NASDAQ Top Dogs of February
NASDAQ 100 Index members paying dividends were tallied as of market closing prices February 22. Yield (dividend / price) results for 46 dividend paying NASDAQ stocks as stacked against analyst 1-yr target projections led to the actionable conclusions discussed below.
Actionable Conclusion (1) 10 Top NASDAQ Dogs Cast 3.19% to 7.6% Yields as of February 22
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.
Forty-Six 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 Marked NASDAQ 100 Stocks by Yield
"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."
Again, just three of nine sectors were represented in the top ten NASDAQ dogs by yield as of February 22, 2016 per IndexARB.com data: technology; services; consumer goods.
Technology put seven firms in the top ten by yield. Tops for tech and overall was Vodafone Group plc (NASDAQ:VOD) . The remaining six tech firms placed second, fourth, through seventh, and tenth: Seagate Technology (NASDAQ:STX) ; Western Digital (NASDAQ:WDC) ; QUALCOMM (NASDAQ:QCOM) ; Cisco Systems (NASDAQ:CSCO); Intel (NASDAQ:INTC) ; Analog Devices (NASDAQ:ADI) .
A lone service rep placed third, Viacom B (NASDAQ:VIAB) . Finally, two consumer goods representatives placed in the eighth and ninth slots, Mattel (NASDAQ:MAT) , and Kraft Heinz (NASDAQ:KHC) . These completed the top ten NASDAQ 100 dogs for February by yield.
NASDAQ Dividend vs. Price Results Contrasted To Those Of Dow Dogs
Top ten NASDAQ 100 dogs compared to those of the Dow by yield were graphed below as of market close 2/22/2016. Annual dividend projected from $10,000 invested as $1K in each of the ten highest yielding stocks and total single share price of those ten stocks created the data points shown in green for price and blue for dividend.
Actionable Conclusions: (1) NASDAQ 100 Dogs Charged As (2) Dow Dogs Retreated After January
NASDAQ 100 top dividend payers dropped in dividend and jumped up in price after January. Aggregate single share price soared 18% as aggregate dividend from $10k invested fell 17% to confirm the bullish charge.
Dow dogs retreated, however, with aggregate single share price for the ten falling 7.8% between January 20 and February 22, while annual dividend from $10k invested as $1K in each of the top ten jumped up 6.3% according to IndexArb.
As a result, the Dow dogs overbought condition (where aggregate single share price of the ten exceeded projected annual dividend from $10k invested as $1k each in those ten) barely receded after January.
Actionable Conclusion (3): Dow Dogs Remain Overbought
The overhang was a record gap of $388 or 102% in March; shrank back to $291 or 79% for April; widened to $320 or 90% to begin May; soared to the new record $406 or 112% in June. The Dow bubble deflated as Dupont replaced IBM in the ten slot of the top ten for July to peg the gap at $269 or 71%, then inflated again as IBM replaced Pfizer 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 CVX and XOM pushed the gap to $334 or 85%. November changed out MCD for WMT, and GE for KO. The resulting price over dividend gap went to $303 or 78%.
As of December 8 the gap stood at $292 or 75%. Come January 20, Boeing moved up to the ten so price of the ten Dow top dogs swelled, and dividend shrank, to push the overbought gap back up to $351 or 91.5%. The influx of CSCO and INTC technology pushed consumer goods stalwarts P&G and KO out of the top ten to shrink the gap to $270 or 66% as of February 22.
This gap between high share price and low dividend per $1k invested defines the Dow over-bought condition. Meaning these are low risk and low opportunity Dow dog stocks. The Dow top ten average price per dollar of annual dividend was $24.26.
Compared to the DOW the NASDAQ ten, tracked a little past a "normal" pattern of aggregate dividend value of $1k investments in each exceeding the aggregate single share price. The NASDAQ dogs showed normal could be achieved. (Notice the crossing point in July where dividends moved above price.) The NASDAQ top ten average price per dollar of annual dividend was $23.63 as of February 22.
NASDAQ Dogs Upside
Results from IndexArb.com tallied for 46 NASDAQ 100 Index members paying dividends as of market closing prices February 22, 2016 were stacked against analyst mean target price projections one year out. The results led to the actionable conclusions discussed below.
Actionable Conclusions: (4) 10 Top NASDAQ 100 Dogs Displayed 30.64% Average Upsides Per Analyst Target Readings To February 2017 (5) A 16.23% Downside Was Also Noted
Actionable Conclusion (5): Wall St. Wizards Cast A 14.67% Average 1 yr. Upside & (6) A 13.16% Average Net Gain for Top 30 NASDAQ 100 Dogs To February 22, 2017
Top 30 dogs on the NASDAQ 100 index stock list graphed below showed relative strengths by dividend and price as of February 22, 2016 and those projected by analyst median 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 predicted a 12% lower dividend from $10K invested as $1k in the average ten of this group, while aggregate single share price of those ten was predicted to increase 17.3% in the coming year. Notice that the 2016-17 graph shows price above dividend. Apparently analysts believe the Dow overbought condition will return to the NASDAQ 100 in 2016.
Actionable Conclusion (7): Analysts Asserted 10 NASDAQ 100 Dividend Dogs Would Net 24.27% to 52.23% By February 2017
Five of the top ten dividend yielding NASDAQ 100 dogs were detected among the top ten gainers for the coming year based on analyst 1 year target prices. Therefore, the past month dog strategy (as graded by Wall St. wizards) was 50% accurate.
Western Digital was projected to net $522.30 based on dividends plus a median target price estimate from twenty-four analysts less broker fees. The Beta number showed this estimate subject to volatility 19% more than the market as a whole.
Skyworks Solutions (NAS7137 based on a median target price estimate from twenty-three analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 43% less than the market as a whole.
Apple, Inc. (NASDAQ:AAPL) was projected to net $366.04 based on dividends plus median target price estimate from thirty-nine analysts less broker fees. The Beta number showed this estimate subject to volatility 35% greater than the market as a whole.
Lam Research (NASDAQ:LRCX) was projected to net $307.13 based on dividends plus a median target price estimate from eighteen analysts less broker fees. The Beta number showed this estimate subject to volatility 557% greater than the market as a whole.
Gilead Sciences (NASDAQ:GILD) was projected to net $302.56 based on a mean target price estimate from nineteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 41% more than the market as a whole.
Viacom [B] was projected to net $301.76 based on dividends plus median target price estimates from twenty-nine analysts less broker fees. The Beta number showed this estimate subject to volatility 29% more than the market as a whole.
Vodafone Group plc (NASDAQ:VOD) was projected to net $263.20 based on dividends plus the mean of annual price estimates from two analysts less broker fees. The Beta number showed this estimate subject to volatility 23% less than the market as a whole.
Amgen Inc. (NASDAQ:AMGN) was projected to net $259.68 based on a mean target price estimate from sixteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 34% more than the market as a whole.
The Kraft Heinz Corporation was projected to net $246.19 based on dividends plus median target price estimate from fourteen analysts less broker fees. The Beta number showed this estimate subject to volatility 79% less than the market as a whole.
Intel Corporation (INTC) was projected to net $242.69 based on a median target price estimate from thirty-eight analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 2% more than the market as a whole.
The average net gain in dividend and price was 32.08% on $10k invested as $1k in each of these dogs. This gain estimate was subject to average volatility 7% greater than the market as a whole.
Actionable Conclusion (10): (Bear Alert) Analysts Predicted One NASDAQ Dog With a Net Loss of 16.24% By February, 2017
A probable losing trade revealed by Thomson/First Call in Yahoo Finance in 2017 was:
Fastenal Company (NASDAQ:FAST) was projected to lose $162.42 based on dividend and a median target price estimate from five analysts including $20 of broker fees (which the dividend more than covered). The Beta number showed this estimate subject to volatility 8% less than the market as a whole.
See my instablog for specific instructions about how to best apply the dividend dog data featured in this article.--Fredrik Arnold
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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.
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 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.