector dogs. Seven other firms back in the pack showed 5.28% to 18.06% upsides.
The chart above used one year mean target price set by brokerage analysts matched against November 1 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 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 (BasMats), consumer goods (ConGo), financials (Fins), healthcare (Heal), industrial goods (IndiGo), services (Svcs), technology (Tec), and utilities (Utes).
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 Services Sector selections for October were disclosed step by step.
Dog Metrics Parsed Ten Top Services Sector Stocks
The top ten services sector stocks showing the biggest dividend yields November 1 per Yahoo represented four industries. Top services stock by dividend yield was Diana Containerships Inc , one of six stocks representing the shipping industry. Other shippers were Teekay Tankers (TNK) in second; Navios Maritime Partners (NMM) in third; Capital Product Partners (CPLP) in fifth place; Ship Finance International (SFL) in eighth, Knightsbridge Tankers (VLCC) in tenth. Strayer Education (STRA) stood for education and training in fourth place. Two consumer service firms placed sixth and ninth: Intersections Inc. (INTX), and Student Transportation Inc (STB). Finally, StoneMor Partners represented personal services in seventh place to complete the services sector top ten dogs.
Dividend vs. Price Results Compared to Dow Dogs
The graph below of relative strengths of the top ten services 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): Services Dogs Were Bearish While Dow Dogs Dithered
The October services collection of dividend payers turned bearish in October. Total single share price plunged 26.5% since September. Aggregate dividend from $10k invested as $1k in each of the top ten services stocks, rocketed up at a rate of 22% since then. The bearish services sector sentiment was likely exaggerated 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 Wizards Forecast 15.6% Net Gain from Top 20 Services Dogs Come 2014
Top twenty dogs for the services 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 upsides to 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 the 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 6% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by 7.7% 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 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 stock price movement opposite of market direction.
Actionable Conclusion (3): Analysts Forecast 2014 Services DiviDog Stock Net Gains of 14% to 35%
Six of the ten top dividend yielding services 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 this 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:
Marchex, Inc. netted $350.45 based on dividends plus mean target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 65% less than the market as a whole.
Diana Containerships Inc netted $337.65 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 43% more than the market as a whole.
Macquarie Infrastructure Co. netted $265.35, based on dividends plus mean target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 11% greater than the market as a whole.
Stonemor Partners LP (STON) netted $255.09, based on dividend plus mean target price estimates from two analysts less broker fees. The Beta number showed this estimate subject to volatility 28% less than the market as a whole.
Capital Products Partners LP netted $229.73 based on target estimates from six analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 86% more than the market as a whole.
FLY Leasing Limited (FLY) netted $193.99 based on estimates from six analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 41% less than the market as a whole.
Ship Finance International netted $189.21 based on estimates from seven analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 23% more than the market as a whole.
Student Transportation Inc netted $176.83 based on dividends plus estimates from four analysts less broker fees. The Beta number showed this estimate subject to volatility 10% less than the market as a whole.
Copart, Inc. (CPRT) netted $174.94 based on dividends plus estimates from eight analysts less broker fees. The Beta number showed this estimate subject to volatility 22% less than the market as a whole.
Strayer Education netted $138.48, based on dividends plus mean target estimates from seven analysts less broker fees. The Beta number showed this estimate subject to volatility 43% more than the market as a whole.
The average net gain in dividend and price was 23.1% on $10k invested as $1k in each of these ten dogs less broker fees. This gain estimate was subject to average volatility 4% more than the market as a whole.
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 are suggested only as decent starting points for your sector dividend stock purchase research process. These are 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.