Results from Yahoo Finance tallied for Russell 1000 Index members as of market closing prices November 15 were compared to analyst mean target price projections one year hence. The resulting chart of that data showed four top stocks exhibiting 12% to 17% price upsides. Starwood Property Trust Inc. (STWD), the Greenwich, CT based diversified REIT firm from the financial sector, exhibited a 12.18% and showed the lowest upside of those top four. CenturyLink Inc. (CTL), the telecom services technology from Monroe, LA, posted an upside number just over 13%. Two financial companies took the top spots: Hatteras Financial Corp. (HTS), a residential REIT based in Winston Salem, NC, at 14.72% placed next to the top, and Mack Cali Realty Corp. (CLI), an office REIT based in Edison, NJ, posted a 17.37% price upside lead the Russell 1000 Index of large-cap stocks in 1 yr target price upside. Six other members of the index back in the pack showed 4.52% to 11.98% price upsides.
On the downside, one Russell 1000 index stock exhibited a pending price slump based on 1 yr. analyst mean target pricing. New York Community Bancorp (NYCB) the Westbury, NY based savings & loan bank in the financial sector measured 11.57% to the downside to tempt hungry bears.
The charts above used the one year mean target price set by brokerage analysts matched against November 15 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 Russell 1000 Index as one 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 several stock indices: Dow 30; Russell 2000; S&P 500; S&P Aristocrats; Russell 1000; NASDAQ 100; Champions; Contenders; Challengers; Carnevale's Power 25 & Super 29 lists combined as his Solid 40.
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 Russell 1000 Index top dog selections for November were disclosed step by step.
Dog Metrics Parsed Russell 1000 Index Stocks by Yield
Russell Investments states:
"The Russell 1000 Index measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000® Index and includes approximately 1000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 92% of the U.S. market.
The Russell 1000 Index is constructed to provide a comprehensive and unbiased barometer for the large-cap segment and is completely reconstituted annually to ensure new and growing equities are reflected."
The top ten stocks in this index promising the biggest yields in November represented three of nine sectors. However seven firms including the top dog were financial and American Capital Agency (AGNC) led these. The rest of the financial firms placed second, third and fifth through eighth: (2) Annaly Capital Management Inc (NLY); (3) Hatteras Financial Corp.; (5) MFA Financial Inc. (MFA); (6) Chimera Investment Corp. (CIM); (7) Two Harbors Investment (TWO); (8) Ares Capital Corp. (ARCC). Two technology firms, Windstream Corp. (WIN) and Frontier Communications (FTR) occupied the fourth and ninth slots. Finally, one basic materials company, Seadrill Limited (SDRL) placed tenth and completed the Russell 1000 top ten dogs.
Dividend vs. Price Results Compared to Dow Dogs
Graphs below plotted the relative strengths of the top ten Russell 1000 dogs by yield as of market close 11/15/2013 compared to those of the Dow. 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.
Actionable Conclusion One: Russell 1000 Cowed by Bear While Dow Dogs Chased Bulls
The November Russell 1000 collection of dividend payers cowered. Top ten dog annual dividend from 10k invested as $1k in each dog increased over 2.7% since October while aggregate single share price of the ten dropped 3.4%.
For the Dow dogs, meanwhile, projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs dropped over 1.1% since October, while aggregate single share price jumped up nearly 5.3%. 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 grew some. The overhang was $125 or 33% in August, and expanded to $161 or 43% for September, shrank down to $111 or 30% for October, and expanded again to $140 or 38'% as of November 14. Most of this bull rally was triggered by JPMorgan Chase & Co. (JPM) replacing Microsoft (MSFT) in the top ten Dow dogs this past month.
To quantify the top dog rankings, analyst mean price target estimates provide a "market sentiment" gauge of upside potential and was added to the simple high yield "dog" metric used to dig out bargains.
Actionable Conclusion Two: Wall St. Wizards Wrest 13% Net Gain from Top 20 Russell 1000 Dogs By 2014
Top twenty dogs from the Russell 1000 index were graphed below to show relative strengths by dividend and price as of November 15, 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 over 13.09% net gain.
Factoring in a 0.395% loss from the negative net stock introduced above, a net gain of 12.9% results.
Yahoo projected nearly a 1.5% lower dividend from $10K invested in this group while aggregate single share price was projected to increase over 11.5% 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 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 Three: Analysts Forecast 10 Russell 1000 DiviDogs to Net 10.9% to 25.5% By October 2014
Six of the top yielding dividend Russell 1000 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 60% accurate.
Ten probable profit generating trades revealed by Yahoo Finance for 2014 were:
Hatteras Financial Corp netted $254.62 based on a mean target price estimate from eleven analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 72% less than the market as a whole.
American Capital Agency netted $226.03 based on dividends plus mean target price estimate from eighteen analysts less broker fees. The Beta number showed this estimate subject to volatility 84% less than the market as a whole.
Mack Cali Realty Corp. netted $213.15, based on dividends plus a mean target price estimate by ten analysts less broker fees. The Beta number showed this estimate subject to volatility 9% less than the market as a whole.
MFA Financial Inc. netted $195.16 based on dividends plus mean target price estimate from thirteen analysts less broker fees. The Beta number showed this estimate subject to volatility 65% less than the market as a whole.
Windstream Corp netted $195.16 based on dividends plus mean target price estimates from fourteen analysts less broker fees. The Beta number showed this estimate subject to volatility 7% less than the market as a whole.
Annaly Capital Management Inc netted $187.83 based on estimates from eighteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 81% less than the market as a whole.
CenturyLink Inc. netted $177.82 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 43% less than the market as a whole.
Starwood Property Trust Inc. netted $171.18, based on dividend plus mean target price estimates from four analysts less broker fees. The Beta number showed this estimate subject to volatility 3% greater than the market as a whole.
R.R. Donnelley & Sons Co. (RRD) netted $160.34 based on dividends plus the mean of annual price estimates from four analysts less broker fees. The Beta number showed this estimate subject to volatility 83% greater than the market as a whole.
Ares Capital Corp. netted $109.88 based on dividends plus the mean of annual price estimates from sixteen analysts less broker fees. No Beta number was available for ARCC.
The average net gain in dividend and price was over 18.9% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 31% less than the market as a whole.
Actionable Conclusion Four: (Bear Alert) Analysts Forecast 1 Russell 1000 DiviDog to Post Net Loss of 3.9% By November 2014
The probable losing trade revealed by Yahoo Finance for 2014 was:
New York Community Bancorp lost $39.45, based on dividends and a mean target price estimate by twenty analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 21% more than the market as a whole.
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.