Yield (dividend / price) results from here verified by Yahoo Finance for sector leading stocks as of market closing prices May 8 were supplemented with analyst 1-yr target projections to reveal four actionable conclusions discussed below.
Wall Street Wizard Weightings
One-year mean target price set by brokerage analysts multiplied by the number of shares in a $1,111.11 investment revealed ten stocks showing the highest upside price potential into 2015 out of 18 selected by yield. The number of analysts providing price estimates was noted after the name for each stock. Three to nine analysts have provided the most accurate mean target price estimates.
Actionable Conclusion (1) Ten Sector Leader Dividend Dogs Chased 5.3% to 42.5% Upsides
Thirty For the Money
This article 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 stock universe to include popular growth equities, if desired.
Dog Metrics Extracted Bargains
Three top sector-leading stocks by yield were culled from each of nine sectors to form the list of twenty-eight for this article. Funds, and preferred shares were excluded but Real Estate Investment Trusts made the list along with common shares and ADRs.
Nine sector-leading equities showing top yields, represented the best of each of the nine Yahoo market sectors: basic materials; consumer goods; financials; healthcare; industrial goods; services; technology; utilities; conglomerates. Top dog Western Asset Mortgage Capital Corp (NYSE:WMC) represented the financial sector.
The eight trailing sector leaders were: Sandridge Permian Trust (NYSE:PER), basic materials; Intersections Inc (NASDAQ:INTX), Services; NTELOS Holdings Corp (NASDAQ:NTLS), technology; Just Energy (NYSE:JE), utilities; New Mountain Finance Corp. (NYSE:NMFC), conglomerates; Vector Group (NYSE:VGR), consumer goods; GlaxoSmithKline PLC (NYSE:GSK), Healthcare; Susser Petroleum Partners (SUSP), industrial goods. By yield, those nine topped the May 8 sector leader dog list.
Actionable Conclusion (2): Sector Leader Dogs Were Mixed Up As Dow Dogs Ran With Bulls
The top nine dogs sector dogs increased in dividend 1.6% since April while total single share price of the top ten jumped up 18% for the period to complete a totally mixed up signal.
Revelry returned to the Dow dogs as projected annual dividend from $10k invested as $1K in each of the top ten declined 9% since April. At the same time aggregate single share price jumped up 16% to confirm the bullish turn. 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 increased. The overhang was $145 or 38% for January, retreated to $125 or 33% in February, grew to $160 or 43% in March, shrunk again to $75 or 18.5% for April, then expanded to $187 or 51% in May.
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. Wall Street Wizards Wished A 16% 1 yr. Net Gain from Top 18 Sector Leaders by May 2015
Top 18 dogs on the sector leader stock list were graphed below to show relative strengths by dividend and price as of May 8, 2014 and those projected by analyst mean price target estimates to the same date in 2015.
A hypothetical $1111.11 investment in each equity was divided by the current share price to find the number of shares purchased. The number of shares were then multiplied by projected annual dividend amounts to find the dividend return. Thereafter the analyst mean target price was used to gauge the stock upsides to 2015.
Historic prices and actual dividends paid from $1111.11 invested in each of the ten highest yielding stocks and the aggregate single share prices of those eighteen stocks divided by 2 created the data points for 2014. Projections based on estimated increases in dividend amounts from $1111.11 invested in the eighteen 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 dividends.
Yahoo numbers showed 6.6% lower dividend from $10K invested as $1111.11 in the nine of this group of while aggregate single share price of those nine was projected to increase by over 8.5% 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): Wall St. Analysts See Sector Leader Net Gains of 12% to 59.9% by May, 2015
Five of the ten top dividend yielding sector leader dogs were verified as being among the ten gainers out of 18 for the coming year based on analyst 1-year target prices. So this time the dog strategy for this collection as graded by Wall St. wizards was 50% accurate.
Ten probable profit generating trades were revealed by Thompson/First Call in Yahoo Finance into 2015. Note that neither consumer goods nor industrial goods sectors placed a representative the top ten by upside or net gain. Financial, healthcare, and conglomerates all had two representative stocks in the top ten.
NTELOS Holdings Corp , from the technology sector, netted $598.64 based on dividends plus mean target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 7% more than the market as a whole.
Sandridge Permian Trust , from basic materials, netted $286.69, based on dividend plus mean target price estimates from two analysts less broker fees. The Beta number showed this estimate subject to volatility 1% greater than the market as a whole.
Western Asset Mortgage Capital Corp, a financial sector representative, netted $271.16 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.
StoneMor Partners L.P.(NASDAQ:STON), from services, netted $254.30 based on a mean target price estimate from two analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 36% less than the market as a whole.
GlaxoSmithKline PLC. (GSK), from healthcare, netted $228.37 based on a mean target price estimate from three analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 34% less than the market as a whole.
CYS Investments, Inc. (NYSE:CYS), another financial firm, netted $202.99 based on a mean target price estimate from twelve analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 70% less than the market as a whole.
Southcross Energy Partners, L.P. (NYSE:SXE), a gas utility netted $190.71 based on estimates from five analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 40% more than the market as a whole.
PetMed Express Inc. (NASDAQ:PETS) another healthcare firm, netted $160.35, based on dividend plus mean target price estimates from four analysts less broker fees. The Beta number showed this estimate subject to volatility 91% more than the market as a whole.
New Mountain Finance Corp., a conglomerate, netted $143.65 based on dividends plus a mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 88% less than the market as a whole.
General Electric (NYSE:GE), another conglomerate, netted $120.36 based on dividends plus the mean of annual price estimates from ten analysts less broker fees. The Beta number showed this estimate subject to volatility 19% more than the market as a whole.
The average net gain in dividend and price was 24.6% on $10k invested as $1k in each of these ten sector leader dogs. This gain estimate was subject to average volatility 11% less than the market as a whole.
The stocks listed above were suggested only as decent starting points for a sector leader dog dividend stock purchase research process in May, 2014. These were not recommendations.
Gains as reported do not factor-in any tax problems resulting from dividend, profit, or return of capital distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.
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 GE, CSCO, CVX, INTC, MCD, 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.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.