This monthly global investments report compared and contrasted December global stock yields against the Dow top ten constituents and found the nine global stocks with the highest analyst predicted net gains out of twenty ranked by yield. Four actionable conclusions were drawn.
First, results from here verified by Yahoo Finance for dividend paying American depository receipts for small, mid & large cap shares (ADSs) as of market closing prices December 24 compared to analyst mean target price results one year hence found three Brazilian firms projecting 29% to 127.83% price upsides by next December.
Companhia de Saneamento Basico do Estado de Sao Paulo-SABESP ADR (NYSE:SBS) a water and sanitation supplier in the utility sector delivered the 29% upside estimate. Oi SA (NYSE:OIBR) a diversified communication services firm in the technology sector with 61.45% showed the mid point upside of the three. At the top, Companhia Siderurgica Nacional (NYSE:SID) a steel & iron firm in the basic materials sector forged a 127.83% upside to lead the December global dogs. Six more global dogs back in the pack showed 4% to 26% price upsides.
On the downside, one stock exhibited a pending price slump of 15.2% based on 1 yr. analyst mean target pricing. Giant Interactive Group (NYSE:GA) a China based multimedia and graphics software firm in the technology sector projected a substantial downside to tempt hungry bears.
The charts above used one year mean target price set by brokerage analysts matched against December 24 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 report presumed yield (dividend / price) dividend dog methodology applied to global stocks and compared that list side by side with the Dow industrial index leaders. Below, the Arnold global dog selections for December were disclosed step by step.
Dog Metrics Measured Ten Top Global Stocks
Ten top global dividend stocks that showed the biggest dividend yields November 12 per Yahoo Finance data represented three sectors: technology; financial; basic materials. Top dog, Oi SA [Brazil] was best of three technology sector dogs which included Portugal Telecom S.A. (NYSE:PT) in third place, and Telefonica Brasil SA (NYSE:VIV) in ninth.
The best of five financial firms, Administradora de Fondos de Pensiones Provida S.A. [Chile] (NYSE:PVD) placed second. The other four financials placed fifth, sixth, eighth, and tenth: Alto Palermo S.A. [Argentina] (NASDAQ:APSA); IRSA Inversiones y Representaciones S.A. [Argentina] (NYSE:IRS); Banco Santander, S.A.[Spain] (NYSE:SAN); Westpac Banking (NYSE:WBK).
Two basic materials representatives, Companhia de Saneamento Basico do Estado de Sao Paulo, and Ecopetrol SA [Colombia] (NYSE:EC) placed fourth, and eighth to complete the top ten global dogs by yield.
Dividend vs. Price Results Compared to Dow Dogs
The graph below of relative strengths of the top ten Global dogs by yield as of market close 12/24/2013 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): Global Dogs Advanced While Dow Dogs Retreated
Global dividend payers as of December 24 showed less dividend from $10k invested as $1k in each of the top ten stocks as aggregate single share price of those ten increased. Dividend dropped at a rate of over 1.2% after November while total single share price improved 1.9% for that period.
Bearish sentiment returned to the dow dogs as projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs increased nearly 2% since November. Aggregate single share price dropped nearly 3.8% to confirm the bearish turn. 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 sank 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, expanded again to $140 or 38% in November, then closed a bit to $111 or 29% for December. Most of this bear attack was triggered by Microsoft (NASDAQ:MSFT) replacing JPMorgan Chase & Co. (NYSE:JPM) at the tail of 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. Wizard Wisdom Weighed 20% 1 yr. Net Gain from Top 20 Global Dogs
Top 20 dogs on the Global stock list were graphed below to show relative strengths by dividend and price as of December 24, 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 near 21% net gain.
Factoring in a 0.58% loss from the negative net stock introduced above, a net net gain of 20.3% resulted.
Yahoo projected a 6.2% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by over 16.3% 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 Global DiviDogs to Net 7% to 131%
Only three of the ten top dividend yielding utilities dogs were verified as being among the nine 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 33% accurate.
Nine probable profit generating trades were revealed by Thompson/First Call in Yahoo Finance for 2014:
Companhia Siderurgica Nacional netted $1,310.10, based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 75% greater than the market as a whole.
Oi SA netted $755.30 based on dividends plus a mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 77% more than the market as a whole.
Companhia de Saneamento Basico do Estado de Sao Paulo netted $356.33 based on estimates from two analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 69% more than the market as a whole.
Telefonica Brasil SA netted $299.89, based on dividend plus mean target price estimates from nine analysts less broker fees. The Beta number showed this estimate subject to volatility 3% less than the market as a whole.
Ecopetrol SA netted $280.15 based on estimates from fourteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 12% less than the market as a whole.
Ensco plc (NYSE:ESV) netted $161.88 based on dividends plus a mean target price estimate from thirty-two analysts less broker fees. The Beta number showed this estimate subject to volatility 65% more than the market as a whole.
BCE Inc. (NYSE:BCE) netted $121.93 based on estimates from thirteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 59% less than the market as a whole.
Total S.A. (NYSE:TOT) netted $75 based on estimates from eight analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 39% more than the market as a whole.
Fly Leasing Ltd. (NYSE:FLY) netted $71.53 based on estimates from six analysts plus dividends 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 38% on $1k invested in each of these nine Global dogs. This gain estimate was subject to average volatility 24% more than the market as a whole.
Actionable Conclusion (4): (Bear Alert) Analysts Forecast 1 Global DiviDog Plotted A Net Loss of 11.5% By November 2014
The probable losing trade revealed by Yahoo Finance for 2014 was:
Giant Interactive Group lost $115.11, based on dividend and mean target price estimates from nine analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 114% greater 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 Global 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, 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.