Results from a consolidation of Chuck Carnevale's Power 25 & Super 29 Indices constituents listed as of market closing prices November 22 were compared to analyst mean target price projections one year hence. The chart of that data shown below highlighted Donnelley RR & Sons Inc (NASDAQ:RRD), a Chicago-based business services firm from the services sector exhibited a 14.1% price upside to lead Carnevale's Solid 40 index.
On the downside, three stocks exhibited pending price slumps of 3% to 10% based on 1 yr. analyst mean target pricing. Microsoft Corporation (NASDAQ:MSFT) the food wholesaler from the services sector presented the weakest 3.33% bear side sentiment. Diebold Inc. (NYSE:DBD) weighed in at 9.67% 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 pick out Carnevale's Index stocks showing the greatest upside & downside 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 for Chuck Carnevale's indices as one in a series of index-specific articles devoted to dividend yield and price upside results. Seeking Alpha reader requests prompted this series reporting dividend yield plus price upside results for these 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 Carnevale Power 25 & Super 29 Indices top dog selections for November were disclosed step by step.
Dog Metrics Measured Carnevale's Index Stocks by Yield
(1) Power 25 (top 20)
Respected stock analyst, Seeking Alpha blogger, and creator of Fastgraphs, Chuck Carnevale, published Our 25 Dividend Growth Stocks Are Dirt Cheap in November, 2011. He listed top 25 blue chip dividend growth stocks that: (1) were available at current valuations; (2) were significantly below their historical norms; (3) remained profitable through the great recession of 2008 and 2009.
Carnevale's top ten Power 25 stocks were ranked by yields calculated as of November 22 to reveal the top ten. Price and dividend data was sourced from Yahoo.com.
The top ten included firms representing seven of nine market sectors. The top stock as revealed by Yahoo Finance data, was one of two basic materials firms, Alliance Resource (NASDAQ:ARLP); Chevron Corp. (NYSE:CVX) the other basic materials firm placed fifth.
The balance of the top ten Power 25 included: two in the service sector, RR Donnelley & Sons , in second, while Sysco Corporation (NYSE:SYY), the other service firm, placed fourth. Two technology representatives, Intel Corporation (NASDAQ:INTC), and Microsoft Corporation, placed third and eighth. One healthcare firm, Novartis AG (NYSE:NVS) placed sixth. One utility, Nextera Energy (NYSE:NEE) ranked seventh. A lone industrial goods firm, Republic Services Inc. (NYSE:RSG) was ninth. . A single consumer goods firm, Procter & Gable (NYSE:PG) placed tenth completing the top ten Power 25 dogs.
The full list of Carnevale's Power 25 had five service, five healthcare, three consumer goods, one financial, three basic materials, five industrial, one utility, one technology and no conglomerates representing market sectors.
(2) Super 29 (top 20)
April 2, 2012, Seeking Alpha blogger, respected stock analyst, and creator of Fastgraphs, Chuck Carnevale, published 29 Dividend Champions That Beat The Market, Inflation & 2 Recessions Since 2001. He listed his top 29 blue chip dividend growth stocks that: (1) consistently raised dividends for 37 years (or more); (2) were at or below fair market value in 2001; (3) outperformed the S&P 500 on a total return basis.
Carnevale's Super 29 top ten stocks showing the biggest projected dividend yields as of November 22, 2013 included firms representing five of nine market sectors. Top stock revealed by Yahoo Finance data, was the only services firm in the top ten, Bowl America Class A (NYSEMKT:BWL.A). Second dog was one of three utilities, Consolidated Edison (NYSE:ED). The other utilities, Connecticut Water Service Inc. (NASDAQ:CTWS), and California Water Service (NYSE:CWT), were seventh and tenth on this top ten list.
Third place on the Super 29 list was filled by one of two basic materials firms, Northwest Natural Gas Co. (NYSE:NWN). The other basic materials firm Nucor Corp. (NYSE:NUE), placed ninth. The lone representative of the financial sector, United Bankshares Inc. (NASDAQ:UBSI) was fifth dog.
The balance of the top ten consisted of three consumer goods firms, Leggett & Platt Inc. (NYSE:LEG) in fifth, Diebold Inc. in sixth, and Procter & Gamble Co. in eighth to complete the top ten Super 29 dogs.
Chuck's full list of 29 stocks has four service, two healthcare, six consumer goods, two financial, three basic materials, six industrial goods, four utilities, no technology, and one conglomerate representing eight of nine market sectors.
Dividend vs. Price Results Compared to Dow Dogs
Relative strengths of the top ten Carnevale Power 25 dogs and the Carnevale Super 29 dogs by yield as of market close 11/22/2013 compared to those of the Dow were graphed below. Projected annual dividend history from $10,000 invested as $1k 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 (1): Carnevale Power 25 Dithered as Super 29 & Dow Got Bullish
Power 25 November dividend payers went one direction (up) in both dividends and price. In the past month the Power 25 top ten dog dividend inched up 0.3% while price moved up over 1.7% since October. The Power 25 dogs overbought condition increased. Aggregate single share price of the ten exceeded projected annual dividend from $10k invested as $1k in each of the ten by over $255 or 64% in June; narrowed to $211 or 57% in July/August; shrank to $174 or 44% for September, then widened to $208 or 55% in October, and expanded to $217 or 57% for November.
The Carnevale Super 29 top November dividend payers continued a bullish price course. Since October aggregate ten dog single share price increased over 2%. To reinforce the message, aggregate dividend from $10k invested in each of those top ten dogs decreased almost 1.6%. Aggregate single share price of the ten again exceeded projected annual dividend from $10k invested as $1k in each to expand the overbought condition of $27 or 7.5% recorded in October to $42 or 11.6% for November.
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 in the top ten Dow dogs last month.
The consolidation of Chuck Carnevale's Power 25 & Super 29 Indices constituents listed as of market closing prices November 22 and named Carnevale's Solid 40 ranked by yield as follows:
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 sniff out bargains.
Actionable Conclusion (2): Wall St. Wizards Willed a 5.4% Net Gain from Top 20 Carnevale's Solid 40 Index Dogs By 2014
Top twenty dogs from Chuck Carnevale's Solid 40 index were graphed below to show relative strengths by dividend and price as of November 22, 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 $1000 invested in the ten 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 5.36% net gain.
Factoring in a .66% loss from the three negative net stocks introduced above, a net net gain of 4.7% results.
Yahoo projected a 2.6% lower dividend from $10K invested in this group ($1k each) while aggregate single share price was projected to increase 2.7% 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 number indicated the degree of a stocks movement opposite of market direction.
Actionable Conclusion (3): Analysts Forecast 9 Carnevale's Solid 40 Dogs to Net 3.2% to 18.1% By October 2014
Four of the nine top dividend yielding Solid 40 index 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 Solid 40 index as graded by Wall St. wizards is 44% accurate.
The ten probable profit generating trades revealed by Yahoo Finance for 2014 were:
Donnelley RR & Sons Inc. netted $181.04 based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 83% more than the market as a whole.
Alliance Resource Partners netted $134.79 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 2% less than the market as a whole.
Republic Services Inc. netted $94.79 based on dividends plus mean target price estimate from seven analysts less broker fees. The Beta number showed this estimate subject to volatility 42% less than the market as a whole.
Consolidated Edison netted $88.01 based on estimates from fourteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility neutral to the market as a whole.
Chevron Corporation netted $87.07 based on estimates from nineteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 12% more than the market as a whole.
Leggett & Platt Inc. netted $61.81 based on a mean target price estimate from three analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 7% less than the market as a whole.
Connecticut Water Service netted $61.26, based on dividends plus a mean target price estimate by four analysts less broker fees. The Beta number showed this estimate subject to volatility 64% less than the market as a whole.
California Water Service GP netted $46.73 based on a mean target price estimate from two analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 42% less than the market as a whole.
Nucor Corp. netted $32.34 based on dividends plus mean target price estimate from twenty analysts less broker fees. The Beta number showed this estimate subject to volatility 56% more than the market as a whole.
The average net gain in dividend and price was nearly 9% on $1k invested in each of these nine dogs. This gain estimate was subject to average volatility 12% less than the market as a whole.
Actionable Conclusion (4): (Bear Alert) Analysts Forecast 3 Carnevale's Solid 40 Dogs to Post Net Losses of 2.3% to 8.2% By November 2014
Three probable losing trades revealed by Yahoo Finance for 2014 were:
Microsoft Corporation lost $23.48, based on dividends and a mean target price estimate by twenty-nine analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 21% less than the market as a whole.
Sysco Corp. lost $26.48 based on dividends and the mean of annual price estimates from eleven analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 36% less than the market as a whole.
Diebold Inc. lost $82.81, based on dividend and mean target price estimates from eight analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 14% greater than the market as a whole.
The average net loss in dividend and price was over 4% on $3k invested as $1k in each of these three dogs. This loss estimate was subject to average volatility 14% less 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 or short sale 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 INTC, MSFT, JNJ, GE, MCD, 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.