Any portfolio of stocks is only as strong as the grounds for its collection. Much like a building is planned and built to suit its location, so must a stock portfolio be built to suit the owner's purpose. Many investment strategists recommend dividend-paying stocks. Recent articles have investigated and compared projected dividend yields from eight indices in an effort to sort out an answer to which dividend stocks are good, better, best, bad or ugly.
Many well-paid financial wizards busy themselves attempting to gain followers and credibility for their chosen collections of equities. Some are:
- Russell Investments, a subsidiary of Northwestern Mutual Life Insurance, publishes the Russell 1000 index.
- Standard and Poors, a division of McGraw Hill, publishes several indices, including the S&P 500 and the S&P 100.
- Dow Jones, a CME Group Company, aggregates the Dow Jones industrial average of 30 stocks commonly called the Dow.
- Nasdaq, the nation's first electronic stock exchange, was once the National Association of Securities Dealers Automated Quotations.
- NYSE the New York Securities Exchange with Euronext has five divisions specializing in financial transaction systems and information.
- AMEX, the American Stock Exchange, is third largest in the U.S. and is now part of NYSE Euronext.
- CBOT the Chicago Board of Trade is a contract market division of the CME Group.
- Most investment houses, such as JPMorgan, Morgan Stanley, Merrill Lynch, Morningstar, Goldman Sachs, Edward Jones, Fidelity and Vanguard, collect lists of multi-purpose equities. Some publish their lists; others do not.
Instant Investment Wisdom
To determine the best of the best dividend stocks, many investors rely on a once per year trading system triggered by yield, called the "Dogs of the Index" strategy. This strategy gives the investor the tactical advantage of obtaining all the wisdom and knowledge of the well-paid wizards of investment and publishing for free, merely by choosing the highest-yielding stocks from an existing collection built by the experts.
Charts below reveal low yielding stocks whose prices increase (or whose dividends decrease) to be sold off once each year to sweep gains and reinvest the seed money into higher yielding stocks in the same index. Two key metrics determine the yields that rank the Nasdaq 100 dividend dog stocks: stock price and annual dividend. Dividing the annual dividend by the price of the stock declares the percentage yield by which each dog stock is ranked. Thus the investor is able to follow, trade, and await the results from an investment in the lowest priced, highest yielding five or ten stocks in this index.
Any portfolio of stocks is only as strong as the grounds for its collection. Much like a building is planned and built to suit its location, so must a stock portfolio be built to suit the owner's purpose. Many investment strategists recommend dividend paying stocks. Recent articles have investigated and compared projected dividend yields from eight indices in an effort to sort out an answer to which dividend stocks are good, better, best, bad or ugly.
Index Revelations for November
Picks below are as of 11/11/11 by indexarb.com for the top dividend yielding stocks listed on the Nasdaq 100 Index. Nasdaq states:
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.
Eight of the top ten stocks paying the biggest dividends in this index for November are again technology firms. Seagate Technology (STX) topped this list with 5% to 7% yields for the past three months this year but ran to greener pastures with a $5.88 price increase since October 20. Now Vodafone (VOD) reasserts the top dog in yield position at 5.30% for November. These top thirty Nasdaq 100 dividend payers include, fifteen technology companies, two consumer goods, no financial, ten services, no basic materials, one industrial, two health care, no utilities, and no conglomerates representing the market sectors.
November Vertical Moves in Nasdaq 100 Index Dividend Payers
Over the first eleven months four different firms have exchanged places at the top of this list: VOD, GRMN, STX, and MCHP. Color code shows: (Yellow) firms listed in first position at least once between January and November 2011; (Cyan Blue) firms listed in tenth position at least once between January and November 2011; (Magenta) firms listed in twentieth position at least once between January and November 2011; (Green) firms listed in thirtieth position at least once between January and November 2011. Duplicates are depicted in color for highest ranking attained. No Nasdaq 100 technology stock disappeared from the list in November.
Click tables to enlarge.
November Dividend vs Price Results for Nasdaq 100 Index Top 10
Below is a graph of the relative strengths of the top ten Nasdaq 100 Index stocks by yield as of November 11, 2011. Using eleven months of historic projected annual dividend history from $1000 invested in the ten highest yielding stocks each month and the total single share prices of those ten stocks creates the data points for each month shown in green for price and blue for dividends.
Conclusion: See How They Romp
The November Nasdaq 100 Index component update shows bull market tendencies exhibited over the past four months culminating in near convergence as dividends from $1,000 invested in the top ten dropped, while aggregate total single share prices rose. Stay tuned.
Disclaimer: This article is for informational and educational purposes only and shall not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation or endorsement to buy or sell any security.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.