Results for S&P 500 Aristocrats Index members from Yahoo Finance tallied as of market closing prices November 15, 2013 were compared with analyst mean target gain results one year hence. The resulting chart of that data below showcased three stocks pursuing 10% to 11% price upsides. Coca-Cola Co. (NYSE:KO) the Atlanta purveyor of snack and soda consumer goods popped 9.85% to sport the lowest upside of those three. HCP Inc. (NYSE:HCP) the Long Beach, CA hybrid healthcare REIT charted 10.32% price upside to capture middle ground. Chevron Corp. (NYSE:CVX), an integrated oil & gas basic materials company from San Ramon, CA flashed 11.04% to lead the index.
On the downside, two S&P 500 Aristocrat dogs exhibited pending price slumps based on 1 yr. analyst mean target pricing. Clorox Co. (NYSE:CLX) the Oakland, DA based maker of housewares in the consumer goods sector charted 6.62% to the downside to most tempt hungry bears. Kimberly-Clark Corp. the Neenah, WI dispenser of personal products also residing in the consumer goods sector offered a 4.33% price downside for the bears to mull.
The charts above used the one year mean target price calculated from brokerage analysts matched against mid-month closing price to compare 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 S&P 500 Aristocrats 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.
The 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 S&P Aristocrats Index top dog selections for November were disclosed step by step. Four actionable conclusions were drawn.
Dog Metrics Rated S&P 500 Aristocrats Index Stocks by Yield
McGraw Hill, publisher of this index, states, "The S&P 500® Dividend Aristocrats index measures the performance of large cap, blue chip companies within the S&P 500 that have followed a policy of increasing dividends every year for at least 25 consecutive years."
November Aristocrats placed seven of nine business sectors into the top ten by yield. One of two financial firms, HCP, Inc., led the pack. The other financial, Cincinnati Financial (NASDAQ:CINF), placed ninth. A lone technology dog, AT&T (NYSE:T) was second. A lone utility, Consolidated Edison Inc. (NYSE:ED) was third. Two consumer goods firms placed fourth, and tenth: Leggett & Platt (NYSE:LEG), and Clorox Co. Two service sector firms, Sysco Corporation (NYSE:SYY), and McDonald's Corp (NYSE:MCD) placed fifth, and sixth. Basic Materials representative, Chevron Corp. placed seventh. Healthcare firm, AbbVie Inc. (NYSE:ABBV) was eighth and completed this top ten S&P 500 Aristocrats dog list.
Dividend vs. Price Results Compared to Dow Dogs
A graph of the relative strengths of the top ten Aristocrats dogs by yield is shown below as of market close 11/15/2013 compared to those of the Dow. Projected annual dividend history from $10,000 invested as $1k in each of the ten highest yielding stocks and the total single share price of those ten stocks created the data points shown in green for price and blue for dividend.
Actionable Conclusion (1): S&P Aristos & Dow Dogs Bullish; Both Stayed Overbought
November Aristocrats resumed a bullish price course set since March. Total single share price has increased nearly 26% over the past nine months including 2% since October. The top ten Aristocrats stocks confirmed a bull track as aggregate dividend from $10k invested as $1k in each dog decreased 1% since October. The Aristocrats dogs expanded their overbought condition as aggregate single share price of the ten exceeded projected annual dividend from $1k invested in each by about $223 or 58%.
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. (NYSE:JPM) replacing Microsoft (NASDAQ: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 (2): Wall St. Wizards Wand A 5% Net Gain from Top 20 Aristocrat Dogs By 2014
Top twenty dogs from the S&P 500 Aristocrats 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 5.36% net gain.
Factoring in a 0.447% loss from the negative net stocks introduced above, a net-net gain of 4.9% results.
Yahoo projected a 3% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by over 2.5% 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 stock's movement opposed to market direction.
Actionable Conclusion Three (3): Analysts Expect 9 S&P 500 Dividend Aristocrats Dogs to Net 4.8% to 13.5% By November 2014
Six of the top yielding dividend S&P 500 Aristocrats dogs were verified as being among the top nine gainers for the coming year by analyst 1 year target prices. So this month the dog strategy as graded by Wall St. wizards is 67% accurate.
Nine probable profit generating trades revealed by Yahoo Finance for 2014 were:
HCP Inc. netted $135.99 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 28% less than the market as a whole.
Chevron Corp. netted $123.68, based on dividend plus mean target price estimates from nineteen analysts less broker fees. The Beta number showed this estimate subject to volatility 12% more than the market as a whole.
Coca-Cola Co. netted $106.31 based on dividends plus a mean target price estimate from fifteen analysts less broker fees. The Beta number showed this estimate subject to volatility 74% less than the market as a whole.
McDonald's Corp. netted $88.26 based on dividends plus a mean target price estimate from twenty-one analysts less broker fees. The Beta number showed this estimate subject to volatility 72% less than the market as a whole.
AbbVie Inc. netted $80.54 based on dividends plus a mean target price estimate from twelve analysts less broker fees. The Beta number showed this estimate subject to volatility 93% more than the market as a whole.
AT&T Inc. netted $77.38 based on dividends plus a mean target price estimate from twenty-five analysts less broker fees. The Beta number showed this estimate subject to volatility 67% less than the market as a whole.
Leggett & Platt netted $70.88 based on target price estimates from three analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 7% less than the market as a whole.
PepsiCo Inc. (NYSE:PEP) netted $68.81 based on dividends plus a mean target price estimate from fifteen analysts less broker fees. The Beta number showed this estimate subject to volatility 68% less than the market as a whole.
Target Corp. (NYSE:TGT) netted $48.82 based on dividends plus a mean target price estimate from twenty-one analysts less broker fees. The Beta number showed this estimate subject to volatility 37% less than the market as a whole.
The average net gain in dividend and price was just about 9% on $9k invested as $1k in each of these nine dogs. This gain estimate was subject to average volatility 28% less than the market as a whole.
Actionable Conclusion (4): (Bear Alert) Analysts Forecast 2 S&P 500 Dividend Aristocrats Dogs to Post Net Losses of 3.4% & 5.6% By November 2014
Probable losing trades revealed by Yahoo Finance for 2014 were:
Kimberly-Clark Corp. (NYSE:KMB) lost $33.64, based on dividends and a mean target price estimate by seventeen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 88% less than the market as a whole.
Clorox Co. lost $55.90, based on dividends and a mean target price estimate by fifteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 52% less 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.
All 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 GE, INTC, JNJ, MCD, MSFT, PFE, 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.