Results from IndexArb.com tallied for NASDAQ 100 Index members as of market closing prices July 18, 2014 were compared to analyst mean target price projections one year out. The resulting chart of that data shown below turned up three stocks exhibiting 14.5% to 34.9% price upsides.
Vodafone Group plc, (NASDAQ:VOD) the British, telecommunications services provider showed the 34.9% upside that led the NASDAQ 100 Index. Seven single digit price upsiders trailed the three with 2.05% to 7.76% projected gains.
Arnold top Dow dog selections for July 2015 were disclosed below step by step. Four actionable conclusions were drawn.
Actionable Conclusion (1): 10 NASDAQ Dogs To See 2.05% to 34.9% July 2015 Upsides
The chart above used one year mean target price set by brokerage analysts matched against June 20 closing price to compare ten NASDAQ index stocks showing the highest upside price potential into 2015 out of 20 selected by yield from indexArb.com dividend data. 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, Sindex AllStars, and Sector Leaders.
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 Measured NASDAQ 100 Stocks by Yield
"The NASDAQ-100 Index includes 100 of the largest domestic and international non-financial securities listed on The Nasdaq Stock Market based on market capitalization. The Index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain securities of financial companies including investment companies."
Just three of nine sectors were represented in the top ten NASDAQ dogs by yield as of July 18, 2014 per IndexARB.com data: technology; services; consumer goods. Technology had six firms in the top ten showing high forward looking yields. Vodafone claimed the top spot. The other five technology firms ranked sixth, through tenth: CA Technologies (NASDAQ:CA); Garmin (NASDAQ:GRMN); Maxim Integrated Products (NASDAQ:MXIM); Seagate Technology (NASDAQ:STX); Cisco Systems (NASDAQ:CSCO).
The remaining two NASDAQ high yield sectors for June included two service firms in second and fifth places: Staples (NASDAQ:SPLS), and Paychex (NASDAQ:PAYX). Two consumer goods representatives, Mattel (NASDAQ:MAT) in third, and Kraft Foods Group, Inc. (KRFT) in fourth place, completed the top ten NASDAQ 100 dogs by yield.
Dividend vs. Price Results Compared to Dow Dogs
Top ten NASDAQ 100 dogs by yield compared to those of the Dow were graphed below as of market close 7/18/2014. Annual dividend projected from $10,000 invested as $1K in each of the ten highest yielding stocks and total single share price of those ten stocks created the data points shown in green for price and blue for dividend.
Actionable Conclusion (2): NASDAQ 100 Faded as Dow Dogs Glowed
NASDAQ 100 top dividend payers ended a run with bulls after June. Total single share price declined 0.8% since then while aggregate dividend from $10k invested as $1k in each of the top ten NASDAQ 100 stocks rose at a 1.5% rate to confirm a bearish retreat.
Dow dogs also romped bullishly by showing lower annual dividend from $10k invested as $1K in each of the top ten Dow dogs, dropping 2% since May, while aggregate single share price increased 1.7%.
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) widened. 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 $192 or 53% for June; widened to $221 or 61.5% in July. Much of the recent move was attributable to price gains by several of the top ten, most notably by PFE, & CSCO; but especially MSFT which exited the top ten list by yield and was replaced by KO.
To quantify the top dog rankings, analyst mean price target estimates provide a "market sentiment" gauge of upside potential and was added to the simple high yield "dog" metric used to dig out bargains.
Actionable Conclusion (3): Wall St. Wizards Wished 7.65% Net Gain from Top 20 NASDAQ 100 Dogs By July 2015
Top twenty dogs from the NASDAQ 100 index were graphed below to show relative strengths by dividend and price July 18, 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 dividend returns. Thereafter the analyst mean target price was used to gauge the stock price upsides and calculate 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. Price was green and blue was used for dividend.
Yahoo projected a 4.9% lower dividend from $10K invested in this group of 20 while aggregate single share price was projected to increase 7.2% in the coming year. Notice that price exceeded dividend signaling an analyst predicted overbought NASDAQ 100 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 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 stocks movement opposite of market direction.
Actionable Conclusion (4): Analysts Forecast 10 NASDAQ 100 DiviDogs to Net 2.8% to Nearly 38% By July 2015
Six of the ten top dividend yielding NASDAQ 100 dogs were verified as being among the top ten gainers for the coming year based on analyst 1 year target prices. So the July dog strategy was graded by Wall St. wizards as 60% accurate.
Ten probable profit generating trades revealed by Yahoo Finance into 2015 were again led by Vodafone, Wynn, and Xilinx:
Vodafone Group plc netted $379.63 based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 38% less than the market as a whole.
Wynn Resorts (NASDAQ:WYNN) netted $206.37 based on dividends plus mean target price estimate from twenty analysts less broker fees. The Beta number showed this estimate subject to volatility 55% more than the market as a whole.
Xilinx Inc. (NASDAQ:XLNX) netted $150.61 based on a mean target price estimate from twenty-two analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 54% greater than the market as a whole.
Analog Devices (NASDAQ:ADI) netted $86.39 based on dividends plus mean target price estimate from twenty-four analysts less broker fees. The Beta number showed this estimate subject to volatility 24% more than the market as a whole.
Mattel netted $83.31 based on dividends plus the mean of annual price estimates from eight analysts less broker fees. The Beta number showed this estimate subject to volatility 18% less than the market as a whole.
Seagate Technology netted $79.68 based on dividends plus mean target price estimate from twenty-four analysts less broker fees. The Beta number showed this estimate subject to volatility 208% more than the market as a whole.
CA Technologies netted $72.89 based on dividends plus mean target price estimate from nine analysts less broker fees. The Beta number showed this estimate subject to volatility 36% more than the market as a whole.
Maxim Integrated Products netted $71.52 based on dividends plus a mean target price estimate from twenty-three analysts less broker fees. The Beta number showed this estimate subject to volatility 24% less than the market as a whole.
Garmin netted $63.55 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 27% less than the market as a whole.
PACCAR Inc. (NASDAQ:PCAR) netted $27.76 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 87% more than the market as a whole.
The average net gain in dividend and price was over 12.2% on $10k invested as $1k in each of these dogs. This gain estimate was subject to average volatility 36% more 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 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.
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.