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Executive summary:

  • 7 top S&P 500 Aristocrat index dividend dogs showed healthy 1 yr. upsides of 10.75% to 17.12% as of February 24 while three laggards in the top ten (as ranked by analyst mean target price) showed single digit results of 9.86% to 4.57%.
  • A mixed signal as neither bull nor bear flashed from the top yielding S&P 500 Aristocrat dogs as both dividend and price increased. Meanwhile a bear attacked the dogs of the Dow.
  • Analysts projected average 12.9% 1 yr. net gains for KO, PEP, MAT, CVX, TGT, PG, T, NUE, JNJ, LEG, and HCP.
  • Consider these stocks as possible starting points for your S&P 500 Aristocrat index dividend dog stock purchase research.

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S&P 500 Aristocrats Index results from Yahoo Finance tallied as of market closing prices February 24, 2014 compared with analyst mean target gain results one year out displayed seven stocks posting 10.75% to 17.12% price upsides.

The chart of that data shown below showed Coca-Cola Co. (NYSE:KO), Atlanta's beloved soft drink firm, with the high 17.12% upside to lead the pack of S&P Aristocrats Index. Trailing the seven dog lead pack were three single digit price upsiders with 4.57% to 9.86% projected gains. HCP Inc. (NYSE:HCP), a Long Beach CA healthcare REIT from the financial sector, showed the 4.56% upside at the very tail.

Arnold top Dow dog selections for February were disclosed below step by step. Four actionable conclusions were drawn.

Actionable Conclusion (1): 10 Aristocrat Dogs Seek 8% to 19% Upsides In January

The chart above used one year mean target price calculated from brokerage analysts matched against 2/24 closing price to compare sector 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 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

The object of this posting was 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 universe to include popular growth equities, if desired.

Dog Metrics Ranked S&P 500 Aristocrats Index Stocks by Yield

McGraw Hill, publisher if this index, states, "The S&P 500® Dividend Aristocrats index measures the performance of large cap, blue chip companies within the S&P 500 that have followed a policy of increasing dividends every year for at least 25 consecutive years."

February Aristocrats dogs by yield included firms representing seven of nine business sectors. One of two financial firms, HCP, Inc., led the pack. The other financial, Cincinnati Financial (NASDAQ:CINF), placed fifth. A lone technology dog, AT&T (NYSE:T), placed second. The singular utility, Consolidated Edison Inc. (NYSE:ED) was third. Three consumer goods firms placed fourth, ninth and tenth: Leggett & Platt (NYSE:LEG), Clorox Co. (NYSE:CLX) and Coca-Cola Co. Basic Materials representative, Chevron Corp. (NYSE:CVX), placed sixth. One service sector firm, McDonald's Corp. (NYSE:MCD), placed seventh. A lone Healthcare firm, AbbVie Inc. (NYSE:ABBV), was eighth and completed this top ten S&P 500 Aristocrats dog list.

Dividend vs. Price Results Compared to Dow Dogs

Periodic strengths of ten top Aristocrats dogs by yield was graphed below as of market closes through 2/24/2013 and compared to those of the Dow. Projected annual dividend history from $10,000 invested as $1k in each of the ten highest yielding stocks and the total single share price of those ten stocks created the data points shown in green for price and blue for dividend.

(click to enlarge)

Actionable Conclusion (2): S&P Aristo Dogs Gave a Mixed Up Signal as Dow Dogs Retreated

S&P Aristocrats top dividend payers showed neither bear nor bull in a mixed up signal into February. Total single share price increased 1.25% in that period. Aggregate dividend from $10k invested as $1k in each of the top ten S&P Aristocrats stocks also rose at a 1.25% 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. 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 Wanted Over 8% Net Gains from Top 20 Aristocrat Dogs By February 2015

Top twenty dogs from the S&P 500 Aristocrats 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.

(click to enlarge)

Yahoo projected a 6.3% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by over 6.8% in the coming year. Notice that price exceeded dividend signaling an analyst predicted overbought S&P Aristocrats 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 numbers indicated the degree of a stocks movement opposed to market direction.

Actionable Conclusion (4): Analysts Expected 10 S&P 500 Dividend Aristocrat Dogs to Net 8.3% to 18.4% By February 2015

Five of the top yielding dividend S&P 500 Aristocrat dogs were verified as being among the top ten gainers for the coming year by analyst 1 year target prices. So this month the dog strategy as graded by Wall St. wizards was 50% accurate.

Ten probable profit generating trades revealed by Yahoo Finance for 2015 were:

Coca-Cola Co netted $183.73 based on dividends plus a mean target price estimate from seventeen analysts less broker fees. The Beta number showed this estimate subject to volatility 65% less than the market as a whole.

PepsiCo Inc. (NYSE:PEP) netted $144.17 based on dividends plus a mean target price estimate from sixteen analysts less broker fees. The Beta number showed this estimate subject to volatility 64% less than the market as a whole.

Chevron Corp netted $137.19, based on dividend plus mean target price estimates from eighteen analysts less broker fees. The Beta number showed this estimate subject to volatility 11% more than the market as a whole.

Target Corp. (NYSE:TGT) netted $137.11 based on dividends plus a mean target price estimate from twenty-one analysts less broker fees. The Beta number showed this estimate subject to volatility 27% less than the market as a whole.

Procter & Gamble (NYSE:PG) netted $136.18 based on dividends plus a mean target price estimate from eighteen analysts less broker fees. The Beta number showed this estimate subject to volatility 60% less than the market as a whole.

AT&T Inc netted $135.22 based on dividends plus a mean target price estimate from twenty-four analysts less broker fees. The Beta number showed this estimate subject to volatility 67% less than the market as a whole.

Nucor Corp (NYSE:NUE) netted $122.25 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 49% more than the market as a whole.

Johnson & Johnson (NYSE:JNJ) netted $118.43 based on target price estimates from seventeen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 43% less than the market as a whole.

Leggett & Platt netted $91.93 based on target price estimates from three analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 11% less than the market as a whole.

HCP Inc. netted $83.38 based on dividends plus a mean target price estimate from eleven analysts less broker fees. The Beta number showed this estimate subject to volatility 56% less than the market as a whole.

The average net gain in dividend and price was over 12.8% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 33% less than the market as a whole.

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.

All 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.

Source: 7 Aristocrat Dogs Pursue 11% To 17% February Upsides