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Summary

  • 7 of 20 S&P 500 dogs averaged 4.03% 1 yr. upside as of May 28. Four showed 7.6% average downside. 10 Aristocrats averaged 7.08% upsides with no bear incentives.
  • A continuing bull run pinned most top yielding S&P 500 index dogs to their upside price limits. Meanwhile, dogs of the Dow and Aristocrats retreated.
  • Analysts projected 7 S&Ps averaging 11.9% net gains: KMI, DUK, ED, TEG, TE, DRI & PPL. 10 Aristocrats averaged 8.3% gains: KO; PG; CVX; TGT; GPC; NUE; PEP; MCD; JNJ.
  • Consider these stocks as possible starting points for your S&P 500 and Aristocrats index June dividend dog stock purchase research.

S&P 500 Index prices from Yahoo Finance tallied as of market closing May 28 were compared with analyst mean target gains one year hence. The results showcased just 7 stocks sporting 2.45% to over 16% price upsides. These included a basic materials firm, a service firm, and five utilities.

This report presumed yield (dividend/price) dividend dog methodology applied to either index and compared both indices side by side with the Dow. Below, Arnold top dog selections for May were disclosed step by step. Nine actionable conclusions were drawn.

Actionable Conclusion (1): 7 S&P 500 Dogs Sought 2.74% to 12.71% Upsides Come May 2015; Four were down 6.1% to 10.6%

Actionable Conclusion (2): 10 Aristocrat Dogs Chased 4.53% to 9.96% Upsides In May

The charts above used one year mean target prices set by brokerage analysts matched against May 28 closing price to compare seven S&P 500 index stocks and ten Aristocrat stocks showing the highest upside price potential into 2015 out of 20 of each 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. A recent bonus report covered Sin stocks: Sindex AllStars.

Sixty For the Money

Bargain stocks to buy and hold for at least one year are but 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 stock universe to include popular growth equities, if desired.

Dog Metrics Measured S&P500 & Aristocrat Indices Stocks by Yield

McGraw Hill Finance, publisher of the Dow Jones S&P 500 Index states:

"The S&P 500® is widely regarded as the best single gauge of large cap U.S. equities. There is over USD 5.58 trillion benchmarked to the index, with index assets comprising approximately USD 1.3 trillion of this total. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization."

Just four of nine sectors placed top dogs in this index by yield for May: technology; financial; utilities; basic materials. Top dog Windstream (NASDAQ:WIN) was one of four technology firms in the top ten. Other technology firms were Frontier Communications (NASDAQ:FTR), second; CenturyLink Inc. (NYSE:CTL), third; AT&T, Inc. (NYSE:T), fifth.

Fourth and seventh places were taken by financial firms, HCP, Inc (NYSE:HCP) and Health Care REIT, Inc. (NYSE:HCN). A lone basic materials firm, Kinder Morgan, Inc. (NYSE:KMI) placed sixth. Finally, three utilities, TECO Energy (NYSE:TE), Southern (NYSE:SO), and Integrys Energy Group (NYSE:TEG) filled the seventh, ninth and tenth slots with electricity and gas and completed these S&P 500 top ten dogs by yield.

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 May Aristocrats by yield included firms representing six of nine business sectors: financial; technology; utilities; consumer goods; basic materials; services. One of two financial firms, HCP, Inc. , led the pack. The other financial, Cincinnati Financial (NASDAQ:CINF), placed fourth. A lone technology dog, AT&T, placed second. The singular utility, Consolidated Edison Inc. (NYSE:ED) was third. Three consumer goods firms placed fifth, seventh, and eighth: Leggett & Platt (NYSE:LEG), Clorox Co (NYSE:CLX), and Procter & Gamble (NYSE:PG). A lone Basic Materials representative, Chevron Corp. (NYSE:CVX) placed sixth. Two service sector firms, McDonald's Corp (NYSE:MCD), and Sysco Corp. (NYSE:SYY) placed ninth and tenth to complete this top ten S&P 500 Aristocrats dog list for May.

Dividend vs. Price Results Compared to Dow Dogs

Relative strengths of the top ten S&P500 dogs and the Aristocrat dogs by yield as of market close 5/28/2014 compared to those of the Dow were graphed below. Projected annual dividend history from $10,000 invested as $1k in each of the ten highest yielding stocks and the total single share prices of those ten stocks created the data points shown in green for price and blue for dividend.

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Actionable Conclusions (3 & 4): S&P500 was Bullish; Dow & Aristocrats Retreated

The May S&P500 dividend dogs sent a bullish signal as price increased while dividend sank. In the past month S&P500 top ten dog annual dividend from 10k invested as $1k in each dog fell 3.9% while aggregate single share price of the ten inclined 2.4% to confirm the bullish sign.

Panic hit the Dow dogs as projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs jumped up 0.61% since April. Aggregate single share price dropped 0.24% to confirm the bearish sign. The Dow dogs' overbought condition (wherein aggregate single share price of the top ten exceeded projected annual dividend from $1k invested in each of those ten) shrank a bit. The overhang was $145 or 38% for January, then retreated to $125 or 33% in February, swelled to $149 or 40% in March, expanded to $173 or 47% in April, then shrank to $170 or 46% come May. All of this recent panic on the Dow was triggered by general price declines coupled with indexarb.com projecting higher dividends for PFE; INTC; CVX; MSFT.

The May Aristocrats collection of dividend payers retreated too. S&P Aristocrats top dividend payers ended a bullish charge after April. Total single share price decreased 3.1% since then. Aggregate dividend from $10k invested as $1k in each of the top ten S&P Aristocrats increased 1%. The Aristocrats' overbought condition in which aggregate single share price of the ten exceeded projected annual dividend from $1k invested in each, shrank since April. 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; set an all time high of $281 or 73% through April; then shrank to $256 or 66% 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 provided another tool to dig out bargains.

Actionable Conclusions (5 & 6): Wall St. Wizards Wrung Just 4.4% Net Gains from Top 20 S&P 500 Dogs and 5.9% Net Gains from Top 20 Aristocrats by May 2015

Top twenty dogs from the S&P 500 and Aristocrat indices graphed below showed relative strengths by dividend and price as of May 28, 2014 against 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 $1k in each of 20 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 dividends.

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Yahoo projected a 0.8% higher dividend from $10K invested in this group while aggregate single share price was projected to increase 0.62% in the coming year.

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Yahoo projected a 3% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by nearly 3.8% 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 stock was provided in the far right column on the above charts. 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 (7): Analysts Foresaw 7 S&P 500 Dogs Netting 5% to 19.48% By May 2015

Three of seven of the top yielding dividend S&P 500 dogs were verified as top gainers for the coming year by analyst 1 year target prices. So this month the dog strategy as graded by Wall Street wizards was 43% accurate.

The seven probable profit generating trades revealed by analysts reported by Thompson/First Call in Yahoo Finance into 2015 were:

Kinder Morgan (KMI) netted $157.14 based on estimates from fourteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 42% less than the market as a whole.

Duke Energy (NYSE:DUK) netted $98.99 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 94% less than the market as a whole.

Consolidated Edison (ED) netted $80.88 based on a mean target price estimate from fourteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 3% opposed to the market as a whole.

Integrys Energy Group (TEG) netted $75.06 based on estimates from five analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 50% less than the market as a whole.

TECO Energy netted $66.00 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 39% less than the market as a whole.

Darden Restaurants (NYSE:DRI) netted $60.11 based on estimates from twenty-two analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 4% less than the market as a whole.

PPL Corporation (NYSE:PPL) netted $50.44 based on a mean target price estimate from sixteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 86% less than the market as a whole.

The average net gain in dividend and price was slightly over 8.4% on $7k invested as $1k in each of these seven dogs. This gain estimate was subject to average volatility 60% less than the market as a whole.

Actionable Conclusion (8): (Bear Alert) Analysts Forecast Four S&P500 DiviDogs to Post Net Losses Averaging 4.2% By May 2015

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

Frontier Communications was projected to lose $26.72 based on dividend and a mean target price estimate from nine analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 22% less than the market as a whole.

Entergy (NYSE:ETR) was projected to lose $36.48 based on dividend and a mean target price estimate from fifteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 82% less than the market as a whole.

Reynolds American (NYSE:RAI) was projected to lose $37.29 based on dividend and a mean target price estimate from seven analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 76% less than the market as a whole.

CenturyLink was projected to lose $68.68 based on dividend and a mean target price estimate from ten analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 34% less than the market as a whole.

The average net loss in dividend and price was nearly 4.3% on $4k invested as $1k in each of these four dogs. This loss estimate was subject to average volatility 53% less than the market as a whole.

Actionable Conclusion (9): Analysts Avow 10 S&P 500 Dividend Aristocrat Dogs To Net 5.3% to 10.9% By May 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 $109.62 based on dividends plus a mean target price estimate from nineteen analysts less broker fees. The Beta number showed this estimate subject to volatility 66% less than the market as a whole.

Procter & Gamble netted $102.22 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.

Chevron Corp netted $92.63, based on dividend plus mean target price estimates from twenty analysts less broker fees. The Beta number showed this estimate subject to volatility 8% more than the market as a whole.

Target Corp (NYSE:TGT) netted $91.85 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.

Genuine Parts Co. (NYSE:GPC) netted $84.69 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.

Consolidated Edison Inc netted $80.88 based on a mean target price estimate from fourteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 3% opposite the market as a whole.

Nucor Corp. (NYSE:NUE) netted $78.89 based on dividends plus a mean target price estimate from eighteen analysts less broker fees. The Beta number showed this estimate subject to volatility 47% more than the market as a whole.

PepsiCo Inc. (NYSE:PEP) netted $74.18 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.

McDonald's Corp netted $60.26 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.

Johnson & Johnson (NYSE:JNJ) netted $53.18 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.

The average net gain in dividend and price was 8.3% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 41% 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/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 Rydlun & Co., LLC from data derived from www.finance.yahoo.com; analyst mean target price by Thompson/First Call in Yahoo Finance.

Source: 7 S&P 500 Dogs Seek 3% To 13% May Upsides As 10 Aristocrats Assail 4.5% To 10% Upsides