NASDAQ April Dogs
NASDAQ 100 Index members paying dividends were tallied as of market closing prices April 25. Yield (dividend / price) results for 47 dividend paying NASDAQ stocks as stacked against analyst 1-yr target projections led to the actionable conclusions reported below.
Actionable Conclusion (1) 10 Top NASDAQ Dogs Showed 2.99% to 7.33% Yields as of April 25
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; NASDAQ 100; Champions; Contenders; Challengers; CCC Combined; and Global. Bonus reports cover Bad Boy AllStars, and Sector Leaders.
Forty-Seven 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 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 March 18, 2016 per IndexARB.com data: technology; consumer goods; services.
Technology put seven technology firms in the top ten by yield. Tops for tech and overall was Seagate Technology (NASDAQ:STX) . The remaining six tech firms placed second, through fifth, seventh, and tenth: Vodafone Group plc (NASDAQ:VOD) ; Western Digital (NASDAQ:WDC) ; QUALCOMM (NASDAQ:QCOM) ; Cisco Systems (NASDAQ:CSCO); Intel (NASDAQ:INTC) ; Microsoft (NASDAQ:MSFT) .
Two consumer goods representatives placed in the sixth and ninth slots, Mattel (NASDAQ:MAT) , and Kraft Heinz (NASDAQ:KHC) . Finally, a lone service rep placed eighth, Viacom B (NASDAQ:VIAB) , and completed the top ten NASDAQ 100 dogs by yield for April.
NASDAQ Dividend vs. Price Results Shadowed Those Of Dow Dogs
Top ten NASDAQ 100 dogs were compared to those of the Dow by yield 4/25/2016. 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: (2) NASDAQ 100 Dogs Retreated, And (3) Dow Dogs Mixed Down After March
NASDAQ 100 top ten dividend payers crossed back under the overbought zone as they climbed in dividend and dropped in price after March. Aggregate single share price fell 2.6% to fall below the track of aggregate dividend from $10k invested, which rose 5.65% to confirm the bearish retreat.
Dow dogs, however, mixed down and widened their overbought condition by a mere 1%. Aggregate single share price for the ten fell 1.5% between March 18 and April 25, while annual dividend from $10k invested as $1K in each of the top ten dropped 1.5%, according to IndexArb.
As mentioned, 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 expanded after March.
Actionable Conclusion (4): Dow Dogs Stay Overbought
The overhang was $320 or 90% to begin May 2015; 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, 2016, 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. However, P&G reclaimed slot ten in March to join big dogs IBM and Boeing to put the gap to a record of $402 or 105%. April saw Intel replace Merck in slot ten to put the gap at $398 or 106%
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 ten average price per dollar of annual dividend was $26.81.
Unlike the DOW, the NASDAQ ten trekked out of overbought territory. The value of dividends from $1k investments in each rose back above the aggregate single share price of those stocks. The NASDAQ dog chart showed how "normal" could be achieved. (Notice the double crossing points in July and now in March and April where dividends moved above price in July, below again in March, and back above this month.) The NASDAQ top ten average price per dollar of annual dividend was $24.70 as of April 25.
NASDAQ Dog Upsides
Results from IndexArb.com tallied for 47 NASDAQ 100 Index members paying dividends as of market closing prices April 25, 2016 were stacked against analyst mean target price projections one year out. The results led to the actionable conclusions continuing below.
Actionable Conclusions: (5) 10 Top NASDAQ 100 Dogs Displayed 22.07% Average Upsides Per Analyst Targets For April 2017. (6) Two NASDAQ Dogs Averages 5.6% Downsides
Actionable Conclusion (7): Wall St. Wizards Cast A 10.24% Average 1 yr. Upside & (8) A 10.12% Average Net Gain for Top 30 NASDAQ 100 Dogs To April 25, 2017
Top 30 dogs on the NASDAQ 100 index stock list graphed below showed relative strengths by dividend and price as of April 25, 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 9.45% 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 12.7% in the coming year. Notice that the 2016-17 graph shows price above dividend. Apparently analysts believe the Dow-like overbought condition will dominate the NASDAQ 100 in 2017.
Actionable Conclusion (8): Analysts Alleged 10 NASDAQ 100 Dividend Dogs Would Net 16.03% to 39.39% By April 2017
Five of the top ten dividend yielding NASDAQ 100 dogs were 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.
NetEase (NASDAQ:NTES) was projected to net $393.85 based on a median target price estimate from eighteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 14% less than the market as a whole.
Western Digital was projected to net $376.50 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 232% more than the market as a whole.
Apple, Inc. (NASDAQ:AAPL) was projected to net $247.66 based on dividends plus median target price estimate from thirty-eight analysts less broker fees. The Beta number showed this estimate subject to volatility 44% greater than the market as a whole.
Seagate Technology (NASDAQ:STX) was projected to net $238.52 based on a median target price estimate from twenty-four analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 23% more than the market as a whole.
Symantec (NASDAQ:SYMC) was projected to net $224.46 based on dividends plus a median target price estimate from twenty analysts less broker fees. The Beta number showed this estimate subject to volatility 23% more than the market as a whole.
Vodafone Group plc (NASDAQ:VOD) was projected to net $194.97 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.
Broadcom Limited (NASDAQ:AVGO) was projected to net $190.07 based on dividends plus median target price estimates from twenty-seven analysts less broker fees. The Beta number showed this estimate subject to volatility 1% more than the market as a whole.
Microsoft was projected to net $179.35 based on a mean target price estimate from thirty-three analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 6% more than the market as a whole.
Walgreens Boots Alliance (NASDAQ:WBA) was projected to net $167.18 based on a mean target price estimate from twenty analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 31% more than the market as a whole.
Intel was projected to net $160.25 based on dividends plus median target price estimate from twenty five analysts less broker fees. The Beta number showed this estimate subject to volatility 6% more than the market as a whole.
The average net gain in dividend and price was 23.7% on $10k invested as $1k in each of these dogs. This gain estimate was subject to average volatility 11% greater than the market as a whole.
Actionable Conclusion (9): (Bear Alerts) Analysts Predicted Four NASDAQ Dogs With Net Losses of -3.55% To -22.69% By March, 2017
Four probable losing trades revealed by Thomson/First Call in Yahoo Finance in 2017 were:
Linear Technology (NASDAQ:LLTC) was projected to lose $41.78 based on dividend and a median target price estimate from sixteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 7% less than the market as a whole.
Paychex, Inc. (NASDAQ:PAYX) was projected to lose $63.87 based on dividend and a median target price estimate from fifteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 6% less than the market as a whole.
The average net gloss in dividend and price was 5.28% on $2k invested as $1k in each of these two bear bait dogs. This gain/loss estimate was subject to average volatility 6% less than the market as a whole.
Dog Metrics Projected Losses From Five Lowest Priced NASDAQ Dogs
Yield (dividend / price) results from Yahoo.com for NASDAQ 100 index April 25 did the ranking.
Actionable Conclusions: (1) 5 Lowest Priced of Top Ten Highest Yield NASDAQ Dogs Promised 15.63% VS. (2) 16.24% Net Gains by All Ten by April 25, 2017
$5000 invested as $1k in each of the five Lowest priced stocks in the top ten NASDAQ dividend kennel by yield were alleged by analyst 1-year targets to deliver 3.79% LESS net gain than the same amount invested in all ten. The seventh lowest priced NASDAQ dividend dog, Western Digital (NASDAQ:WDC), was projected to deliver the best net gain of 37.65%.
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.
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.
The stocks listed above were suggested only as reference points for a NASDAQ dividend dog investigation in late-April/May, 2016. These were not recommendations.
See my instablog for specific instructions about how to best apply the dividend dog data featured in this article.
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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.