February Consumer Goods SML Dogs
Yield (dividend/price) results from here verified by Yahoo Finance were calculated as of February 17, 2016 for Small, Mid, & Large cap consumer goods sector stocks. Small cap firms were valued at $200M(illion) to $2B(illion), Mid cap firms were worth $2B to $10B, Large caps were valued above $10B. Those yield results led to three actionable conclusions discussed below.
50 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 one year target projections.
This article was intended to reveal bargain stocks to buy and hold up to one year. See Dow 30 article for explanation of the term "dogs" for stocks reported based on Michael B. O'Higgins's book "Beating The Dow" (HarperCollins, 1991), now named Dogs of the Dow. O'Higgins's 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 Consumer Goods Stocks by Yield
Actionable Conclusion (1): Telecommunication Firms Still Leading Tech Sector Yields
10 stocks that showed the biggest dividend yields after January, per Yahoo! Finance data, represented seven consumer goods sector industries: paper products, cigarettes, packaging and containers, personal products, food-major, auto manufacturing-major, and rubber/plastics.
In second place was a cigarette company, Vector Group (NYSE:VGR) . The best of three packaging and container firms placed third, Greif Inc. (NYSE:GEF) . The other p&c firms placed seventh, and tenth, Tupperware (NYSE:TUP) , and International Paper (NYSE:IP) .
A lone personal products producer placed fourth, Avon Products (NYSE:AVP) . Following in fifth was a major food producer, Cal-Maine Foods (NASDAQ:CALM) . One major auto manufacturer placed eighth, General Motors (NYSE:GM) .
Finally, Myers Industries (NYSE:MYE) , made the list for rubber and plastics and completed the February consumer goods top 10 dog list by yield.
Consumer Goods Sector Dividend vs. Price Results Contrasted With The Dogs of the Dow
Relative strengths of the top 10 consumer goods dogs graphed below by yield 2/17/2016 were compared to those of the Dow. Projected annual dividend history from $10k invested as $1k in each of the 10 highest yielding stocks and the total single share prices of those 10 stocks created the data points shown in green for price and blue for dividends.
Actionable Conclusions: (2) Consumer Goods Dogs Retreated As (3) Dow Dogs Mixed Up
As of February 17, dividend from $10k invested as $1k in each of the top 10 consumer goods stocks rose as aggregate single share price of those ten also fell. Price dropped 25% while dividend increased 6.4% to make the bearish move.
Dow dogs mixed up after January. Projected annual dividend from $10k invested as $1k in each of the top 10 rose 3.86%. At the same time, aggregate single share price increased 5% to confirm the mix up.
The Dow dogs overbought condition (in which aggregate single share price of the 10 exceeded projected annual dividend from $1k invested in each of the 10) expanded.
[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 (NYSE:IBM)) could in one move return to a normal balance where dividends from 10 $1k investments can again exceed the aggregate single share price of those top 10 stocks.]
Actionable Conclusion (4): Dow Dogs Continue To Be Overbought
The overhang was $388 or 102% in March, shrank back to $291 or 79% for April, widened to $320 or 90% to begin May, and soared to the new record $406 or 112% in June.
The Dow bubble deflated as DuPont (NYSE:DD) replaced IBM in the 10 slot of the top 10 for July to peg the gap at $269 or 71%, then inflated again as IBM replaced Pfizer (NYSE:PFE) to widen the gap to $331 or 85% for August. September brought some sanity back to the runaway Dow when the gap stood at $279 or 67%. October increases in price by Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM) pushed the gap to $334 or 85%.
November changed out McDonald's (NYSE:MCD) for Wal-Mart (NYSE:WMT), and GE (NYSE:GE) for Coca-Cola (NYSE:KO). The resulting price over dividend gap went to $303 or 78%. As of December 4 the gap stood at $294 or 75%. Come January 12, prices of the 10 Dow top dogs fell, and dividends rose, as Boeing (NYSE:BA) replaced General Electric to reduce the overbought gap to $215 or 53%. February moves put the gap at $230 or 55% February 16.
This gap between high share price and low dividend per $1k invested defines the Dow overbought condition. Meaning these are low risk and low opportunity Dow dog stocks. The Dow top 10 average price per dollar of annual dividend is $23.31.
In contrast to the Dow, consumer goods dog charts show them to be higher risk but also higher gain potential pups than those of the Dow. The consumer goods top 10 average price per dollar of annual dividend is $16.87.
Wall Street Wizard Wonders
One-year mean target price set by brokerage analysts multiplied by the number of shares in a $1k investment revealed 10 stocks showing the highest upside price potential into 2017 out of 30 selected by yield. The number of analysts providing price estimates was noted after the name for each stock. Three to nine analysts have usually provided the most accurate mean target price estimates.
Actionable Conclusion: (5) Analysts Assert 72.43% Average Price Upsides For 10 Technology Dogs Come February 2017
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" metrics, analyst mean price target estimates provided another tool to dig out bargains.
Actionable Conclusions: Wall St. Analysts Forecast (6) A 29.87% Average Upside; (7) A 30.14% Average one year Net Gain from Top 30 February Consumer Goods Dogs
ConGo sector dogs were graphed below to show relative strengths by dividend and price as of February 17, 2016 and those projected by analyst mean price target estimates to the same date in 2017.
A hypothetical $1k 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 median target price was used to gauge the stock upside to 2017.
Historic prices and actual dividends paid from $1k invested in each of the 30 highest yielding stocks and the aggregate single share prices of those 30 stocks divided by three created the data points for 2016. Projections based on estimated increases in dividend amounts from $1k invested in the 30 highest yielding stocks and aggregate one year analyst target share prices from Yahoo Finance divided by three created the 2017 data points green for price and blue for dividends.
Analysts reported by Yahoo finance projected a 18.7% lower dividend from $10k invested in this group while aggregate single share price was projected to increase by 17.8% 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 have proven to provide more accurate projected estimates. Estimates provided by one analyst were not applied (n/a).
A beta (risk) ranking for each stock was shown in the far right column on the above chart. A beta of one meant the stock's price would move with the market. Less than one showed lower than market movement. Higher than one showed greater than market movement. A negative beta number indicated the degree of a stock price movement opposite to market direction.
Actionable Conclusion (8): Wall St. Analysts Estimate 10 Consumer Goods Dogs To Net 28.18% to 351.39% Gains by February 2017
Four of the 10 top dividend yielding technology dogs were verified as being among the 10 top net gainers for the coming year based on analyst one year target prices. So this period the dog strategy for technology stocks as graded by Wall St. wizards were 40% accurate.
10 probable profit generating trades were revealed by Thomson/First Call in Yahoo Finance for February 2017:
Fibria Celulose S.A. was projected to net $3,513.89 based on dividends plus the lowest target price estimate from one of 10 analysts less broker fees. The Beta number showed this estimate subject to volatility 72% less than the market as a whole.
Steelcase Inc. (NYSE:SCS) was projected to net $741.08, based on dividends plus a mean target price estimate from two analysts less broker fees. The Beta number showed this estimate was subject to volatility 10% less than the market as a whole.
KapStone Paper and Packaging (NYSE:KS) was projected to net $581.56 based on estimates from eight analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 167% greater than the market as a whole.
Potlatch Corporation was projected to net $537.81 based on the median target price estimate from seven analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 16% more than the market as a whole.
Pitney Bowes (NYSE:PBI) was projected to net $474.87 based on estimates from six analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 12% less than the market as a whole.
Packaging Corporation of America (NYSE:PKG) was projected to net $381.17, based on dividends plus a median target price estimate from 13 analysts less broker fees. The Beta number showed this estimate subject to volatility 88% more than the market as a whole.
Ford Motor Company (NYSE:F) was projected to net $332.89, based on dividends plus a median target price estimate from 17 analysts less broker fees. The Beta number showed this estimate was subject to volatility 34% greater than the market as a whole.
General Motors Company was projected to net $330.19 based on estimates from 16 analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 66% more than the market as a whole.
Avon Products was projected to net $316.73 based on dividends plus the median of annual price estimates from 11 analysts less broker fees. The Beta number showed this estimate subject to volatility 120% more than the market as a whole.
Douglas Dynamics, Inc. (NYSE:PLOW) was projected to net $281.80 based on estimated dividends plus median target price estimate from two analysts less broker fees. The Beta number showed this estimate subject to volatility 37% more than the market as a whole.
Average net gain in dividend and price was 74.92% on $10k invested as $1k in each of these 10 dogs. This gain estimate was subject to average volatility 43% more than the market as a whole.
Dog Metrics Extracted More Bargains From Five Lowest Priced Highest Yield Consumer Goods Stocks
10 consumer goods sector equities were culled by yield from here. Yield (dividend/price) results verified by Yahoo Finance did the ranking.
As noted above, 10 stocks that showed the biggest dividend yields after January, per Yahoo! Finance data, represented seven consumer goods sector industries: paper products, cigarettes, packaging and containers, personal products, food-major, auto manufacturing-major, and rubber/plastics.
Actionable Conclusions: (9) Analysts Assert Five Lowest Priced of 10 Highest Yield Consumer Goods Dividend Dogs Deliver 85.37% Vs. (10) 56.94% Net Gains by All 10 as of February 17, 2017
$5k invested as $1k in each of the five lowest priced stocks in the top 10 consumer goods dividend kennel by yield were predicted by analyst one-year targets to deliver 49.95% more net gain than $5k invested as $.5k in each of all 10. The second lowest priced, Fibria Celulose S.A., was projected to deliver the best net gain of 359.81%.
Lowest priced five consumer goods dividend dogs as of February 17 were Avon Products, Fibria Celulose S.A., Myers Industries, Vector Group, and Greif Inc., with prices ranging from $3.92 to $26.05.
Higher priced five consumer goods dividend dogs for February 17 were Potlatch Corporation, General Motors Company, International Paper, Cal-Maine Foods, and Tupperware, whose prices ranged from $26.64 to $49.43.
This distinction between five low priced dividend dogs and the general field of 10 reflects the "basic method" Michael B. O'Higgins employed for beating the Dow. The same technique, you now see, can also be used to find the consumer goods sector.
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. It's 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.
Net gain and loss 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.
See my instablog for specific instructions about how to best use the dividend dog data featured in this article.
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, and analyst mean target price by Thomson/First Call in Yahoo Finance.
Disclosure: I am/we are long CSCO, 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.