This article reports results for the 3x9 Sectors Index as of March 13. It also shows results for selected top yielding stocks from each of nine business sectors along with the best yielding runner-up from any sector as the tenth. This is to perfectly diversify a top ten sector index portfolio, named 1x9+1 Sectors Index.
These two sector indices were analyzed using a once per year trading system triggered by yield, called the "Dogs of the Index" to determine the best of the best dividend stocks.
Dogs of the Index Metrics
Two key metrics determined the yields to ranked the stocks in each index: (1) stock price; (2) annual dividend. Dividing the annual dividend by the price of the stock declared the percentage yield by which each dog stock was ranked. Thus investors were able to follow, trade, and await the results from investments in the lowest priced, highest yielding five or ten stocks in the index.
Investment Wisdom from the 3x9 and 1x9+1 Sectors
Listed below are the top twenty-seven 3x9 Sector stocks by yield as of 3/13/12 per Yahoo Finance data. This data is controversial since it reported estimated annual dividends that may or not be paid depending on decisions by individual corporate governing boards.
Last month dog dividend methodology was applied in new forward tests using Dogs of the Index metrics on each of eight major market sectors: basic materials, consumer goods, financial, healthcare, industrial goods, services, technology, and utilities. This index is derived from data reported in those articles.
The rankings of 1, 2, or 3 for the nine sectors indicate the relative positions of the stocks in each sector as of March 13: (Click to enlarge)
For March, the top ten dividend paying stocks in this index represented six sectors: Three from basic materials, three from financials, one each from utilities, consumer, technology, and services. The top dividend yield slots were claimed by basic materials firms, Oxford Resource (OXF), and Whiting USA Trust (NYSE:WHX). The former leaders were cast off the list.
The nine top dogs and top runner-up on the above chart form the March 1x9+1 list:
Vertical Moves by 3x9 and 1x9+1 Sector Dividend Payers
Over the past three months, four different firms bubbled to the top of the lists: CPI Corp. (NYSE:CPY); Alon Holdings Blue Square (NYSE:BSI); Paragon Shipping (PRGN); Oxford Resource (OXF). All were powered to that position by those ever-controversial forward-looking dividend estimates reported courtesy of Yahoo finance and its Morningstar analytic resource.
Color code shows: (Yellow) firms listed in first position at least once between December 2011 and March 2012; (Cyan Blue) firms listed in tenth position at least once between December 2011 and March 2012; (Magenta) firms listed in nineteenth position at least once between December 2011 and March 2012; (Green) firms listed in twenty seventh position at least once between December 2011 and March 2012. Duplicates are depicted in color for highest ranking attained.
The top ten 1x9+1 Sector stocks paying the biggest dividends for March were two from basic materials: Oxford Resource and Whiting USA Trust; from financials, BBVA Banco Franca S.V. (NYSE:BFR); from utilities, Inergy (NRGY); from consumer, Standard Register (NYSE:SR-OLD); from technology, Cellcom Israel (NYSE:CEL); from services, Baltic Trading (BALT); from healthcare, Veolia Environnement (VE); from conglomerates, Rayonier Inc. (RYN).
Click on charts below to enlarge:
Bullish vertical moves made since February 10 included one: Resource Capital (NYSE:RSO) whose share price increased 2.617%.
Bearish moves for the same period were more prevalent as experienced by: Inergy declining 9.75%; Whiting USA Trust dropping 11.10% in price to claim the second slot on this chart by yield; Armour Residential REIT (NYSE:ARR) posting a 3.65% decline.
Dividend vs. Price Results for 3x9 and 1x9+1 Sector Indices
Below are graphs reporting relative strengths of the top ten 3x9 Sector and 1x9+1 Sector index stocks by yield as of March 13, 2012. Projected annual dividend history from $1000 invested in the ten highest yielding stocks each month and the total single share prices of those ten stocks created the data points for each of the past five months shown in green for price and blue for dividends.
(Click to enlarge)
February dividends sank as stock prices increased under a bullish trend. Notice how dividends and prices both fell in March as less expensive stocks with lower dividends ascended to the top. Will price gains ever become rampant in these sectors in 2012? Stay tuned.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: This article is for informational and educational purposes only and shall 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 are listed without consideration of fees, commissions, taxes, penalties, or interest payable due to purchasing, holding, or selling same.