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Summary

  • 8 top Utilities dividend dogs project 5.98% average 1 yr. upsides into April 2015 (per analyst mean target price).
  • Dividend dropped as price plunged for top ten Utilities dogs but Dow dogs got bullish for April.
  • Analysts project average 10.8% 1 yr. net gains for SXE, AT, TAC, SPH, UIL, BIP, HE, & SMLP.
  • Consider these stocks starting points for your Utilities dog dividend stock purchase research.

Yield (dividend / price) results from here verified by Yahoo Finance for small, mid, & large cap Utilities stocks as of market closing prices as of April 17 were compared with analyst mean target gain results one year out. The resulting chart of that data below displayed eight stocks averaging 5.98% price upsides. The eight included two diversified utilities at the top; three gas utilities with one as high as third; three electric utilities the best of which placed fourth.

Below, Arnold top dog selections for April by yield, price upsides, and net gains were disclosed step by step. Five actionable conclusions were drawn.

Actionable Conclusion (1) Eight Utilities Dividend Dogs Chased 2.8% to 9.4% April Upsides; Two Were 5.7% & 7.8% down

Since the fall of 2011 this report series applied dog dividend methodology to uncover possible buy opportunities in each of eight major market sectors listed by Yahoo Finance: basic materials (BasMats), consumer goods (ConGo), financials (Fins), healthcare (Heal), industrial goods (IndiGo), services (Svcs), technology (Tec), and utilities (Utes). In the past year the series expanded to report (1) dividend yield; (2) price upside; (3) net gain results based on analyst 1 yr. target projections.

Dog dividend methodology is 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. Now named Dogs of the Dow, O'Higgins system also works to find bargains in any collection of dividend paying stocks. Utilizing analyst price upside estimates has expanded the stock lists to include popular growth equities, if desired.

Dog Metrics Gauged Utilities Stocks by Yield

Utilities sector stocks that showed the biggest dividend yields April, per Yahoo Finance data, represented four industries: electric; diversified; gas; foreign. Tops was Atlantic Power Corporation (NYSE:AT) the most downtrodden electric firm. The next two dogs, Just Energy Group, Inc. [Canada] (NYSE:JE), and Southcross Energy Partners, L.P. (NYSE:SXE), in second and third places were two of three diversified utilities. TransAlta Corp. (NYSE:TAC), the other diversified firm, placed fifth. One gas firm placed fourth, Suburban Propane Partners (NYSE:SPH).

Four electric firms claimed slots six through eight & ten: Pepco Holdings, Inc. (NYSE:POM); Hawaiian Electric Industries (NYSE:HE); TECO Energy, Inc. (NYSE:TE); Brookfield Infrastructure Partners L.P. (NYSE:BIP).

A foreign utility, CPFL Energia S.A (NYSE:CPL) in ninth place completed the top ten dog list.

Dividend vs. Price Results Compared to Dow Dogs

Graphs shown below as of market close 4/17/2014 compared relative strengths of the top ten utilities sector dogs by yield with those of the Dow industrials index. 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 made the data points shown in green for price and blue for dividends.

(click to enlarge)

Actionable Conclusion (2): Utilities Dogs Ran Down While Dow Dogs Chased Bulls

Utilities dividend payers as of April 17 dropped in dividend from $10k invested as $1k in each of the top ten stocks while aggregate single share price of those ten also plunged. Dividend fell at a rate of 3.4% since March while total single share price dropped 17.3% as one new foreign utility dog pushed into the top ten.

For the Dow dogs, meanwhile, projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs dropped 2.4% since March while aggregate single share price rose 6.9%. 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) widened again. The overhang was $111 or 29% in December/January; expanded to $132 or 35% in February; swelled to $136 or 36% in March; then widened to $180 or 49% in April.

To quantify the top dog rankings, analyst mean price target estimates provided a "market sentiment" gauge of upside potential and so were added to the simple high yield "dog" metric used to dig out bargains.

Actionable Conclusion (3): Wall Street Wizards Expect 6.5% Net Gain from Top 20 Utilities Dogs Come April 2015

Top twenty dogs for the utilities sector were graphed below to show relative strengths by dividend and price as of April 17, 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 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 2% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by over 1% 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 market direction.

Actionable Conclusion (4): Analysts Forecast Eight April 2015 Utilities DiviDogs to Net 6% to 17%

Six of the eight top dividend yielding utilities dogs were verified as being among the ten gainers for the coming year based on analyst 1 year target prices. So this month the dog strategy for this sector as graded by Wall St. wizards was 75% accurate.

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

Southcross Energy netted $168.24, based on dividend plus mean target price estimates from five analysts less broker fees. The Beta number showed this estimate subject to volatility 40% greater than the market as a whole.

Atlantic Power Corporation netted $134.09 based on estimates from five analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 63% less than the market as a whole.

TransAlta Corp netted $117.47 based on dividends plus a mean target price estimate from six analysts less broker fees. The Beta number showed this estimate subject to volatility 86% less than the market as a whole.

Suburban Propane L.P netted $108.90 based on estimates from seven analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 36% less than the market as a whole.

UIL Holdings (NYSE:UIL) netted $98.04 based on dividends plus a mean target price estimate from ten analysts less broker fees. The Beta number showed this estimate subject to volatility 70% less than the market as a whole.

Brookfield Infrastructure Partners L.P. netted $96.03 based on estimates from five analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 51% less than the market as a whole.

Hawaiian Electric netted $79.96, based on dividends plus mean target price estimate from six analysts less broker fees. The Beta number showed this estimate subject to volatility 80% less than the market as a whole.

Summit Midstream Partners (NYSE:SMLP) netted $61.44 based on estimates from seven analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 7% greater than the market as a whole.

The average net gain in dividend and price was 10.8% on $10k invested as $1k in each of these ten utilities dogs. This gain estimate was subject to average volatility 42% less than the market as a whole.

Actionable Conclusion (5): (Bear Alert) Analysts Forecast 2 Utilities Dogs to Post Net Losses By 2015

Two probable losing trade revealed by analysts reported by Thompson/First Call in Yahoo Finance for 2015 were:

Pepco Holdings was projected to lose $26.09 based on dividend and a mean target price estimate from ten analysts including dividends & broker fees. The Beta number showed this estimate subject to volatility 80% less than the market as a whole.

Entergy Corporation (NYSE:ETR) was projected to lose $51.86 based on dividend and a mean target price estimate from fifteen analysts including dividends & broker fees. The Beta number showed this estimate subject to volatility 80% less than the market as a whole.

The average net loss was 3.9% on $2k invested as $1k in each of these two utilities dogs. This loss estimate was subject to average volatility 80% less than the market as a whole.

The net gain/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 sector dog dividend stock purchase/sale 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.

Graphs and charts were compiled by R&R, LLC from data derived from www.finance.yahoo.com; analyst mean target price by Thompson/First Call in Yahoo! Finance.

Source: 5 Ultra Utilities Dogs Produced 5% To 9% April Upsides