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Summary

  • 10 Technology sector dividend dogs chased 1-year price upsides of 4.45% to 49.52% into August. Three techies dogged 6.4% to 9.7% downsides.
  • Top Technology dogs were mixed down, as Dow dogs retreated from bears into August.
  • Analysis averaged 21.3% 1-year net gains for ELNK, NTLS, CPWR, VIV, BCE, STM, QSII, VZ, VOD & T. Bears tagged CNSL, FTR & CTL with 3.1% to 5.2% losses.
  • Consider these stocks as possible starting points for your August Technology dividend dog stock purchase/sale research.

Yield (dividend / price) results from here verified by Yahoo Finance for small, mid, & large cap Tech sector stocks as of market closing prices July 11 compared with analyst 1-year target projections led to six actionable conclusions discussed below.

Wall Street Wizard Weights

One-year mean target price set by brokerage analysts multiplied by the number of shares in a $1k investment were used to cull ten stocks showing the highest upside price potential into 2015 out of 20 selected by yield. Three Techno dogs showed declinations. The number of analysts providing price estimates was noted after the name for each stock. Three to nine analysts was considered optimal for a valid mean target price estimate.

Actionable Conclusion (1) Ten Technology Dividend Dogs Average 21.32% August Upsides

Thirty For the Money

Since late 2011, this report series has applied dog dividend methodology to uncover possible buy opportunities in each of eight major market sectors listed by Yahoo Finance: basic materials (BasMats), consumer goods (ConGo), financials (Fins), healthcare (Heal), industrial goods (IndiGo), services (Svcs), technology (Tec), and utilities (Utes). In the past two years the series expanded to report (1) dividend yield; (2) price upside; (3) net gain results based on analyst 1-year target projections.

Dog dividend methodology is 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. Now named Dogs of the Dow, O'Higgins system also works to find bargains in any collection of dividend paying stocks. Utilizing analyst price upside estimates has expanded the stock lists to include popular growth equities, if desired.

Dog Metrics Tested Technology Sector Stocks for Yield

Just four industries were represented by the top ten technology dogs by yield: wireless communications, telecom services - foreign, telecom services - domestic, and application software. Top dog, NTELOS Holdings Corp. (NASDAQ:NTLS) was one of two wireless communications firms. The other wireless firm, Portugal Telecom S.A., placed fifth.

Four telecom services - foreign firms made the list in second, third, eighth, & tenth places: Nortel Inversora S.A. (NYSE:NTL), France Telecom (NYSE:ORAN), Vodafone Group (NASDAQ:VOD), and Philippine Long Distance Telephone Co. (NYSE:PHI).

Three domestic telecoms were slotted fourth, sixth, and seventh: Windstream Holdings (NASDAQ:WIN), Consolidated Communications Holdings (NASDAQ:CNSL), and Frontier Communications (NASDAQ:FTR). A single application software firm, Compuware Corporation (NASDAQ:CPWR), completed the top ten technology dogs by yield for August.

Technology Sector Dividend vs. Price Results Compared to Dow Index Dogs

Relative strengths of the top ten technology dogs graphed below by yield were plotted as of market close 8/21/2014 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 prices of those ten stocks created the data points shown in green for price and blue for dividends.

(click to enlarge)

Actionable Conclusion (2): Technology Top Ten Mixed Down As Dow Dogs Ran Away for August

Dividend from $10k invested as $1k in each technology top ten dog fell as did the aggregate single share price of those ten into August. These concurrent down ticks produced a truly mixed down signal. Dividend dropped at a rate of 3.7%, while total single share price plummeted 9.4% in that period. Much of this mixed down action was produced by resurgent low priced equities in this month's dividend.com technology sector by yield top ten screen.

Meanwhile, Dow dogs reversed and retreated by showing 3.5% bigger annual dividend from $10k invested as $1K in each of the top ten, while aggregate single share price dropped 2.8%.

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) declined from its 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; then fell back to $190 or 51% in August.

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 Street Wizards Willed A 12.5% Net Gain from Top 20 Technology Dogs For August 2015

Top twenty sector dogs were graphed below to show relative strengths by dividend and price as of August 21, 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 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 $1000 invested in each of the ten highest yielding stocks and the aggregate single share prices of those twenty stocks divided by 2 created the 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.

(click to enlarge)

Yahoo projected 5.6% lower dividend from $10K invested in this group, while aggregate single share price was projected to increase by 4.9% 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 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 Anticipated 10 Technology Sector Dogs to Net 7.7% to Over 52.3% By August 2015

Just three of the ten top dividend yielding Technology dogs were verified as being among the ten top net gainers for the coming year based on analyst 1-year target prices. So this month the dog strategy for technology stocks as graded by Wall St. wizards was 30% accurate.

Ten probable profit generating trades revealed by Yahoo Finance into 2015 were:

Earthlink, Inc. (NASDAQ:ELNK) was projected to net $523.06 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 3% more than the market as a whole.

NTELOS Holdings Corp. was projected to net $383.56 based on estimates from five analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 10% greater than the market as a whole.

Compuware Corporation was projected to net $273.03, based on dividends plus a mean target price estimate by three analysts less broker fees. The Beta number showed this estimate subject to volatility 23% greater than the market as a whole.

Telefonica Brasil SA (NYSE:VIV) was projected to net $231.01 based on estimates from six analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 6% less than the market as a whole.

BCE Inc. (NYSE:BCE) was projected to net $153.84 based on dividends plus the mean of annual price estimates from twelve analysts less broker fees. The Beta number showed this estimate subject to volatility 56% less than the market as a whole.

STMicroelectronics (NYSE:STM) was projected to net $138.84, based on dividends plus a mean target price estimate from seven analysts less broker fees. The Beta number showed this estimate was subject to volatility 21% more than the market as a whole.

Quality Systems (NASDAQ:QSII) was projected to net $137.34, based on dividends plus a mean target price estimate from twenty-one analysts less broker fees. The Beta number showed this estimate was subject to volatility 51% less than the market as a whole.

Verizon Communications (NYSE:VZ) was projected to net $132.45 based on estimated dividends plus mean target price estimate from twenty-four analysts less broker fees. The Beta number showed this estimate subject to volatility 96% less than the market as a whole.

Vodafone Group was projected to net $81.49 based on estimates from three analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 38% less than the market as a whole.

AT&T (NYSE:T) was projected to net $77.58, based on dividends plus a mean target price estimate from twenty-two analysts less broker fees. The Beta number showed this estimate was subject to volatility 76% less than the market as a whole.

Average net gain in dividend and price was 21.3% 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.

Actionable Conclusion (5): (Bear Alert) Analysts Forecast3 Tech DiviDogs to Post Net Losses By August 2015

Three probable Technology losing trades revealed by analysts reported by Thomson/First Call in Yahoo Finance for 2015 was:

Consolidated Communications Holdings was projected to lose $52.19 based on dividend and a mean target price estimate from five analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 13% less than the market as a whole.

Frontier Communications, Inc. was projected to lose $38.07 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 17% less than the market as a whole.

CenturyLink, Inc. (NYSE:CTL) was projected to lose $31.00 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.

Actionable Conclusion (6): Analysts See Net Gains of 8.8% for CHL by August 15, 2015

A note about China Mobile (NYSE:CHL):

July's twentieth place finisher by yield and sixth place by upside dropped out of the top twenty by yield as its share price ramped up into August. However, analysts are still convinced that China Mobile has upside potential to net $88.98 based on a mean target price of $64.93 from four analysts (with a Beta number showing this estimate subject to volatility 85% less than the market as a whole.) So, despite a paltry dividend yield of 3.53%, CHL would still sit in seventh place on the upside table and in seventh place by net gain this week, despite not qualifying for the field based on yield

The stocks listed above were suggested only as decent starting points for a Techno dog dividend stock purchase/sale research process in early August, 2014. These were not recommendations.

Gains/declines 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.

Graphs and charts were compiled by Rydlun & Co., LLC from data derived from www.indexarb.com; www.dividend.com; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance.

Source: 4 Top Techno Dogs Denote 20.5% To 49.5% August Upsides