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Summary

  • 8 S&P 500 dividend dogs averaged 6.7% 1 yr. upside as of July 16; 2 averaged 10.3% downside. 10 S&P Aristocrats averaged 7.9% upsides; two bearish Aristocrats averaged 4.9% down.
  • A continuing bull run pushed many top yielding S&P 500 index, Dow dogs, and Aristocrats toward their upside price limits.
  • Analysts' 9.2% S&P 500 average net gainers included: DRI, PPL, FE, RAI, DUK, PM, VTR, KMI. Aristocrat gains averaged 10% from: ABBV, NUE, PG, MCD, JNJ, GPC, KO, LEG, PEP, CVX.
  • Consider these stocks as possible starting points for your S&P 500 and S&P Aristocrats indices July dividend dog stock purchase research.

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 July were disclosed step by step. Ten actionable conclusions were drawn.

Actionable Conclusion (1): 8 S&P 500 Dogs Pursued 2.6% to 13.7% Upsides Come July 2015; 2 were 11.6% and 8.9% down

S&P 500 Index prices from Yahoo! Finance tallied as of market closing July 16 were compared with analyst mean target gains one year hence. The results showcased 8 S&P 500 stocks averaging 6.7% price upsides and 2 stocks averaging 10.3% down.

Sectors were represented by one service firm; three utilities; a basic materials firm; two consumer goods manufacturers; one healthcare firm; one basic materials firm.

Actionable Conclusion (2): 10 Aristocrat Dogs Tracked 2.5% to 20.1% Upsides In July; 2 were 4.1% and 5.6% down

Yahoo! Finance July 16 closing prices for S&P 500 Aristocrats compared with analyst mean targets showcased 10 stocks.

Sectors were represented by two healthcare firms; two basic materials firms; four consumer goods makers; two service firms.

One year mean target price set by brokerage analysts matched against July 16 closing price were used to chart eight 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 and Aristocrats; Russell 2000 and 1000; NASDAQ 100; Champions, Contenders, and Challengers Combined; Global. Bonus reports covered, Sindex AllStars, and Sector Leaders.

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&P 500 and 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."

Five of nine sectors placed top dogs in this index by yield for July: technology; financial; services; utilities; consumer goods. 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). One service firm, Darden Restaurants (NYSE:DRI), claimed sixth place. Two utilities, TECO Energy (NYSE:TE) and Southern (NYSE:SO), filled the eighth and ninth slots. Finally, a lone consumer goods firm, Reynolds American, Inc. (NYSE:RAI) placed tenth and completed these July S&P 500 top ten dogs by yield.

Dog Metrics Stacked 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 July Aristocrats by yield included firms representing six of nine business sectors: financial; technology; utilities; consumer goods; services; basic materials. 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, ninth, and tenth: Leggett & Platt (NYSE:LEG), Clorox Co (NYSE:CLX), and Procter & Gamble (NYSE:PG). Two service sector firms, Target Corp. (NYSE:TGT) and McDonald's Corp (NYSE:MCD), placed sixth and eighth. A lone Basic Materials representative, Chevron Corp. (NYSE:CVX), placed seventh to complete this top ten S&P 500 Aristocrats dog list for July.

Dividend vs. Price Results Compared to Dow Dogs

Relative strengths of the top ten S&P 500 dogs and the Aristocrat dogs by yield as of market close 7/16/2014 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 Conclusion (3 & 4): S&P 500, Dow and Aristocrats were Bullish into July

The July S&P 500 dividend dogs extended their bull path that started in January as price increased while dividend sank. In the past month S&P 500 top ten dog annual dividend from 10k invested as $1k in each dog fell 1.5% while aggregate single share price of the ten inclined 3.8% to define the bullish mood.

Dow dogs frolicked as projected annual dividend from $10k invested as $1K in each of the top ten fell 1% since June. At the same time aggregate single share price moved up 6.9% to confirm the bullish month.

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) grew. The overhang of $136 or 36% in March, widened again to $180 or 49% for April, retreated to $167 or 43% in May, expanded to $193 or 53% for June, then grew to $220 or 61% for July.

The July Aristocrats collection of dividend payers was bullish, too. S&P Aristocrats total single share price increased 1.6% since June while aggregate dividend from $10k invested as $1k in each of the top ten S&P Aristocrats dropped 2% to confirm the bull charge.

The Aristocrats overbought condition (in which aggregate single share price of the ten exceeded projected annual dividend from $1k invested in each) expanded after June. Their overhang was a record $281 or 73% in April; shrank to $256 or 66% in May; grew to $277 or 71% for June; set a new high of $296 or 77% in July.

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 (5 & 6): Wall St. Wizards Wrestled 5.7% Net Gains from Top 20 S&P 500 Dogs and 5.62% Net Gains from Top 20 Aristocrats by July 2015

Top twenty dogs from the S&P 500 and Aristocrat indices graphed below displayed relative strengths by dividend and price as of July 16, 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 0.3% higher dividend from $10K invested in this group (as lower priced stocks bought more high yielding shares). However, aggregate single share price was projected to increase 2.2% in the coming year.

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Yahoo projected a 2.7% lower dividend from $10K invested in this group while aggregate single share price was projected to increase by nearly 3.1% in the coming year. Notice that price exceeded dividend signaling an analyst predicted overbought S&P Aristocrats index will continue 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 above 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 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 Envisioned 8 S&P 500 Dogs Netting 5.2% to 16.7% By July 2015

Two of ten 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 20% accurate.

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

Darden Restaurants netted $167.06 based on estimates from twenty-one analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 1% more than the market as a whole.

PPL Corporation (NYSE:PPL) netted $119.97 based on a mean target price estimate from fifteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 84% less than the market as a whole.

FirstEnergy (NYSE:FE) netted $101.94 based on estimates from sixteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 97% less than the market as a whole.

Reynolds American netted $92.49 based on a mean target price estimate from six analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 72% less than the market as a whole.

Duke Energy (NYSE:DUK) netted $74.17 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 95% less than the market as a whole.

Philip Morris (NYSE:PM) netted $71.62 based on estimates from fourteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 3% less than the market as a whole.

Ventas, Inc. (NYSE:VTR) netted $58.44 based on estimates from nine analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 55% less than the market as a whole.

Kinder Morgan (NYSE:KMI) netted $51.53 based on estimates from fifteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 40% less than the market as a whole.

The average net gain in dividend and price was slightly over 9.2% on $8k invested as $1k in each of these eight dogs. This gain estimate was subject to average volatility 56% less than the market as a whole.

Actionable Conclusion (8): (Bear Alert) Analysts Saw Two S&P 500 DiviDogs With Net Losses Averaging 4.4% By July 2015

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

Windstream was projected to lose $37.68 based on dividend and a mean target price estimate from eleven analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 3% more than the market as a whole.

CenturyLink was projected to lose $51.25 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 28% less than the market as a whole.

The average net loss in dividend and price was over 4.4% on $2k invested as $1k in each of these two dogs. This loss estimate was subject to average volatility 12% less than the market as a whole.

Actionable Conclusion (9): Analysts Asserted 10 S&P 500 Dividend Aristocrat Dogs Will Net 3.8% to 21.2% By July 2015

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:

AbbVie Inc. (NYSE:ABBV) netted $212.25 based on target price estimates from seven analysts plus dividends 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 $114.48 based on dividends plus a mean target price estimate from seventeen analysts less broker fees. The Beta number showed this estimate subject to volatility 42% more than the market as a whole.

Procter & Gamble netted $90.93 based on dividends plus a mean target price estimate from nineteen analysts less broker fees. The Beta number showed this estimate subject to volatility 60% less than the market as a whole.

McDonald's Corp netted $87.38 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 64% less than the market as a whole.

Johnson & Johnson (NYSE:JNJ) netted $78.63 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 46% less than the market as a whole.

Genuine Parts Co. (NYSE:GPC) netted $77.05 based on dividends plus a mean target price estimate from eight analysts less broker fees. The Beta number showed this estimate subject to volatility 32% less than the market as a whole.

Coca-Cola Co (NYSE:KO) netted $75.20 based on dividends plus a mean target price estimate from twenty analysts less broker fees. The Beta number showed this estimate subject to volatility 66% less than the market as a whole.

Leggett & Platt netted $74.98 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 9% less than the market as a whole.

PepsiCo Inc. (NYSE:PEP) netted $48.84, based on dividend plus mean target price estimates from eighteen analysts less broker fees. The Beta number showed this estimate subject to volatility 65% less than the market as a whole.

Chevron Corp. netted $37.66 based on target price estimates from twenty-two analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 6% more than the market as a whole.

The average net gain in dividend and price was 8.97% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 20% less than the market as a whole.

Actionable Conclusion (8): (Bear Alert #2) Analysts Tagged Two Aristocrat DiviDogs With Net Losses Averaging 3.8% By July 2015

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

Kimberly-Clark (NYSE:KMB) was projected to lose $31.82 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 95% less than the market as a whole.

Clorox Co was projected to lose $44.25 based on dividend and a mean target price estimate from sixteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 53% less than the market as a whole.

The average net loss in dividend and price was over 3.8% on $2k invested as $1k in each of these two dogs. This loss estimate was subject to average volatility 74% 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 Thomson/First Call in Yahoo! Finance.

Disclosure: The author is long CSCO, GE, INTC, 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.

Source: S&P 500 And Dividend Aristocrat Dogs Mark 2.5% To 20% July Upsides