April 16, David Fish published his latest findings in Dividend Champions: 11 Increases Expected By June 30 on Seeking Alpha. David's dividend champion stocks are distinguished as companies that have paid higher dividends for 25 straight years or more.
Dogs of the Index Metrics Cull Out Current Bargains
Given the Dividend Champions, 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 10 stocks in any one grouping to trade. They optimistically 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.
Classic Dogs of the Index theory trades selected Dow stocks. Thus, the Dow is used as a standard of comparison to conclude this article.
The top 30 dividend champions stocks listed below were ranked by yields calculated as of April 27.
Ten Champion dogs paying the biggest dividends in April included firms representing six market sectors. The top stock Pitney Bowes (NYSE:PBI) is one of three firms in the consumer sector. The other two consumer goods top dogs were Altria Group Inc. (NYSE:MO), and Leggett & Platt Inc. (NYSE:LEG). The balance of the top 10 include three financial, Old Republic International (NYSE:ORI), Washington REIT (NYSE:WRE), and Mercury General Corp. (NYSE:MCY); one technology, AT&T Inc. (NYSE:T); one service, Bowl America Class A (NYSEMKT:BWL.A); one healthcare , HCP Inc. (NYSE:HCP); one utility, Vectren Corp. (NYSE:VVC); represent market sectors.
Up and Down Moves for Dividend Champions Dogs
Two companies, Pitney Bowes , and Old Republic International, have vied for dominance 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 10th position at least once between January and April; (Magenta) firms listed in 20th position at least once between January and April; (Green) firms listed in 30th 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 six of the top 10 Dividend Champion Dogs: Washington REIT managed a .612% gain; AT&T Inc dialed up a 3.71% price gain; Mercury General Corp. inked a 4.86% price gain; Altria Group Inc. ignited a 5.72% price gain; HCP Inc bedded a 4.6% price improvement; Vectren Corp generated a 1.59% price bump.
Bearish downward price moves for the same period hit the rest of the top 10 dogs: Pitney Bowes posted a 4.45% price decline; Old Republic International managed a 4.52% decline; Leggett & Platt sagged 1.79% in price; Bowl America A rolled out a 2.59% gutter ball.
Dividend vs. Price Results
Below relative strength of the Dividend Champions top 10 index stocks by yield was graphed as of April 27, 2012, and compared with those of the Dow. Four months of historic projected annual dividend history from $1000 invested in the 10 highest yielding stocks and the total single share prices of those 10 stocks created the data points for each month shown in green for price and blue for dividends.
Conclusion: Champions Dogs Sport Lower Price for More Dividends Than Dow
The Champions top 10 reliable dividend stocks showed 7.04% aggregated 10 share price gains over the past four months while their dividends sank 2.65%. The Dow 10 on the other hand exhibited over valuation since January as dividends from $1k invested in the top 10 stayed steady at the $400 level while aggregate total single share price climbed above those dividends 14.57%.
Ten Champions paid 41.3% higher dividends at a 39.02% lower aggregate share price than those 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 indices, 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.