Results from Yahoo Finance tallied for NASDAQ 100 Index members as of market closing prices February 5, 2014 were compared to analyst mean target price projections one year out. The resulting chart of that data shown below turned up ten stocks exhibiting 8% to 22% price upsides. Symantec, (NASDAQ:SYMC) the Mountain View, CA security software and services provider showed the 22.15% that led the NASDAQ 100 Index. Perhaps the heightened interest in security issues surrounding the Sochi Olympics competition triggered the analyst enthusiasm.
Actionable Conclusion (1): 10 NASDAQ Dogs See 8.2% to 22.15% Upsides In Late January
The chart 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 price potential into 2015 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 February 5 and compared those results with analyst 1 yr target projections and the top ten dogs of the Dow. Arnold top dog selections for late January were disclosed step by step. Four actionable conclusions were drawn including the price upside list revealed above.
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 February 5, 2014 per IndexARB.com data. Technology had six firms in the top ten showing high forward looking yields. Vodafone (NASDAQ:VOD) claimed the top spot. The other five technology firms ranked fourth, and sixth through ninth: Garmin (NASDAQ:GRMN); Intel (NASDAQ:INTC); Seagate Technology (NASDAQ:STX); Maxim Integrated Products (NASDAQ:MXIM); Cisco Systems (NASDAQ:CSCO). The remaining two NASDAQ high yield sectors for January included two consumer goods representatives, Kraft Foods Group, Inc. (KRFT) in second, and Mattel (NASDAQ:MAT) in third. Two service firms took the fifth and tenth places, Paychex (NASDAQ:PAYX), and Staples (NASDAQ:SPLS), to complete 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 2/5/2014 compared to those of the Dow. Annual dividend projected from $10,000 invested as $1K in each of the ten highest yielding stocks and total single share price of those ten stocks created the data points shown in green for price and blue for dividend.
Actionable Conclusion (2): NASDAQ 100 Shrunk from Bears as Dow Dogs Dithered Up
NASDAQ 100 top January dividend payers turned decidedly downward through January. Total single share price dropped 9% in that period. Aggregate dividend from $10k invested as $1k in each of the top ten NASDAQ 100 stocks rose 9.9%.
Conflict infected the Dow dogs as projected annual dividend from $10k invested as $1K in each of the top ten increased nearly 2.5% since December. Aggregate single share price also increased nearly 6.3% to confirm the dithering. 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 $111 or 29% for December, and widened to $145 or 38% in January. Most of this dither up was triggered by Procter & Gamble (NYSE:PG) replacing Microsoft (NASDAQ:MSFT) at the tail end of the ten Dow dogs this month.
To quantify top dog rankings, analyst mean price target estimates provide a "market sentiment" gauge of upside potential. Added to the simple high yield "dog" metric, analyst mean price target estimates is another tool used to dig out bargains.
Actionable Conclusion (3): Wall St. Wizards Wish A 9.6% Net Gain from Top 20 NASDAQ 100 Dogs By 2015
Top twenty dogs from the NASDAQ 100 index were graphed below to show relative strengths by dividend and price as of February 5, 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.
Yahoo projected a 8.4% lower dividend from $10K invested in this group of 20 while aggregate single share price was projected to increase nearly 10.9% 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 (4): Analysts Forecast 10 NASDAQ 100 DiviDogs to Net 10.3% to Nearly 23.4% By January 2015
Six 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 60% accurate.
The ten probable profit generating trades revealed by Yahoo Finance into 205 were led by Symantec and Seagate upsides:
Symantec Corporation netted $233.85 based on a mean target price estimate from twenty-two analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 12% more than the market as a whole.
Seagate Technology netted $213.96 based on dividends plus mean target price estimate from twenty-three analysts less broker fees. The Beta number showed this estimate subject to volatility 214%% more than the market as a whole.
Staples netted $191/02 based on dividends plus mean target price estimate from sixteen analysts less broker fees. The Beta number showed this estimate subject to volatility 75% more than the market as a whole.
Mattel netted $162.67 based on dividends plus the mean of annual price estimates from ten analysts less broker fees. The Beta number showed this estimate subject to volatility 10% less than the market as a whole.
Kraft Foods Group, Inc netted $162.12 based on dividends plus mean target price estimate from eighteen analysts less broker fees. A Beta number was not available for KRFT.
Apple, Inc. (NASDAQ:AAPL) netted $148.58 based on a mean target price estimate from forty-five analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 27% less than the market as a whole.
KLA-Tencor Corporation (NASDAQ:KLAC) netted $138.21 based on a mean target price estimate from eighteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 34% greater than the market as a whole.
Garmin netted $125.10 based on dividends plus mean target price estimate from ten analysts less broker fees. The Beta number showed this estimate subject to volatility 35% less than the market as a whole.
Vodafone Group plc netted $107.97 based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 26% less than the market as a whole.
C.H. Robinson Worldwide (NASDAQ:CHRW) netted $103.40 based on dividends plus mean target price estimate from twenty analysts less broker fees. The Beta number showed this estimate subject to volatility 62% less than the market as a whole.
The average net gain in dividend and price was over 15.8% on $10k invested as $1k in each of these dogs. This gain estimate was subject to average volatility 19% more than the market as a whole.
The net gain 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.
Disclosure: I am long CSCO, CVX, 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.