3 Global Dogs Plot 46% To 196% February Upsides

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 |  Includes: APSA, BBD, BSMX, CHRM, EC, ESV, FLY, GSK, IRS, KO, MSFT, NPD, OIBR, PVD, SAN, SID
by: Fredrik Arnold

Executive summary:

  • 8 top Global dividend dog stocks show aggressive 1 yr. analyst mean target price upsides averaging 45.87% as of February 21.
  • Dividend dropped as price popped up for top ten Global dogs to send a bullish sign but Dow dogs were bearish after January.
  • Analysts project average 57.8% 1 yr. net gains for SID, OIBR, BSMX, ESV, EC, BBD, FLY, & GSK.
  • Consider these as starting points for your Global dividend dog stock purchase research.

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Bargain stocks were revealed below as candidates to buy and hold for at least one year. This was one installment 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 has expanded the universe to include popular growth equities when desired.

This report tallied yield (dividend / price) results from here verified by Yahoo Finance for dividend paying American depository receipts small, mid & large cap shares (ADSs) as of market closing prices February 21 compared with analyst mean target prices one year hence. Four actionable conclusions were drawn.

Wall Street Wizard Weightings

One year mean target price set by brokerage analysts multiplied by the number of shares in a $1k investment were used to compare eight 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 for each stock. Three to nine analysts was considered optimal for a valid mean target price estimate.

Actionable Conclusion (1) Eight Global February Dividend Dogs Pursued 8% to 196% Upsides

Three Global firms were found projecting 46.52%, 75.78%, and 196.47% price upsides by next February. Santander Mexico Fincl Gp SAB deCV (ADR) (NYSE:BSMX) a foreign regional bank in the financial sector projected the lower 46.52% upside estimate. In the middle, Oi SA (NYSE:OIBR) a diversified communication services firm in the technology sector showed 75.78% price upside. At the top, Companhia Siderurgica Nacional (NYSE:SID) a steel & iron firm in the basic materials sector projected a 196.47% upside for the February global dogs. Five more global dogs back in the pack marked 7.99% to 29.84% price upside projections.

Dog Metrics Gauged Ten Top Global Stocks

Ten top global dividend stocks that showed the biggest dividend yields February 21 per Yahoo Finance data represented four sectors: technology; services; financial; basic materials. Top dog, Oi SA [Brazil] was best of two technology sector dogs which included Charm Communications Inc (NASDAQ:CHRM) in eighth place. The lone service firm, China Nepstar Chain Drugstore Ltd ADR (NYSE:NPD) placed second.

The best of six financial firms, Administradora de Fondos de Pensiones Provida S.A. [Chile] (NYSE:PVD) placed third. The other five financials placed fourth, fifth, sixth, ninth, and tenth: Alto Palermo S.A. [Argentina] (NASDAQ:APSA); Santander Mexico Fincl Gp SAB deCV ADR [Mexico] ; Banco Bradesco S.A [Brazil] (NYSE:BBD); Banco Santander, S.A.[Spain] (NYSE:SAN); IRSA Inversiones y Representaciones S.A. [Argentina] (NYSE:IRS). One basic materials representative, Ecopetrol SA ADR [Colombia] (NYSE:EC) placed seventh 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 2/21/2014 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.

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Actionable Conclusion (2): Global Dogs Charged Upward While Dow Dogs Retreated

Global dividend payers as of February 21 showed reduced dividend from $10k invested as $1k in each of the top ten stocks as their aggregate single share price rose to signal a bullish turn. Dividend dropped at a rate of 13% after January while total single share price popped up nearly 14% for that period.

Bears chased the Dow dogs as projected annual dividend from $10k invested as $1K in each of the top ten increased just xx% since January. Aggregate single share price dropped nearly xx% to confirm the mauling. 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 shrank a bit. The overhang was $111 or 29% for December, widened to $145 or 38% in January, now shrank to $xx or xx% for February. Most of this mauling was triggered by Coca-Cola Co. (NYSE:KO) replacing Microsoft (NASDAQ:MSFT) at the tail end of the ten Dow dogs this 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 (3): Wall St. Wizard Wisdom Weighed 28% 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 February 21, 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 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.

(click to enlarge)Click to enlarge

Yahoo projected a 12% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by nearly 11% 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 (4): Analysts Forecast 8 Global DiviDogs to Net 11% to 199% Come February 2015

Four of the ten top dividend yielding global dogs were verified as being among the eight gainers for the coming year based on analyst 1 year target prices. So this month the dog strategy for this collection as graded by Wall St. wizards was 50% accurate.

Eight probable profit generating trades were revealed by Thompson/First Call in Yahoo Finance into 2015:

Companhia Siderurgica Nacional netted $1994.55, based on dividends plus mean target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 98% greater than the market as a whole.

Oi SA netted $886.33 based on dividends plus a mean target price estimate from three analysts less broker fees. The Beta number showed this estimate subject to volatility 56% more than the market as a whole.

Santander Mexico Fincl Gp SAB deCV netted $544.17 based on estimates from five analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 93% less than the market as a whole.

Ensco plc [United Kingdom] (NYSE:ESV) netted $335.59 based on dividends plus a mean target price estimate from thirty-four analysts less broker fees. The Beta number showed this estimate subject to volatility 65% more than the market as a whole.

Ecopetrol SA netted $315.31 based on estimates from fifteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 29% less than the market as a whole.

Banco Bradesco S.A. netted $283.56 based on estimates from seven analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 61% greater than the market as a whole.

Fly Leasing Ltd. (NYSE:FLY) netted $147.21 based on estimates from six analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 29% less than the market as a whole.

GlaxoSmithKline PLC (NYSE:GSK) netted $113.78, based on dividend plus mean target price estimates from three analysts less broker fees. The Beta number showed this estimate subject to volatility 31% less than the market as a whole.

Average net gain in dividend and price was 57.8% on $8k invested as $1k in each of these nine Global dogs. This gain estimate was subject to average volatility 12% more than the market as a whole.

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 CSCO, GE, CVX, 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.