This end of month report tallied results from here as verified using Yahoo Finance data for technology sector stocks as of market closing prices November 1 along with analyst mean target price results one year hence. The comparison found a pair of firms signaling 31.62% & 68.24% price upsides.
Silicon Motion Technology (SIMO) the Taiwan based diversified electronics developer with 31.62% showed the lower upside of the two. At the top, Oi SA (OIBR) the Brazilian diversified communications services entity flashed a 68.24% upside to lead the tec sector. Eight more tec sector dogs back in the pack showed 6.67% to 18.56% price upsides.
On the downside, two stocks exhibited pending price slumps of 9.43% & 18.37% based on 1 yr. analyst mean target pricing. NTELOS Holdings Corp. (NTLS) the Waynesboro, VA based wireless communications firm presented weaker bearish sentiment while Telecom Argentina S.A. (TEO) a Buenos Aires based diversified communications services firm measured 18.37% to the downside to most tempt hungry bears.
The charts 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 Tec selections for October were disclosed step by step.
Dog Metrics Tabbed Ten Top Technology Stocks
Top ten technology sector stocks from Yahoo Finance screens showing the biggest dividend yields November 1 represented four industries.
Top tec dog Oi SA, was the lone diversified communications services listed. Second technology sector dog, Windstream Corporation (WIN) was one of six telecom services - domestic representatives. The other telecom doms placed fourth, sixth, seventh, ninth, and tenth: Frontier Communications Corporation (FTR); Consolidated Communications Holdings (CNSL); CenturyLink, Inc. (CTL); BCE, Inc. (BCE); and AT&T, Inc. (T). Third dog, Portugal Telecom (PT), was one of two wireless technology firms. The other wireless firm, NTELOS Holdings Corp. placed fifth. Vodafone Group (VOD), in eighth was the lone telecom services - foreign representative and completed the October tec top ten dogs.
Dividend vs. Price Results Compared to Dow Dogs
The graph below of relative strengths of the top ten technology 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): Technology & Dow Dogs Both Dithered
The tec collection of dividend payers got confused after September as total single share price rocketed up 13% while aggregate dividend from $10k invested as $1k in each of the top ten tec dogs shot up at a rate of 11% for the period. The pop in market price and dividend 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 Expect 14.4% Net Gain from Top 20 Techno Dogs Come 2014
Top twenty dogs for the technology 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 14.38% net gain.
Factoring in a 0.92% loss from the two negative net stocks introduced above, a net net gain of 13.45% results.
Yahoo projected a near 8% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by over 6% 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 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 Tec DiviDog Stock Net Gains of 9.6% to 80%
Four of the ten top dividend yielding technology dogs were verified as being among the ten overall 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 40% accurate.
Ten probable profit generating trades were revealed by Thomson/First Call in Yahoo Finance for 2014:
Oi SA netted $803.53, based on dividends plus a mean target price estimate by five analysts less broker fees. The Beta number showed this estimate subject to volatility 8% less than the market as a whole.
Silicon Motion Technology netted $344.37 based on dividend plus a mean target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 131% greater than the market as a whole.
Philippine Long Distance (PHI) netted $209.66 based on dividend plus a mean target price estimate from two analysts less broker fees. The Beta number showed this estimate subject to volatility 25% greater than the market as a whole.
Compuware Corporation (CPWR) netted $204.11 based on estimates from six analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 18% more than the market as a whole.
STMicroelectronics (STM) netted $166.84 based on dividends plus the mean of annual price estimates from seven analysts less broker fees. The Beta number showed this estimate subject to volatility 57% greater than the market as a whole.
Windstream Corporation netted $163.84 based on dividends plus mean target price estimate from fourteen analysts less broker fees. The Beta number showed this estimate subject to volatility 7% less than the market as a whole.
Frontier Communications netted $146.29 based on a mean target price estimate from fourteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 20% less than the market as a whole.
Cypress Semiconductor (CY) netted $142.31 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 81% greater than the market as a whole.
CenturyLink, Inc. netted $128.60, based on dividends plus mean target price estimate from seventeen analysts. The Beta number showed this estimate subject to volatility 43% less than the market as a whole.
Verizon Communications (VZ) netted $95.67 based on dividend plus a mean target price estimate from twenty-eight analysts less broker fees. The Beta number showed this estimate subject to volatility 84% less than the market as a whole.
The average net gain in dividend and price was 24.05% on $1k invested in each of these ten tec dogs. This gain estimate was subject to average volatility 15% greater than the market as a whole.
Actionable Conclusion (4): (Bear Alert) Analysts Forecast 2 Tec DiviDogs to Post Net Losses of 2.5% & 16% By October 2014
Two probable losing trades revealed by Yahoo Finance for 2014 were:
NTELOS Holdings Corp. lost $24.79, based on dividend and mean target price estimates from five analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 16% more than the market as a whole.
Telecom Argentina S.A. lost $160.02 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 30% greater than the market as a whole.
The average net loss in dividend and price was over 9.2% on $2k invested as $1k in each of these two dogs. This loss estimate was subject to average volatility 23% 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.