Seeking Alpha
Dividend investing, growth, momentum
Profile| Send Message|
( followers)  

David Fish published Dividend Champions:13 Increases Expected by the End of May; Contenders: Twelve Increases, and Challengers:16 Increases Expected By May 31 on this Seeking Alpha site in three postings March 16. He defined his CCC group as follows: "Champions are companies that have paid higher dividends for at least 25 straight years; Contenders have streaks of 10-24 years; Challengers have streaks of 5-9 years."

This article combined the top ten yielding stocks from each group then utilized the dogs of the index strategy to sort the combined index of 30 into a suitable grouping of ten to trade. This effort was part an ongoing one to respond to the question, "which dividend stocks were good, better, best, bad or ugly in March?"

The research was also in keeping with Yale professor Robert Shiller's observation: "People still place too much confidence in the markets and have too strong a belief that paying attention to the gyrations in their investments will someday make them rich, and so they do not make conservative preparations for possible bad outcomes." Hence this article graphically depicted the gyrations.

Dog Metrics Selected Ten

Two key metrics determined the yields that ranked these index dog stocks: (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. Investors select portfolios of five or ten stocks in any one index by yield to trade. They await the results from their investments in the lowest priced, highest yielding stocks they selected in an index assembled by experts and pray that the price of every stock they now own climbs higher (having locked in a high yield percentage at purchase).

This Dogs of the Index strategy, popularized by Michael B. O'Higgins in the book "Beating The Dow" (HarperCollins, 1991), revealed how low yielding stocks whose prices increase (and whose dividend yields therefore decrease) could be sold off once each year to sweep gains and reinvest the seed money into higher yielding stocks in the same index.

Classic Dogs of the Index theory traded selected Dow stocks. Thus, the Dow was used as a standard of comparison to conclude this writing.

Comparative Methods Used

First, the combination of David Fish's lists (from here) as of February 29th of 103 Champions, 161 Contenders, and 195 Challengers was updated with pricing information from Yahoo Finance as of March 23 then sorted by yield to reveal the top thirty stocks. Market performance of these thirty selections was then reviewed using four months of historic projected annual dividend history.

To conclude, this research assessed the relative strengths of the top ten CCC Combo Index vs. Dogs of the Dow March stock list. Annual dividends from $1000 invested in the ten highest yielding stocks in each index versus the aggregate single share prices of those stocks provided measures of risk (and reward).

Top Dividend CCC Index

Top ten stocks in the CCC index paying the biggest dividends come March included firms representing five market sectors. Top dog Inergy LP (NRGY) was the lone utility sector equity. The balance of the top ten included one service, two consumer goods, three basic materials, and three financial firms representing market sectors.

Prices Moved in Top Ten Dividend CCC Combo Stocks

Going back four months one firm-- Inergy LP-- claimed the yellow tint at the top of this list by yield. 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 twentieth position at least once between December 2011 and March 2012; (Green) firms listed in thirtieth position at least once between December 2011 and March 2012. Duplicates are depicted in color for highest ranking attained.

Click on charts below to enlarge.

Bullish price moves made since February 24: Dynex Capital (DX) posted a 1.7% price gain; Triangle Capital Corp (TCAP) entered a .508% price gain; StoneMor Partners LP (STON) etched a .441% gain; Vanguard Natural Resources (VNR) grew a 1.62% in price; Boardwalk Pipeline Partners LP (BWP) flowed out a .366% gain.

Special mention for no movement at all went out to Natural Resource Partners (NRP), which locked in at 00.00% movement neither up nor down last month.

Bearish moves for the same period were experienced by the rest of the pack: Top dog Inergy LP delivered a 9.78% price decline to solidify its hold at the top by yield; Vector Group Ltd. (VGR) flicked off a 4.48% decline in price; Exterran Partners LP (EXLP) notched a 7.26% price decline; Pitney Bowes (PBI) posted a .055% price swoon within the top ten.

March Dividends vs. Prices & CCC Index Vs. Dogs of the Dow

Graphs below show relative strengths of the top ten CCC Combo index stocks by yield and price from December to March along with those of the Dow Index. Using four months of historic projected annual dividend history from $1000 invested in the ten highest yielding stocks each month, and the aggregate single share prices of those ten stocks, created the data points for each month shown in green for price and blue for dividends.

Click to enlarge

Conclusion: CCC Dog Dividends Soar as Prices Drop

The CCC Combo Index top ten dividend payers showed annual dividends from $1000 invested in each of the ten stocks soaring above $1000 as their aggregate single share prices dropped below $200.

The Dow index, on the other hand, exhibited near convergence as dividends from $1k invested in the top ten decreased 2.78% while aggregate total single share prices sank 11.83% to meet dividends near the $400 mark in the past month. The top ten CCC Composite Index stocks currently pay 156.74% higher dividends from an aggregate single share price 52% lower than that of the Dow.

At the end of each month, two summaries conclude this new series of articles showing comparative results of yield and price for six indices: Carnevale Power 25; Fish Dividend Champions; Contenders; Challengers; CCC Composite; Dow 30 Index.

Disclosure: I am long T.

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. Unless otherwise noted, 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.

Source: CCC Combo Index Vs. Dogs Of The Dow In March