The Dividend Dogs Rule
The "dog" moniker was earned by stocks exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where (3) yield (dividend/price) grew higher than their peers. Thus, the highest yielding stocks in any collection became known as "dogs." More specifically, these are, in fact, "underdogs".
Twelve Technology Industries Featured Firms With More Cash Margin For Dividends
Twelve of nineteen industries composing the sector, included the 28 firms whose dividends were backed by cash cushions as of November 25: Information Technology (5); Software - infrastructure (2); Communication Equipment (6); Data Storage (2); Software- application (2); Computer Systems (3); Electronic Components (1); Computer Distribution (1); Scientific & Technical Instruments (1); Internet Content & Information (1); Consumer Electronics (1); Semiconductors (3).
28 Telecom Services Firms Backed By Cash Flow Margin to Cover Dividends
Periodic Safety Check
Another article will discuss the attributes of these 50 Technology stocks from which these twenty-eight were sorted. You see below the list that passed the dividend "stress" test. These 28 Techno dogs report sufficient annual cash flow yield to cover their anticipated annual dividend yield. The margin of excess is shown in the bold face "Safety Margin" column.
Financial guarantees however are easily over-ruled by a cranky board of directors or company policy canceling or varying the payout of dividends to shareholders. For example, MIND C.T.I. (NASDAQ:MNDO) on the list above has always issued a variable annual dividend. In another case, Eutelsat Communications (OTCPK:ETCMY) shows just two years of annual dividend payments, though the company was formed in 1977. Furthermore, Seagate Technology (NASDAQ:STX) started paying dividends in 2003 but cut nearly two years of quarterly dividends off after Q1 2009, not resuming a quarterly schedule again until Q1 2011.
Three additional columns of financial data listed after the Safety Margin figures reveal payout ratios (lower is better), total annual returns, and dividend growth levels for each stock. This data is provided to reach beyond yield to select reliable payout stocks.
Dog Metrics Revealed Bargains In "Safe" Dividend Technology Sector Stocks
Ten "Safest" top Tech firms that showed the biggest yields November 25 per YCharts data ranked themselves by yield as follows:
Actionable Conclusions: (1) Analysts Predict 5 Lowest Priced of Ten "Safe" Dividend High Yield Technology Sector Dogs To Deliver 4.22% VS. (2) 3.87% Net Gains from All Ten by December, 2017
$5000 invested as $1k in each of the five lowest priced stocks in the "safe" ten Technology Sector kennel by yield were determined by analyst 1 year targets to deliver 8.99% more net gain than $5,000 invested as $.5k in all ten. The very lowest priced safe dividend Technology Sector dog, MIND C.T.I. showed the best net gain of 8.42% per analyst targets.
Lowest priced five "safe" Technology dogs as of November 25 were: MIND C.T.I.; Eutelsat Communications; Hammond Power Solutions (HPS-A.TO); Transact Technologies (NASDAQ:TACT); CSP Inc. (NASDAQ:CSPI), with prices ranging from $2.59 to $10.33.
Higher priced five Safe Dividend Technology dogs as of November 25 were: Tessco Technologies (NASDAQ:TESS); Asseco Poland (OTCPK:ASOZY); Evertz Technologies (ET.TO); DH Corporation (DH.TO); Seagate Technology, with prices ranging from $11.75 to $39.07.
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 net gain estimates mentioned 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 safest Industrial dog dividend stock research process. These were not recommendations.
Two of these technology sector dividend pups qualified as valuable catches! Find them as two of the now 52 Dogs of the Week found on The Dividend Dog Catcher premium site. Click here to subscribe or get more information.
It's about time to make investing fun again. For a free copy of the monthly top dogs, the quarterly reports, and the dog of the year winner from the 52 Dogs of the Week, send your e-mail address, ticker symbol for your favorite dividend stock, and name of your favorite team of any sport or activity to: firstname.lastname@example.org. Remember: E-mail, ticker, team!
Root for the Underdog.
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 ycharts.com; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance. Dog photo from: dividenddogcatcher.com.
Disclosure: I am/we are long CSCO.
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.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.