This monthly series compares relative strengths of eight stock indexes by yield using projected annual dividends from $1000 invested in the ten highest yielding stocks in each index. This is one part of an ongoing Dogs of the Index effort to respond to the question, "which dividend stocks are good, better, best, bad or ugly?" The effort also aims to uncover strong evidence of the need to heed Yale professor Robert Shiller's observation: "People still place too much confidence in the markets and have too strong a belief that paying attention to the gyrations in their investments will someday make them rich, and so they do not make conservative preparations for possible bad outcomes."
Previous posts in November ranked the subject eight indices dividend stocks by risk in the following order from most risk to least:
Russell 1000 Index Stocks
Transitioning from Russell 2000 stocks to the 1000 list in October brought some diversity to the list along with higher capitalized firms bringing lower risk. These are (eight financial, one service, and one consumer) firms paying big dividends. Since my October list update to the Russell 1000 list, American Capital Agency Corp. (NASDAQ:AGNC) is atop of the list. As of 12/30 AGNC showed a 19.94% yield. Teekay Takers (NYSE:TNK), a service firm, is the highest yielding non-financial firm on the Russell 1000 in December at 17.05%.
Composed of top dividend payers regardless of index and limited to three stocks from each of nine sectors. The top ten was completely shaken up in December and the top dividend payer (according to Yahoo Financial) was disqualified by the author as projecting an unsustainable dividend. Below the disqualified CPI Corp projecting a 55.25% yield, are representatives of six sectors: two services, two technology, three financial, one basic materials, one industrial, and one utility. The new default top dog by yield at 24.43% is Alon Holdings Blue Square (NYSE:BSI), another services (grocery) firm. Later this month a 1 by 9 plus one Sector report will be introduced featuring the top yielding stocks in each of the nine sectors plus the best performing runner up. Those sector dogs will likely show a more conservative trajectory than the current 3 by 9 model.
S&P 500 Stocks
The best of the top ten S&P 500 dividend paying stocks is again Frontier Communications (NASDAQ:FTR) tops with a 14.56% December 30 indexarb.com yield for this index. Top ten S&P 500 firms sectors consist of four technology, three consumer, one services, one basic materials, and one financial.
NYSE International 100 Stocks
These international dividend stocks feature ten European based companies on the NYSE showing the highest dividend yields. For December, five of the top ten stocks paying the biggest dividends in this index are technology firms. Nokia (NYSE:NOK) last topped this list in July and edges out Telefonica SA (NYSE:TEF) by 0.13%. NOK is tops again with a 9.96% yield in December.
NASDAQ 100 Stocks
For December, six of the top ten stocks paying the biggest dividends in this index were technology firms. Vodafone (NASDAQ:VOD) and Seagate Technologies (NASDAQ:STX) have traded places at the top of this list twice over the past seven months throwing 5 to 8% yields in 2011. In December VOD was tops again at 8.38%. The remaining four firms represented two business sectors with two consumer, and two service firms.
Three of the top ten stocks paying the biggest dividends on the Dow for December were technology firms. As it has for the entire year, AT&T (NYSE:T) continues atop this list. It's yield was at 5.98% as of November 11 and at 5.82% December 30 reflecting a $.82 price gain of 2.79%.
S&P 500 Aristocrats Stocks
Four of the top ten stocks paying the biggest dividends on the S&P 500 Aristocrats in December were consumer goods firms. The leading consumer goods firm, Pitney Bowes (NYSE:PBI), took over the top spot from Century Link (NYSE:CTL). This technology firm will be leaving the list in January since CTL failed to raised dividend in 2011 and broke the 25 year requirement to be listed.
JPMorgan Sovereigns Stocks
Below are ten November top stocks by yield on a list first published July 22, 2011 by Thomas Lee, an equity strategist with JPMorgan, titled "Corporates are the New Sovereigns: 22 stocks to own around sovereign default." Two of the top ten stocks paying the biggest dividends of the JPMorgan Sovereigns for December were healthcare firms. As for the first nine months of 2011, Merck (NYSE:MRK) topped this list by yield at 6.06% finally forcing Lockheed Martin (NYSE:LMT) off the top. LMT was second with a 4.94% yield.
Companies in the top ten for each index
Any variations in divided projections from identical stocks on separate lists results from the data coming from separate sources. For example PBI projected annual dividend is listed as $1.50 at $18.54 in the 12/30/11 indexarb.com database used for the S&P 500 Index but as $1.48 at $18.54 for 7.98% yield by the 12/30/11 Yahoo Finance data used for the S&P 500 Aristocrats Index. You will note that the Dow index figures for December are reported using Yahoo finance numbers instead of the indexarb figures used in previous months. This is so the 2011 closing Dow results would conform with those at www.dogsofthedow.com.
See the battling dogs of 2011 by projected dividend yields
The following graph shows annual dividends projected from $1000 invested in each of ten stocks with the top yields in eight indices (a total of 80 stock investments). The chart plots projected yields as of a specific purchase date near the middle of each month going back to January. Projected yield increases were most frequent as average stock prices within each index fell. Bull market reversals in several indices forced yields down as recent prices increased.
Relative yield strengths differentiate the indices on the graph. The JPM Sovereigns, Dow (NYSEARCA:DIA), NASDAQ (NASDAQ:QQQ), and Aristocrats show lower yields with less pronounced swings. The NYSE International and S&P 500 (NYSEARCA:SPY) stocks display slightly higher yields than the lower volatility group. The Russell Index and Top Yielding Sectors declare the highest yields during the past months. The top indices exchanged positions in October by virtue of the reporters changeover from Russell 2000 to higher cap Russell 1000 stocks in that index.
Annual Dividends Forecast from $1k Invested in each of 10 Top Yielding Stocks in 8 Indices
Click to enlarge.
Projected dividend yield amounts from eight indexes over the past twelve months point to a wild variety of yields. You'd think the top four indices were in entirely different markets than the bottom four as these eight representative market indices display their relative strengths in top end dividend yield. Nevertheless, they're all traded on the NYSE and the NASDAQ.
For example, two indices, (the NASDAQ and S&P 500 Aristocrats) crossed paths between April and August and now parallel each other showing flat yields. The most active and erratic lower volatility index over the summer by yield, the NASDAQ, is now back above the DOW in yield by $30 in December.
Later this month a 1 by 9 plus 1 Sector report will be introduced featuring the top yielding stocks in each of the nine sectors plus the best performing runner up. Those sector dogs will likely show a more conservative trajectory than the current 3 by 9 model.
These eight indices and their component stocks have ongoing stories to tell. This graph and list of companies will be updated again for publication in late January and thereafter.
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. Prices and returns on equities in this article are listed without consideration of fees, commissions, taxes, penalties, or interest payable due to purchasing, holding or selling same.