6 Nasdaq Dogs Chase 11% To 78% February Upsides

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 |  Includes: AAPL, CHRW, CSCO, GE, GRMN, INTC, KHC, KLAC, KO, MAT, MSFT, MXIM, PAYX, SPLS, STX, SYMC, VOD
by: Fredrik Arnold

Executive summary:

  • 6 top NASDAQ 100 index dividend dogs showed robust 1 yr. upsides of 10.53% to 78.37% as of February 24, while four laggards in the top ten (as ranked by analyst mean target price) showed single digit results of 4.91% to 7.27%.
  • Dividend and price both increased to show a mixed signal from the top yielding NASDAQ 100 dogs while a bear attack hit the dogs of the Dow.
  • Analysts projected average 19.1% 1 yr. net gains for VOD, SYMC, MAT, STX, SPLS, AAPL, KRFT, CHRW, CSCO, & KLAC.
  • Consider these stocks as possible starting points for your NASDAQ 100 index dividend dog stock purchase research.

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Results from Yahoo Finance tallied for NASDAQ 100 Index members as of market closing prices February 24, 2014 were compared to analyst mean target price projections one year out. The resulting chart of that data shown below turned up six stocks exhibiting 11% to 78% price upsides.

Vodafone Group plc, (NASDAQ:VOD) the British, telecommunications services provider showed the 78.37% upside that led the NASDAQ 100 Index. Four single digit price upsiders with 4.91% to 7.27% projected gains trailed the leading group of six double digit upsiders. KLA-Tencor (NASDAQ:KLAC) a Milipitas, CA based semiconductor equipment and materials concern was at the tail. Arnold top Dow dog selections for February were disclosed below step by step. Four actionable conclusions were drawn.

Actionable Conclusion (1): 10 NASDAQ Dogs See 4.9% to 78.37% February Upsides

The charts above used one year mean target price set by brokerage analysts, matched against February 24 closing price, to compare ten NASDAQ index stocks showing the highest upside price potential into 2015 out of 20 selected by yield from indexArb.com dividend data. 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.

Seeking Alpha reader requests prompted this series of index-specific articles reporting dividend yield plus price upside results for these indices: Dow 30; S&P 500; Russell 2000 & 1000; S&P Aristocrats; NASDAQ 100; Champions; Challengers; Global.

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.

Dog Metrics Measured NASDAQ 100 Stocks by Yield

NASDAQ states:

"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 24, 2014 per IndexARB data. Technology had six firms in the top ten showing high forward looking yields. Vodafone claimed the top spot. The other five technology firms ranked fifth, sixth, and eighth through tenth: Intel (NASDAQ:INTC); Garmin (NASDAQ:GRMN); Seagate Technology (NASDAQ:STX); Maxim Integrated Products (NASDAQ:MXIM); Cisco Systems (NASDAQ:CSCO).

The remaining two NASDAQ high yield sectors for February included two consumer goods representatives, Mattel (NASDAQ:MAT) in second, and Kraft Foods Group, Inc. (KRFT) in third. Two service firms took the fourth and seventh places, Staples (NASDAQ:SPLS), and Paychex (NASDAQ:PAYX), to complete the top ten NASDAQ 100 dogs by yield.

Dividend vs. Price Results Compared to Dow Dogs

The graph below displays relative strengths of the top ten NASDAQ 100 dogs by yield as of market close 2/24/2014 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.

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Actionable Conclusion (2): NASDAQ 100 Dogs Gave a Mixed Up Signal as Dow Dogs Retreated

NASDAQ 100 top February dividend payers were mixed upward into February. Total single share price increased 2.7% in that period. Aggregate dividend from $10k invested as $1k in each of the top ten NASDAQ 100 stocks also rose at a 7% pace.

Gloom returned to the Dow dogs as projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs increased 0.62% since January. Aggregate single share price fell 3.4% to confirm the bearish sign. 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 fell back. The overhang was $140 or 38% in November,closed a bit to $111 or 29% for December, expanded to $145 or 38% for January, then retreated to $125 or 33% in February. Most of this recent gloom on the Dow was triggered by Coca Cola Co. (NYSE:KO) replacing Microsoft (NASDAQ:MSFT) at the tail of the top ten Dow, accompanied by a General Electric (NYSE:GE) price drop propelling GE higher by yield.

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 Wrest 11% Net Gain from Top 20 NASDAQ 100 Dogs By February2015

Top twenty dogs from the NASDAQ 100 index were graphed below to show relative strengths by dividend and price as of February 24, 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.

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Yahoo projected a 9% lower dividend from $10K invested in this group of 20 while aggregate single share price was projected to increase over 9% in the coming year. Notice that price exceeded dividend signaling an analyst predicted overbought NASDAQ 100 index into 2015. 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 5.9% to 83.6% By February 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 February dog strategy was graded by Wall St. wizards as 60% accurate.

The ten probable profit generating trades revealed by Yahoo Finance into 2015 were led by Vodafone and Symantec upsides:

Vodafone Group plc netted $836.19 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.

Symantec Corporation (NASDAQ:SYMC) netted $212.25 based on a mean target price estimate from twenty-one 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.

Mattel netted $168.10 based on dividends plus the mean of annual price estimates from nine analysts less broker fees. The Beta number showed this estimate subject to volatility 10% less than the market as a whole.

Seagate Technology netted $156.40 based on dividends plus mean target price estimate from twenty-two analysts less broker fees. The Beta number showed this estimate subject to volatility 214%% more than the market as a whole.

Staples netted $124.14 based on dividends plus mean target price estimate from fifteen analysts less broker fees. The Beta number showed this estimate subject to volatility 75% more than the market as a whole.

Apple, Inc. (NASDAQ:AAPL) netted $115.68 based on a mean target price estimate from forty-four 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.

Kraft Foods Group, Inc netted $80.87 based on dividends plus mean target price estimate from seventeen analysts less broker fees. A Beta number was not available for KRFT.

C.H. Robinson Worldwide (NASDAQ:CHRW) netted $79.36 based on dividends plus mean target price estimate from eighteen analysts less broker fees. The Beta number showed this estimate subject to volatility 62% less than the market as a whole.

Cisco Systems netted $79.01 based on dividends plus mean target price estimate from ten analysts less broker fees. The Beta number showed this estimate subject to volatility 23% more than the market as a whole.

KLA-Tencor Corporation netted $58.96 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 34% greater than the market as a whole.

The average net gain in dividend and price was over 19.1% on $10k invested as $1k in each of these dogs. This gain estimate was subject to average volatility 26% 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.