Seeking Alpha
Dividend investing, growth, momentum
Profile| Send Message|
( followers)  

Summary

  • 6 top S&P 500 Aristocrat dividend dogs showed price upsides above 5% as of May 5 while four lagged (as ranked by analyst mean target price) with 3.63%o 4.91%.
  • Charging bulls pursued both S&P 500 Aristocrats and the dogs of the Dow.
  • Analysts projected average 7.1% 1 yr. net gains for KO, GPC, PEP, PG, ABBV, NUE, TGT, JNJ, MCD, & CVX.
  • Consider these stocks as possible starting points for your S&P 500 Aristocrat index dividend dog stock purchase research.

S&P 500 Aristocrats Index results from Yahoo Finance tallied as of market closing prices May 5, 2014 compared with analyst mean target gain results one year out displayed ten stocks posting an average of 6.11% 1 yr. price upsides.

A chart of that data shown below showed consumer goods and services led the pack of S&P Aristocrats Index dogs. Trailing those in the lead were healthcare and basic materials dogs.

Arnold top S&P Aristocrat dog selections for April were disclosed below step by step. Four actionable conclusions were drawn.

Actionable Conclusion (1): 10 Aristocrat Dogs Chase 3.63% to 9.4% Upsides In April

One year mean target price calculated from brokerage analysts compared to end-of-month closing price determined which sector stocks showed the highest upside price potential into 2015 out of 20 selected by yield in the chart below. 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. Two recent bonus reports were: Sindex, & SuSindex.

Thirty For the Money

This posting revealed bargain stocks to buy and hold for at least one year. 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."

Ten top April Aristocrats by yield included firms representing seven of nine business sectors: financial; technology; utilities; consumer goods; basic materials; healthcare; services. One of two financial firms, HCP, Inc. (NYSE:HCP), 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, eighth, and tenth: Leggett & Platt (NYSE:LEG), Clorox Co (NYSE:CLX), & Procter & Gamble (NYSE:PG). A lone Healthcare firm, AbbVie Inc. (NYSE:ABBV) was seventh. Basic Materials representative, Chevron Corp. (NYSE:CVX) placed sixth. One service sector firm, McDonald's Corp (NYSE:MCD), placed ninth 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 were graphed below as of market closing prices through 5/5/2014 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 & Dow Dogs Continue To Bull Ahead

S&P Aristocrats top dividend payers continued their bullish charge from February. Total single share price increased 12% in that period. Aggregate dividend from $10k invested as $1k in each of the top ten S&P Aristocrats dropped 4.8%. The Aristocrats overbought condition exploded as aggregate single share price of the ten exceeded projected annual dividend from $1k invested in each. Their overhang was a record $244 or 64% in December, fell to $187 or 47% for January, nudged up to $189 remaining at 47% in February, swelled to $213 or 55% in March; then set an all time high of $281 or 73% after April.

Joy imbued to the Dow dogs as projected annual dividend from $10k invested as $1K in each of the top ten fell 2% since March. Aggregate single share price increased 3% to confirm the bullish sign. The Dow dogs overbought condition grew as aggregate single share price of the ten exceeded projected annual dividend from $1k invested in each of the ten. The overhang was $145 or 38% for January, then retreated to $125 or 33% in February, swelled to $149 or 40% in March, expanded more to $173 or 47% in April. All of this recent joy on the Dow was triggered by across the board price improvement propelling dividends lower 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 provided another tool to dig out bargains.

Actionable Conclusion (3): Wall St. Wizards Want 5.4% Net Gains from Top 20 Aristocrat Dogs By April 2015

Top twenty S&P 500 Aristocrats index dogs were graphed below to show relative strengths by dividend and price as of May 5, 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 2% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by nearly 3% 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 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 Avow 10 S&P 500 Dividend Aristocrat Dogs To Net 5% to 10.4% By April 2015

Just four 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 40% accurate.

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

Coca-Cola Co (NYSE:KO) netted $103.90 based on dividends plus a mean target price estimate from eighteen analysts less broker fees. The Beta number showed this estimate subject to volatility 66% less than the market as a whole.

Genuine Parts Co. (NYSE:GPC) netted $96.90 based on dividends plus a mean target price estimate from eight analysts less broker fees. The Beta number showed this estimate subject to volatility 33% less than the market as a whole.

PepsiCo Inc. (NYSE:PEP) netted $84.88 based on dividends plus a mean target price estimate from seventeen analysts less broker fees. The Beta number showed this estimate subject to volatility 67% less than the market as a whole.

Procter & Gamble netted $80.24 based on dividends plus a mean target price estimate from nineteen analysts less broker fees. The Beta number showed this estimate subject to volatility 61% less than the market as a whole.

AbbVie Inc. netted $68.98 based on dividends plus a mean target price estimate from ten analysts less broker fees. The Beta number showed this estimate subject to volatility 93% more than the market as a whole.

Nucor Corp (NYSE:NUE) netted $62.37 based on a mean target price estimate from eighteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 47% more than the market as a whole.

Target Corp (NYSE:TGT) netted $57.84 based on target price estimates from twenty-one analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 18% less than the market as a whole.

Johnson & Johnson (NYSE:JNJ) netted $55.20 based on target price estimates from seventeen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 47% less than the market as a whole.

McDonald's Corp netted $50.79 based on dividends plus a mean target price estimate from twenty-two analysts less broker fees. The Beta number showed this estimate subject to volatility 66% less than the market as a whole.

Chevron Corp netted $50.44, based on dividend plus mean target price estimates from twenty-one analysts less broker fees. The Beta number showed this estimate subject to volatility 8% more than the market as a whole.

The average net gain in dividend and price was 7.1% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 21% less than the market as a whole.

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.

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: April Aristocrat Dogs 7% - 9% Upsides Led By Consumer Goods And Services