The list of fifty "AllStar Sindex" bad boy stocks below was created by screening for industries with public companies that have historically committed acts, made substances, by-products, or devices that maim, kill, tempt, harm, addict, insult, or scam us. These included corporate members of all nine business sectors: basic materials, consumer goods, financial, technology, conglomerates, health, services, utilities & industrial goods. Sorting and refining top stocks in each industry by yield narrowed the field to fifty from over 1000 candidates. They may be bad but they all pay dividends.
Below, Arnold top AllStar Sindex dog selections for July by yield, price upsides, and net gains were disclosed step by step. Four actionable conclusions were drawn.
Actionable Conclusion (1): 10 AllStar Sindex Dogs Averaged 8.82% July Upsides
The chart above used one-year mean target prices set by brokerage analysts matched against July 1 closing price to compare ten AllStar Sindex 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 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 & Aristocrats; Russell 2000 & 1000; NASDAQ 100; Champions, Contenders, & Challengers Combined; Global. Bonus reports covered Sin stocks, Sindex AllStars, and Sector Leaders.
Fifty 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 Sorted Dividend All Star Sindex Stocks by Yield
The AllStar Sindex list of fifty companies above was sorted by yield as of July 1 to reveal the top ten.
Ten AllStar Sindex dogs that promised the biggest dividend yields for July included firms from six of nine market sectors listed here:
Basic Materials included all the exploitive mining companies, toxic, corrosive and genetically manipulative chemical firms, and explosives manufacturers, to name a few.
Financials included money manipulating, merger and acquisition managing, crisis creating, scamming and ill-gotten gain laundering institutions and more.
Technology meant wireless, cable, phone, and net service providers, addictive electronic gizmo creators and the like.
Conglomerates were firms so diverse that there was no end to the mayhem and madness they could do.
Utilities meant regulated monopolies that regularly provide consumers blackouts, brown-outs, traffic delays, air pollution, toxic emissions, and insipid feel-good over charging billing notices.
Consumer goods firms made all the processed foods, liquids, vehicles, devices and substances that made us fat, sick, addicted, hyper, stupid, and mad.
The top stock, SandRidge Permian Trust (NYSE:PER), was one of four from the basic materials sector. The other basic materials firms, Eagle Rock Energy Partners L.P. (NASDAQ:EROC), OCI Partners LP (NYSE:OCIP), and CVR Partners L.P. (NYSE:UAN) placed third, sixth, and eighth.
The balance of the top ten included two financials, in second, and fourth places: Prospect Capital Corporation (NASDAQ:PSEC); Fifth Street Finance Corp. (NYSE:FSC). Remaining firms included a technology firm, Windstream Corp (NASDAQ:WIN), in sixth place; a conglomerate, New Mountain Finance Corp. (NYSE:NMFC), in seventh place; a consumer goods firm, Vector Group (NYSE:VGR) in ninth place. Finally, one utility, Just Energy (NYSE:JE), in tenth place completed the representation of market sectors in the AllStar Sindex top ten by yield.
Not represented in the top ten AllStar Sindex dog list were three remaining sectors:
Industrial goods included arms dealers, military contractors, equipment, hardware, nuts, bolts, and other factory produced items of mass destruction and harm.
Healthcare was responsible for the prescribed liquids, devices, and substances that make us fat, sick, addicted, hyper, stupid, and mad.
Services covered all the delivery modes for the exploding, toxic, addictive, fattening, caustic, and insulting stuff.
Dividend vs. Price Results Compared to Dow Dogs
Periodic strengths of ten top AllStar Sindex dogs by yield was graphed below as of market closing prices through 7/1/2014 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 history of those ten stocks created the data points shown in green for price and blue for dividend.
Actionable Conclusion (2): AllStar Sindex & Dow Dogs Both Bullish
AllStar Sindex top dividend payers ran with bulls in June as dividend fell while price inclined. Top ten AllStar Sindex dog dividend sunk 11% while price rose 5.5%.
Meanwhile, Dow dogs also romped bullishly by showing lower annual dividend from $10k invested as $1K in each of the top ten Dow dogs, dropping 1.5% in June, while aggregate single share price increased 7.5%. As a result, the Dow dogs overbought condition (in which aggregate single share price of the ten exceeded projected annual dividend from $10k invested as $1k each in those ten) expanded to a new high. The overhang was $145 or 38% for January; retreated to $125 or 33% in February; swelled to $149 or 40% in March; expanded to $173 or 47% in April; shrank to $170 or 46% come May; swelled to $215 or 59% for July. Recent frolic by the Dow was triggered by general price rises most notably by INTC (which fell out of the top ten last week), & CSCO.
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 Wonk 11.5% Net Gain from 20 AllStar Sindex Dogs Into July 2015
Twenty dogs of the AllStar Sindex were graphed below as of July 1, 2014 compared to analyst mean price target estimates for 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 super sin 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 3.5% lower dividend from $20K invested as $1k in each stock in this group while aggregate single share price was projected to increase over 4% 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 estimate.
A beta (risk) ranking for each analyst rated 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 Assay AllStar Sindex Top Ten Dogs to Net 6.5% to 23.2% By July 2015
Six of the ten top dividend yielding AllStar Sindex dogs were verified as being among the ten net gainers for the coming year based on analyst 1-year target prices. So this month the dividend dog strategy as graded by Wall St. wizards was 60% accurate for the AllStar Sindex top ten.
The ten probable profit generating trades revealed by Yahoo Finance for 2015 were:
Eagle Rock Energy Partners L.P. netted $434.76 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 28% less than the market as a whole.
OCI Partners LP netted $282.00 based on a mean target price estimate from three analysts combined with projected annual dividend less broker fees. A Beta number was not available for OCIP.
CVR Partners L.P. netted $181.40 based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 18% less than the market as a whole.
Prospect Capital Corporation (PSEC) netted $328.55 based on dividends plus a mean target price estimate from ten analysts less broker fees. The Beta number showed this estimate subject to volatility 14% less than the market as a whole.
GlaxoSmithKline PLC (NYSE:GSK) netted $168.74 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 35% less than the market as a whole.
OneBeacon Insurance (NYSE:OB) netted $129.62 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 26% less than the market as a whole.
Fifth Street Finance (FSC) netted $129.34 based on dividends plus mean target price estimate from fourteen analysts less broker fees. The Beta number showed this estimate subject to volatility 32% less than the market as a whole.
Darden Restaurants (NYSE:DRI) netted $115.66 based on a mean target price estimate from twenty-one analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 1% more than the market as a whole.
New Mountain Finance Corp. netted $97.29 based on a mean target price estimate from four analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 88% less than the market as a whole.
Philip Morris International (NYSE:PM) netted $65.26 based on dividends plus a mean target price estimate from thirteen analysts less broker fees. The Beta number showed this estimate subject to volatility 3% less than the market as a whole.
The average net gain in dividend and price was nearly 15% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 27% less than the market as a whole.
The net gain 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 AllStar Sindex dog dividend stock 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: The author is long FSC, CSCO, CVX, GE, INTC, MCD, MSFT, PFE, T, VZ. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.