Results from Yahoo Finance tallied for NASDAQ 100 Index members as of market closing prices January 7, 2014 were compared to analyst mean target price projections one year hence. The resulting chart of that data shown below turned up ten stocks exhibiting 3.67% to 10.31% price upsides. Mattel, Inc. (MAT) an El Segundo, CA based toy & game consumer goods firm with showed the lowest upside of those ten. Maxim Integrated Products (MXIM) the San Jose, CA based semiconductor - broadline purveyor exhibited a 9.9% second best price upside while Apple, Inc. (AAPL) the Cupertino consumer electronics innovator showed 10.3% to lead the NASDAQ 100 Index. Perhaps it is just coincidence that both companies were recently prominently mentioned as likely to play major roles bringing revolutionary wearable electronics to market.
On the downside, four stocks exhibited pending price slumps of 5.06% to 10.46% based on 1 yr. analyst mean target pricing. Staples (SPLS) presented the least bear sentiment of the four, while CA Technologies (CA) slumped furthest to the downside to most tempt hungry bears.
he charts above used one year mean target price set by brokerage analysts multiplied by the number of shares in a $1k investment to compare NASDAQ 100 Index stocks showing the highest upside and downside price potential into 2014 out of 20 selected by yield. The number of analysts providing price estimates was noted after the name of each stock. Three to nine analysts were considered optimal for a valid mean target price estimate.
Thirty For the Money
This article was written to reveal bargain stocks to buy and hold for at least one year. It is one component in an ongoing series that has reported (1) dividend yield; (2) price upside; (3) net gain results based on analyst 1 yr target projections. Stocks reported were termed dogs because they were all selected based on Michael B. O'Higgins book "Beating The Dow" (HarperCollins, 1991), which revealed how high yielding stocks whose prices increased (and whose dividend yields therefore decreased) could be sold off once a year to sweep gains and reinvest the seed money into higher yielding stocks in the same index, named Dogs of the Dow. O'Higgins system works to find bargains in any collection of dividend paying stocks. Utilizing analyst price upside estimates expanded the stock universe to include popular growth equities, if desired.
The report below tallied yield (dividend / price) results from Yahoo Finance for the NASDAQ 100 Index as of market closing prices January 7 and compared them to results for the top ten dogs of the Dow. Arnold's top NASDAQ dog selections for January were disclosed below step by step. Four actionable conclusions were drawn.
Dog Metrics Measured NASDAQ 100 Stocks by Yield
"The NASDAQ-100 Index includes 100 of the largest domestic and international non-financial securities listed on The Nasdaq Stock Market based on market capitalization. The Index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain securities of financial companies including investment companies."
Just three of nine sectors were represented in the top ten NASDAQ dogs by yield as of January 7, 2014 per IndexARB.com data. Technology had six firms in the top ten showing high forward looking yields. Vodafone (VOD) claimed the top spot. The other five technology firms ranked third through sixth, and tenth: Garmin (GRMN); Maxim Integrated Products ; Intel (INTC); Cisco Systems (CSCO); with Microsoft (MSFT) in tenth. The remaining two NASDAQ high yield sectors for January included two consumer goods representatives, Kraft Foods Group, Inc. (KRFT) in second, and Mattel in the seventh slot. Two service firms took eighth and ninth places, Paychex (PAYX), and Staples and completed out the top ten NASDAQ 100 dogs by yield.
Dividend vs. Price Results Compared to Dow Dogs
The graph below displays the relative strengths of the top ten NASDAQ 100 dogs by yield as of market close 1/7/2014 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 (1): NASDAQ 100 Was Bearish as Dow Dogs Chased Bulls
NASDAQ 100 top January dividend payers turned downward after December. Total single share price dropped 5.5% in that period. Aggregate dividend from $10k invested as $1k in each of the top ten NASDAQ 100 stocks rose 0.83%.
The January numbers ended a December overbought condition which echoed a September and October situation in which aggregate single share price for the top ten NASDAQ 100 dogs exceeded dividend from $10k invested as $1k in each. A slight September excess in price over dividend gap of just $5 or 1% rose to $23 or 6% in October, but was obliterated in November as dividend grew to exceed declining price. December saw the overbought condition return with price exceeding dividend by $19 or 5%. As a result, NASDAQ top ten dividend vs price chart graph lines resemble a descending braided cord since September.
Bullish sentiment however returned to the dow dogs as projected annual dividend from $10k invested, as $1K in each of the top ten Dow dogs, dropped over 1.12% since December. Aggregate single share price went up over 1.6% to emphasize the bullish 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 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, expanded again to $140 or 38% in November, closed a bit to $111 or 29% for December, then grew again to $126 or 34% in January. Rising prices for most of the top ten dogs through December accounted for the change.
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 Wish A 5.4% Net Gain from Top 20 NASDAQ 100 Dogs By 2015
The top twenty dogs from the NASDAQ 100 index were graphed below to show relative strengths by dividend and price as of January 7, 2014 and those projected by analyst mean price target estimates to the same date in 2015.
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 2015.
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 2014. 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 2015 data points green for price and blue for dividend graphed from the plus row in the chart below exhibiting the 5.32% net gain.
Factoring in a 1.4% loss from the four negative net stocks introduced above, a net gain of 3.95% results.
Yahoo projected a slight 0.01% lower dividend from $10K invested in this group of 20 while aggregate single share price was projected to increase nearly 5% in the coming year. Notice that price exceeded dividend, signaling an analyst predicted overbought NASDAQ 100 index in 2014. 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 Three: Analysts Forecast 10 NASDAQ 100 DiviDogs to Net 5% to Nearly 12% By January 2015
Five of the ten top dividend yielding NASDAQ 100 dogs were verified as being among the top ten gainers for the coming year based on analyst 1 year target prices. So the January dog strategy was graded by Wall St. wizards as 50% accurate.
The ten probable profit generating trades revealed by Yahoo Finance for 2014 were led by Maxim and Apple upsides:
Maxim Integrated Products netted $116.55 based on dividends plus mean target price estimate from twenty-four analysts less broker fees. The Beta number showed this estimate subject to volatility 9% less than the market as a whole.
Apple, Inc. netted $107.93 based on a mean target price estimate from forty-nine analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 35% less than the market as a whole.
Kraft Foods Group, Inc netted $100.53 based on dividends plus mean target price estimate from eighteen analysts less broker fees. No Beta number was available for KRFT.
KLA-Tencor Corporation (KLAC) netted $93.91 based on a mean target price estimate from nineteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 37% greater than the market as a whole.
Symantec Corporation (SYMC) netted $87.74 based on a mean target price estimate from twenty analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 8% more than the market as a whole.
C.H. Robinson Worldwide (CHRW) netted $83.03 based on dividends plus mean target price estimate from twenty analysts less broker fees. The Beta number showed this estimate subject to volatility 40% more than the market as a whole.
Applied Materials (AMAT) netted $82.48 based on dividends plus mean target price estimate from nineteen analysts less broker fees. The Beta number showed this estimate subject to volatility 94% more than the market as a whole.
Cisco Systems , Inc. netted $72.34 based on dividends plus mean target price estimate from thirty-five analysts less broker fees. The Beta number showed this estimate subject to volatility 27% more than the market as a whole.
Garmin netted $65.38 based on dividends plus mean target price estimate from eleven analysts less broker fees. The Beta number showed this estimate subject to volatility 37% less than the market as a whole.
Mattel netted $51.48 based on dividends plus the mean of annual price estimates from eleven analysts less broker fees. The Beta number showed this estimate subject to volatility 32% less than the market as a whole.
The average net gain in dividend and price was over 8.6% on $10k invested as $1k in each of these dogs. This gain estimate was subject to average volatility 10% more than the market as a whole.
Actionable Conclusion (4): (Bear Alert) Analysts Forecast 4 NASDAQ 100 DiviDogs to Post Net Losses of 3.7% to 9.5% By 2015
Four probable losing trades revealed by Yahoo Finance for 2014 were:
Staples lost $37.72, based on dividends and a mean target price estimate by sixteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 65% more than the market as a whole.
Paychex, Inc. lost $63.25 based on dividend and a mean target price estimate from seventeen analysts including broker fees. The Beta number showed this estimate subject to volatility 7% less than the market as a whole.
Seagate Technology (SEA) lost $76.63 based on dividend and a mean target price estimate from twenty-three analysts including broker fees. The Beta number showed this estimate subject to volatility 213% more than the market as a whole.
CA Techologies lost $94.74 based on dividends and the mean of annual price estimates from ten analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 36% greater than the market as a whole.
The average net loss in dividend and price was nearly 7% on $4k invested as $1k in each of these four dogs. This loss estimate was subject to average volatility 77% 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.