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 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.
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) Ten Global Dividend Dogs Pursued 8% to 179% Upsides for March
Dog Metrics Gauged Ten Top Global Stocks
Thirty small, mid, and large cap Global equities were culled by yield from over 274 common and preferred choices for this article. Small cap firms showed $300M to $2B; mid cap showed $2B to $10B; large showed over $10B in market capitalization.
Ten top global dividend stocks that showed the biggest dividend yields March 25 per Yahoo Finance data represented just three sectors: technology; financial; basic materials. Top dog, Oi SA [Brazil] (NYSE:OIBR) was the lone technology sector dog. The lone basic materials firm, Ecopetrol SA ADR [Columbia] (NYSE:EC) placed eighth .
The best of eight financial firms, Administradora de Fondos de Pensiones Provida S.A. [Chile] (NYSE:PVD) placed second. The other seven financials placed third through seventh, ninth, and tenth: Alto Palermo S.A. [Argentina] (NASDAQ:APSA); Santander Mexico Fincl Gp SAB deCV ADR [Mexico] (NYSE:BSMX); Banco Bradesco S.A [Brazil] (NYSE:BBD); Barclays Bank Plc ADR (Sponsored) Pref Shs Ser 5 [U.K.] (BCD-PD); HSBC Holdings Plc ADR Ser A Rep 1/40 Pfd Ser A [U.K.] (HSEA); Royal Bank of Scotland Group Plc ADR (Sponsored) Ser F Repr Pref Shs Ser F [U.K.] (RBS-PM); Banco Santander, S.A.[Spain] (NYSE:SAN) to complete the top ten global dogs by yield.
Dividend vs. Price Results Compared to Dow Dogs
The graphs below compare top ten Global dogs by yield as of market close 3/25/2014 with those of the Dow industrials index. Projected annual dividend history from $10,000 invested as $1k in each of the ten highest yielding stocks was graphed along with the total single share price of those ten stocks. The resulting data points were shown in green for price and blue for dividends.
Actionable Conclusion (2): Global & Dow Dogs Both Chased Bulls
Global dividend payers as of March 25 showed falling dividend from $10k invested as $1k in each of the top ten stocks, while their aggregate single share price rose sharply upward to signal a bullish turn. Dividend dropped at a rate of 5.2% after February, while total single share price popped up over 33% for that period. The change was mostly attributable to three large banks joining the top ten Global list.
The Dow dogs, meanwhile, turned mildly bullish as projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs fell 1.5% since February, while aggregate single share price rose 5.5%. 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) grew x%. The overhang of $126 or 33% in February, widened to $150 or 40% March 25. Some of the recent move was attributable to Merck (NYSE:MRK) replacing Coca-Cola Co. (NYSE:KO) in the top ten Dow dog list
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 31.6% 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 March 25, 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 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 14% lower dividend from $10K invested in this group, while aggregate single share price was projected to increase by over 14% 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 10 Global DiviDogs Net 11.5% to 182.5% Come 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 40% accurate.
Ten probable profit generating trades were revealed by Thompson/First Call in Yahoo Finance into 2015:
Companhia Siderurgica Nacional (NYSE:SID) netted $1825.79, based on dividends plus mean target price estimate from six analysts less broker fees. The Beta number showed this estimate subject to volatility 93% greater than the market as a whole.
Oi SA netted $1,026.67 based on dividends plus a mean target price estimate from three analysts less broker fees. The Beta number showed this estimate subject to volatility 58% less than the market as a whole.
Vodafone Group (NASDAQ:VOD) netted $821.30 based on estimates from four analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 35% less than the market as a whole.
Santander Mexico Fincl Gp SAB deCV netted $517.12 based on estimates from five analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 40% less than the market as a whole.
IRSA Inversiones y Representaciones S.A. (NYSE:IRS) netted $445.50 based on estimates from two analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 118% greater than the market as a whole.
Fly Leasing Ltd. (NYSE:FLY) netted $289.24 based on estimates from five analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 29% less than the market as a whole.
Telefonica Brasil SA (NYSE:VIV) netted $209.89, based on dividend plus mean target price estimates from nine analysts less broker fees. The Beta number showed this estimate subject to volatility 7% less than the market as a whole.
Banco Bradesco S.A. netted $168.50 based on estimates from seven analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 66% greater than the market as a whole.
Ecopetrol SA netted $128.35 based on estimates from fourteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 28% less than the market as a whole.
Ensco plc (NYSE:ESV) netted $115.28 based on dividends plus a mean target price estimate from twenty-nine analysts less broker fees. The Beta number showed this estimate subject to volatility 64% more than the market as a whole.
Average net gain in dividend and price was 55.5% on $10k invested as $1k in each of these ten Global dogs. This gain estimate was subject to average volatility 14% 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, 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.