This monthly report tallied results from here as verified using Yahoo Finance data for healthcare sector stocks as of market closing prices January 13 along with analyst mean target price results one year hence. The comparison found Questcor Pharmaceuticals (QCOR) flaunting a 57.41% price upside over three times greater than the runner-up.
The nine healthcare dogs trailing Questcor showed 4.6% to 15.03% price upsides. This was the first actionable conclusion within this article.
On the downside, three stocks exhibited pending price slumps of 4.06% to 11.67% based on 1 yr. analyst mean target pricing. Meridian Bioscience, Inc. (VIVO) a Cincinnati based diagnostic substances provider weighed in at nearly 12% to the downside to most tempt hungry bears. This was the second actionable conclusion within this article.
The charts above used one year mean target price set by brokerage analysts matched against January 13 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.
Thirty For the Money
Since the fall of 2011 this report series applied dog dividend methodology to uncover possible buy opportunities in each of eight major market sectors listed by Yahoo Finance: basic materials (BasMats), consumer goods (ConGo), financials (Fins), healthcare (Heal), industrial goods (IndiGo), services (Svcs), technology (Tec), and utilities (Utes). In the past year the series has expanded to report (1) dividend yield; (2) price upside; (3) net gain results based on analyst 1 yr target projections.
Dog dividend methodology is 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. Now named Dogs of the Dow, O'Higgins system also works to find bargains in any collection of dividend paying stocks. Utilizing analyst price upside estimates has expanded the stock lists to include popular growth equities, if desired.
The report below tallied yield (dividend / price) results from Yahoo Finance for the healthcare sector as of market closing prices January 13 and compared them to results for the top ten dogs of the Dow. Arnold top financial dog selections for January were disclosed below step by step. Four additional actionable conclusions were drawn to total six including the price upside and downside insights noted above.
Dog Metrics Metered Healthcare Stocks by Yield
Top ten healthcare sector dogs showing the biggest dividend yields by this screen as of January 13 represented just three industries. Top healthcare sector stocks were two of eight drug manufacturers - major on this list, GlaxoSmithKline (GSK) and AstraZeneca PLC (AZN). PetMed Express (PETS), in third, represented drug delivery firms. In fifth place, Select Medical Holdings Corporation (SEM) was the lone hospitals representatives. The other six major drug manufacturers placed fourth and sixth through tenth: Eli Lilly and Company (LLY); Sanofi SA (SNY); Merck & Co. Inc. (MRK); AbbVie Inc. (ABBV); Novartis AG (NVS) completed the top ten healthcare dogs.
Sector Leader Dividend vs. Price Results Compared to Dow Index Dogs
The graphs below compare relative strengths of the top ten healthcare sector dogs by yield as of market close 1/13/2014 with those of the Dow industrials index. 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 made the data points shown in green for price and blue for dividends.
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Actionable Conclusion (3): Healthcare Got Bullish As Dow Dogs Retreated
The Healthcare collection of dividend payers continued to a very bullish course since October as total single share price shot up over 8% and aggregate dividend from $10k invested as $1k in each of the top ten healthcare dogs dropped at a rate of nearly 7.7 % since November. The healthcare pack again expanded in overbought territory as aggregate single share price moved atop dividend derived from $10K invested as $1k in each. December/January healthcare top ten price exceeded dividend by $76 or 20%.
For the Dow dogs, meanwhile, projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs increased over 2.5% since November as aggregate single share price fell nearly 4%. The Dow dogs overbought condition in which aggregate single share price of the ten exceeded projected annual dividend from $10k invested in those ten (@$1k each) shrank again. The overhang was $161 or 43% for September; shrank down to $111 or 30% for October; expanded to $140 or 38% to end November; shrank back to $111 or 29% into December/January.
To quantify the top dog rankings, analyst mean price target estimates provided a "market sentiment" gauge of upside potential and so were added to the simple high yield "dog" metric used to dig out bargains.
Actionable Conclusion (4): Wall Street Wizards Willed Nearly 9% Net Gain from Top 20 Healthcare Dogs Come 2015
Top twenty dogs from the Healthcare sector were graphed below to show relative strengths by dividend and price as of November 1, 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 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 8.98% net gain.
Factoring in a .95% loss from the three negative net stocks introduced above, a net net gain of 8.04% results.
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Yahoo projected a 4.6% lower dividend from $10K invested as $1k in ten dogs in this group while aggregate single share price for those ten was projected to increase by 7.6% 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 of 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 (5): Analysts Forecast Ten 2015 Healthcare DiviDog Net Gains of 5.4% to 57.7%
Five of the ten top dividend yielding healthcare 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 financial sector as graded by Wall St. wizards was 50% accurate.
Ten probable profit generating trades were revealed by Thompson/First Call in Yahoo Finance for 2015:
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Questcor Pharmaceuticals netted $576.65 based on estimates from eight analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 8% less than the market as a whole.
Sanofi netted $166.29, based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 10% more than the market as a whole.
GlaxoSmithKline PLC netted $127.87 based on dividends plus a mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 35% less than the market as a whole.
AbbVie Inc. netted $121.68 based on dividends plus the mean of annual price estimates from twelve analysts less broker fees. A Beta number was not available for ABBV.
Quest Diagnostics (DGX) netted $118.60 based on dividend plus a mean target price estimate from twenty-one analysts less broker fees. The Beta number showed this estimate subject to volatility 39% less than the market as a whole.
Mine Safety Appliances Co. (MSA) netted $116.50, based on dividends four analysts less broker fees. The Beta number showed this estimate subject to volatility 65% more than the market as a whole.
Baxter International, Inc. (BAX) netted $106.39 based on estimates from seventeen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 44% less than the market as a whole.
Pfizer (PFE) netted $100.83 based on dividends plus the mean of annual price estimates from eighteen analysts less broker fees. The Beta number showed this estimate subject to volatility 22% less than the market as a whole.
Eli Lilly and Company netted $80.25 based on dividends plus mean target price estimate from eighteen analysts less broker fees. The Beta number showed this estimate subject to volatility 71% less than the market as a whole.
Johnson & Johnson (JNJ) netted $53.97 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 46% less than the market as a whole.
Average net gain in dividend and price was 15.7% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 29% less than the market as a whole.
Actionable Conclusion (6): (Bear Alert) Analysts Forecast 3 Healthcare DiviDogs to Post Net Losses of 3.5% to 11% By 2015
Three probable losing trades revealed by Yahoo Finance for 2015 were:
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Meridian Bioscience, Inc. lost $110.30 based on dividend and a mean target price estimate from eight analysts including broker fees. The Beta number showed this estimate subject to volatility 44% more than the market as a whole.
Select Medical Holdings lost $44.36 based on dividend and a mean target price estimate from six analysts including broker fees. The Beta number showed this estimate subject to volatility 28% more than the market as a whole.
Bristol-Myers Squibb (BMY) lost $34.62, based on dividend and mean target price estimates from eighteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 77% less than the market as a whole. .
The average net loss in dividend and price was 6.3% on $2k invested as $1k in each of these three dogs. This loss estimate was subject to average volatility 2% 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 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.