On February 7, 2012, Seeking Alpha contributor Dividends4Life published The Dividend Achievers of 2012 which announced additions and deletions to the Broad Dividend Achievers Index, which is comprised of companies:
- Incorporated in the United States or its territories
Trade on the NYSE, NASDAQ or AMEX
Have increased dividends 10 or more consecutive years
Have an average daily trading volume $500,000 per day
These companies are said to be weighted based on their market capitalization as of the last trading date in December. No constituent may weigh more than 5% of the index on the annual reconstitution date or quarterly rebalance date. The index was reconstituted on the last trading date in January.
For this article, the Dividend AchieversTM 50 Index was chosen from here. The selected subset below was constituted from "the 50 U.S. companies with the highest current dividend yield as of the last trading date in December." The selected list was then updated with price data as of January 30, 2012, February 27 2012, March 29, 2012, and April 27, 2012 from historical prices available on Yahoo Finance.
Dogs of the Index Metrics Cull Out Current Bargains
Given the Dividend AchieversTM 50 Index, this article used two key numbers to rank those stocks: (1) stock price; (2) annual dividend. Dividing the annual dividend by the price declared the percentage yield by which each dog stock was ranked.
Historically, investors utilized this ranking system to select portfolios of five or ten stocks in any one index or sector to trade. They awaited the results from their investments in the lowest priced, highest yielding stocks and prayed that the price of every stock they now owned climbed higher (having locked in a high yield percentage at purchase).
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) can be sold off once each year to sweep gains to reinvest the seed money into higher yielding stocks in the same index.
The top thirty stocks in the Dividend AchieversTM 50 Index listed below were ranked by yields calculated as of April 27.
(Click to enlarge)
Dividend Achievers top ten stocks paying the biggest dividends as of April 27 included equities representing five market sectors. The top stock as revealed by Yahoo Finance data, was one of four in the consumer goods sector, Vector Group LTD (VGR). The other three consumer goods firms were: Pitney Bowes Inc (PBI); Altria Group (MO); Leggett & Platt Inc (LEG). The balance of the top ten included: three financial, Old Republic International (ORI), Mercury General Corp (MCY), and People's United Financial (PBCT); one technology, AT&T Inc (T); one utility, PPL Corporation (PPL); one service, Meredith Corp (MDP) representing the sectors.
Up and Down Moves for Dividend Achievers Dogs
Just one firm, Vector Group LTD, has stayed at the top of this list by yield for the four months surveyed.
Color code shows: (Yellow) firms listed in first position at least once between January and April; (Cyan Blue) firms listed in tenth position at least once between January and April; (Magenta) firms listed in twentieth position at least once between January and April; (Green) firms listed in thirtieth position at least once between January and April. Duplicates are depicted in color for highest ranking attained.
Bullish upward price moves since March 29 were made by five of the top ten March Dividend Achiever dogs: AT&T dialed up a 4.74% gain; Mercury General Corp documented a 4.4% gain; Altria Group stoked a 5.07x% hike; Avon Products (AVP) price stepped up 12.46% to exit the top ten; Vectren Corp (VVC) price jumped 1.38% and also exited the top ten by yield.
Bearish downward price moves for the same period hit the rest of the top ten March Dividend Achiever dogs: Top dog Vector Group LTD price dragged 1.7%; Pitney Bowes Inc cranked out a 3.26% price drop; Old Republic International posted a 4.97% decline; PPL Corporation generated a 2.46% decline; Leggett & Platt Inc. made a 4.1% price decline; People's United Financial swooned 6.08% to re-enter the top ten by yield.
Dividend vs. Price Results
Below the relative strengths for the Dividend Achievers top ten index stocks by yield was graphed as of April 27, 2012. Four months of historic projected annual dividend history from $1000 invested in the ten highest yielding stocks and the total single share prices of those ten stocks created the data points for each month shown in green for price and blue for dividends.
Conclusion: Achiever Dog Price Sags as Dividends Rise
This Dividend Achievers collection of top ten dividend payers displayed neutral action for the four months surveyed. Dividends from $1k invested in the top ten rose 1.29% above aggregate total single share prices, which also rose 5.64% between January and April.
This past month, however, the Achiever top ten showed bearish action as projected annual dividends from $1k invested in each stock rose 1.97% while the aggregate single share price of those stocks dropped 1.92%.
April projected annual dividend returns from $1k invested in each of the top ten Achiever dogs exceed the aggregate single share price of those stocks by $370 or 150.49%. Compared to the Dow in April, these Achievers showed a 45.11% lower aggregate single share price with 52.62% greater dividends from $1k invested in each of the top ten stocks than the dogs of the Dow.
At the end of each month, a summary concludes this series of articles by showing results of yield and price for these Dividend Achievers, the Carnevale Power 25 and new Super 29 indexes, along with David Fish's Champions, Contenders, Challengers, and Composite lists. Stay tuned and follow these intrepid dogs.
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.