This article reports results for the NASDAQ 100 Index as of April 18 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.
Previous articles in this series reported April results from 3x9 and 1X9+1 Sector indices, the Russell 1000, S&P 500, and NYSE International 100 indices. Upcoming articles this week report Dog Metrics applied to three additional indices: S&P 500 Aristocrats; Dow 30 Industrials; JPMorgan New Sovereigns.
Dogs of the Index Metrics
Two key numbers determined the yields that ranked 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. Investors selected portfolios of five or ten stocks in any one index or sector by yield to trade. They awaited the results from their investments in the lowest priced, highest yielding stocks selected and prayed that the price of every stock they now owned climbed 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 high yielding stocks whose prices increase (and whose dividend yields therefore decrease) could be sold off once each year to sweep gains and reinvest seed money into higher yielding stocks in the same index.
Investor Empowerment from the NASDAQ 100
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.
Click to enlarge:
Seven of the top ten stocks showing the highest forward looking yields in this index were technology firms. Vodafone (VOD) from this sector claimed the top spot as of November last year throwing 5-8% yields. On April 18th, VOD was tops again at 6.95%. The remaining three firms for April represented two business sectors consisting of two consumer goods firms and one service outfit.
Up and Down Moves for NASDAQ 100 Index Dogs
As of April 18, Vodafone earned the yellow tint awarded the dog at the top of the list.
Color code shows: (Yellow) firms listed in first position at least once between December 30, 2011 and April 2012; (Cyan Blue) firms listed in tenth position at least once December 30, 2011 and April 2012; (Magenta) firms listed in twentieth position at least once between December 30, 2011 and April 2012; (Green) firms listed in thirtieth position at least once between December 30, 2011 and April 2012. Duplicates are depicted in color for highest ranking attained.
Bullish upward price moves since March 13 were made by just three of the top ten NASDAQ 100 dogs: Vodafone solidified its top dog status as its price popped 1.07%; Seagate Technology's (STX) share price jumped up 3.43% which pushed it down the list two slots; Intel's (INTC) price shot up 1.67% but moved up to the tenth slot by yield on the strength of an estimated annual dividend increase of $.10 or 12.5% by IndexArb.com.
Bearish downward price moves for the same period hit the rest of the dogs of the NASDAQ 100: Paychex's (PAYX) share price decreased 2.88%; Mattel (MAT) saw a 4.2% price slump; Garmin's (GRMN) price plunged 5.05%; Microchip Technology (MCHP) dropped in the ranks, though its price declined 1.01%; PACCAR Inc.'s (PCAR) price swooned 9.4%; CA technologies' (CA) share price fell 3.18%; Maxim Integrated Products (MXIM) showed a price drop of .602%; Automated Data Processing (ADP) dropped out of the tenth spot despite a .799% price crash.
Dividend vs. Price Results for NASDAQ 100 Dogs
Relative strengths of the top ten NASDAQ 100 Index stocks by yield was graphed as of April 18, 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:
Hints of an earlier bull market showed in the NASDAQ 100 over six data points graphed. Dividends from $1k invested in each of the top ten dogs decreased 4.32% as aggregate single share price for those ten jumped up 15.15% since October.
However, NASDAQ 100 Index dogs reflected bear market symptoms for April as projected dividend totals for $1000 invested in the top ten increased 2.49% while their aggregate total single share prices dropped 10.05% over the past month.
Will the NASDAQ 100 Index resume bullish price gains for May? Stay tuned.
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.