April 16, David Fish published his latest findings in "Dividend Contenders: 19 Increases Expected By The End of June" here on Seeking Alpha. David's dividend contender stocks are distinguished as companies that have paid higher dividends for 10-24 straight years.
Dogs of the Index Metrics Cull Out Current Bargains
Given the Dividend Contenders, 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 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 thirty dividend contenders stocks listed below were ranked by yields calculated as of April 27.
Ten contender dogs paying the biggest dividends in April included firms representing four of nine market sectors. The top stock Inergy LP (NRGY) was one of two in the utilities sector. The other utility was Suburban Propane Partners LP (NYSE:SPH). The balance of the top ten included one consumer, Vector Group Ltd. (NYSE:VGR); two financial, Omega Healthcare Investors (NYSE:OHI), and Universal Health Realty Trust (NYSE:UHT); five basic materials firms, NuStar Energy LP (NYSE:NS), Buckeye Partners LP (NYSE:BPL), TC Pipelines LP (NYSE:TCP), Alliance Resource Partners LP (NASDAQ:ARLP), and Kinder Morgan Energy Partners (NYSE:KMP) representing market sectors.
Up and Down Moves for Dividend Contenders Dogs
There is no contention at the top of the contender list. Inergy LP has claimed the yellow tint recognizing the top dog each of the past 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 23 were made by five top ten dividend contender stocks: Top dog Inergy LP generated a 17.76% price spike; Suburban Propane Partners spewed a .709% gain; Omega Healthcare Investors inked a 1.18% increase; Universal Health Realty Trust showed a 3.33% price gain; National Retail Properties (NYSE:NNN) price escalated 1.82% to push it out of the top ten by yield.
Bearish downward price moves for the same period hit the rest of the top ten contender dogs: Vector Group Ltd. flicked off a 1.86% decline in price; NuStar Energy LP price fell 9.4%; Buckeye Partners LP dribbled a 8.97% decline; TC Pipelines LP leaked 5.64% in price; Alliance Resource Partners LP swooned 5.09%; Kinder Morgan Energy Partners was down .573% in price.
Dividend vs. Price Results Pit Contenders vs. Dow
Below relative strength of the dividend contenders top ten stocks by yield was graphed as of April 27, 2012 and compared to those of the Dow. 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: Contender and Dow Prices Jump
This contenders collection of top ten dogs by yield show dividends from $1k invested in each of the top ten stocks decreased .762% as their aggregate single share price jumped 10.94%. The Dow index dividend from $1k invested in each of the top ten increased 2.12% while aggregate total single share price jumped 11.18% to exceed dividends by $44.50 past the $400 mark in April.
Ten contenders paid 98.99% higher dividends at a 1.55% lower aggregate share price than the Dow did in April.
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.