Global Dogs of The New Year
Global dividend paying firms listed here were tallied as of market closing prices January 15. Only Small, Mid, & Large cap Global stocks were listed. Small cap firms were valued at $200M to $1.9B; Mid cap firms were worth $2B to $9.9B; Large caps were valued north of $10B. Yield (dividend / price) results from yahoo.com/finance for 50 top yielding Global stocks led to the actionable conclusions delineated below.
Actionable Conclusion (1) 10 Top Global Dogs Projected 8.93% to 17.66% Annual Yields as of January 15
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; S&P Aristocrats; Russell 2000; NASDAQ 100; Champions; Contenders; Challengers; CCC Combined; and Global. Bonus reports cover Bad Boy AllStars, and Sector Leaders.
Fifty For the Money
This article was written to reveal bargain stocks to buy and hold up to one full year. See Dow 30 article for explanation of the term "dogs" for stocks reported based on Michael B. O'Higgins book "Beating The Dow" (HarperCollins, 1991), now 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, as desired.
Dog Metrics Sorted Global 50 Stocks by Yield
Fifty small, mid, and large cap Global equities were culled by yield from 280 common and preferred choices from here for this article.
Ten top global dividend stocks that showed the biggest dividend yields January 15, per Yahoo Finance data, represented six of nine sectors: basic materials; utilities; financials; technology; services; industrial goods.
Five basic materials firms placed first, second, fourth, eighth, and ninth: Ecopetrol SA ADR [Colombia] (NYSE:EC) ; BHP Billiton Plc ADR [Australia] (NYSE:BBL) ; BHP Billiton Ltd. [Australia] (NYSE:BHP) ; Royal Dutch Shell plc [Netherlands] (NYSE:RDS.B) ; Royal Dutch Shell plc [Netherlands] (NYSE:RDS.A) .
One utility placed third, Companhia Paranaense De Energia [Brazil] (NYSE:ELP) . A lone financial firm placed fifth, CorpBanca S.A [Chile] (NYSE:BCA). The only technology firm placed sixth, Telecom Italia SPA (NYSE:TI.A). Then, the lone services representative took seventh place, Grana y Montero S.A.A. [Peru] (NYSE:GRAM) . At the end of the list was a lone industrial goods firm, Tenaris SA [Luxembourg](NYSE:TS), which completes the January Global top ten by yield.
Dividend vs. Price Results VS. Dow Dogs
Relative strengths of the top ten Global dogs by yield as of market close 1/15/2016 compared to those of the Dow are shown in the graphs and charts below. Projected annual dividend history from $10,000 invested as $1k in each of the ten highest yielding stocks and the total single share price history of those ten stocks created the data points shown in blue for dividend and green for price.
Actionable Conclusions: (2) Global Dogs Retreated And (3) Dow Dogs Mixed Up
Global top dividend payers soared in dividend and fell in price after November. Aggregate single share price dropped 6.5% and aggregate dividend from $10k invested as $1k in each of the top ten stocks flew skyward 38% to signal the bearish retreat. The change was triggered by four notable high dividend paying stocks returning to the top ten by yield plus a global price decrease. The returning payers were the four basic materials firms, BHP Billiton Plc ADR , BHP Billiton Ltd., Royal Dutch Shell plc, & Royal Dutch Shell plc.
The Dow dog mix up showed as aggregate single share price for those ten rose 3.3% between September 25, and October 28 while annual dividend from $10k invested as $1K in each of the top ten inclined 1.3% according to IndexArb.
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) went wider. The price rise in the top ten was triggered by $125/share BA replacing $30/share GE in the number 10 slot.
Actionable Conclusion (4): Dow Dogs Persist As Overbought
The overhang was $250 or 65% for February; slid to $243 or 62% in March; gapped to $295 or 81% for a record in April; then broke the new annual record again in May at $311 or 87%. June saw the gap narrow to $286 or 77%. Then the August market set a new gap high at $328 but merely 84%. A September retreat narrowed the chasm to $261 or 62%. October-November action, however, put the gap at $299, or 77%. By January the gap grew to to $316 or 80.9 % as of 1/15.
[Since the Dow Index is in serious decline again, I invite you to sign on to my premium site, The Dividend Dog Catcher, to share my discussion about how the Dow (short of tossing out IBM and Boeing) could return to a "normal" balance where dividends from 10 $1k investments can again exceed the aggregate single share price of those ten stocks.]
This gap between high share price and low dividend per $1k invested shows an overbought condition. Meaning, these are low risk and low opportunity Dow dogs.
Compared to the DOW, the GLOBAL ten, while volatile, remain in a "normal" pattern of aggregate dividend value of $1k investments in each exceeding the aggregate single share price. Should Dow stocks move to grow in price as dividends drop, it appears that the Global opportunities will become even more attractive.
Actionable Conclusions: (5) 10 Top Global Dogs Showed 84.31% Average Upsides Per Analyst Targets For January 2017
The number of analysts providing price estimates was noted after the name of each stock. Three to nine analysts have historically showed more accurate mean target price estimates.
Actionable Conclusions: Wall St. Wizards Wished (6): A 37.34% Average 1 yr. Upside (7) A 39.11% average 1 yr. net gain for Top 30 NASDAQ 100 Dogs by January, 2017
Top 30 dogs on the NASDAQ 100 index stock list graphed below show relative strengths by dividend and price as of January 15, 2016 and those projected by analyst mean price target estimates to the same date in 2017.
A hypothetical $1000 investment in each equity was divided by the current share price to find the number of shares purchased. The number of shares was then multiplied by projected annual dividend amounts to find the dividend return. Thereafter the analyst mean target price was used to gauge each stock's upside to 2017.
Historic prices and actual dividends paid from $1000 invested in each of the highest yielding stocks and the aggregate single share prices of those thirty stocks divided by 3 created the data points for 2016. Projections based on estimated increases in dividend amounts from $1000 invested in the thirty highest yielding stocks and aggregate one-year analyst target share prices from Yahoo Finance divided by 3 created the 2017 data points on the chart below, green for price and blue for dividend
Yahoo reported Thomson/First Call analyst survey numbers predicting 23.6% lower dividend from $10K invested as $1k in the average ten of this group, meanwhile aggregate single share price of those ten was predicted to increase 31.75% in the coming year.
Actionable Conclusion (8): Analysts Predicted 10 Global Dividend Dogs To Net 50.8% to 237.95% By January 2017
Just three of the top ten dividend yielding Global dogs were detected among the top ten gainers for the coming year based on analyst 1 year target prices. Thus, January dog strategy, as graded by Wall St. wizards, was 30% accurate.
Grana y Montero S.A.A. (Peru) was projected to net $2,370.95, based on dividends plus one-half of the lowest target price estimate from six analysts less broker fees. The Beta number showed that estimate subject to volatility 21% less than the market as a whole.
Companhia de Saneamento Basico do Estado de Sao Paulo-SABESP (NYSE:SBS) was projected to net $1,881.69 based on one-half the lowest target estimate from three analysts plus dividends less broker fees. The Beta number showed that estimate subject to volatility 169% more than the market as a whole.
Ecopetrol SA ADR was projected to net $786.45 based on estimates from fourteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 12% more than the market as a whole.
Ensco plc (NYSE:ESV) was projected to net $664.47 based on dividends plus median target price estimate from thirty-one analysts less broker fees. The Beta number showed this estimate subject to volatility 298% more than the market as a whole.
CNOOC Ltd. ADR (NYSE:CEO) was projected to net $643.68, based on dividends plus median target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 8% less than the market as a whole.
BHP Billiton Ltd. was projected to net $598.62 based on estimates from four analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 12% more than the market as a whole.
ArcelorMittal (NYSE:MT) was projected to net $587.67 based on estimates from six analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 101% more than the market as a whole.
Fly Leasing Ltd. (NYSE:FLY) was projected to net $570.91, based on dividend plus mean target price estimates from seven analysts less broker fees. The Beta number showed this estimate subject to volatility 8% less than the market as a whole.
Rio Tinto plc (NYSE:RIO) was projected to net $550.70 based on dividends plus median target price estimates from four analysts less broker fees. The Beta number showed this estimate subject to volatility 5% more than the market as a whole.
Huaneng Power International, Inc ADR (NYSE:HNP) was projected to net $508.81 based on estimates from two analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 46% less than the market as a whole.
Average net gain in dividend and price was 91.64% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 52% more than the market as a whole.
Dog Metrics Extracted Bargains
Ten top global dividend stocks that showed the biggest dividend yields January 15 per Yahoo Finance data, as you recall, six of nine sectors: basic materials; utilities; financials; technology; services; industrial goods. They ranked themselves by yield as follows:
Actionable Conclusions: (1) Analysts Forecast 5 Lowest Priced of Top Ten Highest Yield Global Top Dogs To Deliver 75.21% VS. (2) 54.54% Net Gains from All Ten by January, 2017
$5000 invested as $1k in each of the five lowest priced stocks in the top ten Global kennel by yield were alleged by analyst 1 year targets to deliver 37.9% more net gain than $5,000 invested as $.5k in all ten. The very lowest priced Global dog, Grana y Montero S.A.A. , was projected to deliver the best net gain of 237.09%.
Lowest priced five Global dogs as of January 15 were: Grana y Montero S.A.A.; Companhia Paranaense De Energia; Ecopetrol SA ADR; Telecom Italia SPA ADR; CorpBanca S.A., with prices ranging from $2.43 to $11.15.
Higher priced five Global dogs for January 15 were: BHP Billiton Plc ADR; Tenaris SA; BHP Billiton Ltd.; Royal Dutch Shell Plc ADR; Royal Dutch Shell Plc ADR, whose prices ranged from $17.87 to $39.15.
This distinction between five low priced dividend dogs and the general field of ten reflects the "basic method" Michael B. O'Higgins employed for beating the Dow. The added scale of projected gains based on analyst targets contributed a unique element of "market sentiment" gauging upside potential. It provided a here and now equivalent of waiting a year to find out what might happen in the market. Its also the work analysts got paid big bucks to do.
A caution is advised, however, as analysts are historically 20% to 80% accurate on the direction of change and about 0% to 20% accurate on the degree of the change.
See Fredrik Arnold's instablog for specific instructions about how to best apply the dividend dog data featured in this article.
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.
Do any of these Global pups qualify as valuable catches? Check out the now 22 Dogs Of The Week (DOTW) found on The Dividend Dog Catcher premium site. Click here to subscribe: http://seekingalpha.com/account/research/subscribe?slug=fredrik-arnold&source=auths_effs_fredrik-arnold
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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: I am/we are long INTC, PFE, VZ.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.