This end of month summary compares relative strengths of six stock indexes by yield and dividend vs price gaps using projected annual dividends from $1000 invested in the ten highest yielding stocks in each index: Results for the Dow are also presented as a baseline standard.
This was another chapter in the ongoing effort to respond to the question, "Which dividend stocks are good, better, best, bad or ugly?" The effort also heeded 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.
Previous summaries in January and February used Dogs of the Index methodology on five indices: (1) Chuck Carnevale's Power 25 Index, David Fish's vaunted (2) Champions, (3) Contenders, and (4) Challengers, plus a (5) Composite CCC Index. March added (6): Dividend AchieversTM 50. April added (7) Carnevale's Super 29 Index.
This next installment of dog strategy compared those seven fabulous indices designed By Chuck, David, and Indxis to the Dow index as a baseline.
Dog Metrics Selected Ten in Each Index
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.
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).
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) can be sold off once each year to sweep gains and reinvest the seed money into higher yielding stocks in the same index.
Top ten dogs for each index displayed their annual dividends from $1000 invested in the ten highest yielding stocks in the index compared to the aggregate single share prices of the top ten stocks therein to produce the summary graphs shown below. 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 creates the data points for each month shown in green for price and blue for dividends.
Carnevale Power 25 Index
Seeking Alpha blogger, respected stock analyst, and creator of Fastgraphs, Chuck Carnevale, published Our 25 Dividend Growth Stocks Are Dirt Cheap in November. He listed top 25 blue chip dividend growth stocks that: (1) were available at current valuations; (2) were significantly below their historical norms; (3) remained profitable through the great recession of 2008 and 2009.
Carnevale's top ten power stocks paying the biggest dividends as of April 27 included firms representing five market sectors. The top stock as revealed by Yahoo Finance data, was one of two in the service sector, RR Donnelley & Sons (NASDAQ:RRD), and Sysco Corporation (NYSE:SYY) in fifth place. The balance of the top ten included: three consumer goods, Avon Products (NYSE:AVP), Procter & Gamble (NYSE:PG), and Pepsico (NYSE:PEP); one basic materials, Alliance Resource (NASDAQ:ARLP); one utility, Nextera Energy; two healthcare firms, Novartis AG (NYSE:NVS), and Abbott Laboratories (NYSE:ABT) representing market sectors.
Bullish upward price moves in the past month (since March 26) were made by five of the top ten Power 25 dogs: Avon Products applied a 14.2% price gain; Nextera Energy Inc. connected with a 6.67% surge; Johnson & Johnson wrapped up a .309% hike; Abbott Labs grew 2.42% in price; Pepsico price popped 1.64%.
March aggregate single share stock price for the top ten Carnevale dogs exceeding the total annual dividend returns from $1k invested in each of those stocks by over $125 or 29.28%. In April the price over dividend gap retreated to just over $55 or 12.57% for this collection of low risk but overvalued power dogs.
Carnevale's New Super 29 Index
April 2, 2012, Seeking Alpha blogger, respected stock analyst, and creator of Fastgraphs, Chuck Carnevale, published 29 Dividend Champions That Beat The Market, Inflation & 2 Recessions Since 2001. He listed top 29 blue chip dividend growth stocks that: (1) consistently raised dividends for 37 years (or more); (2) were at or below fair market value in 2001; (3) outperformed the S&P 500 on a total return basis.
Carnevale's Super 29 top ten stocks showing the biggest dividend yields as of April 23 included firms representing five market sectors. The top stock as revealed by Yahoo Finance data, was the only one in the service sector, Bowl America Class A (NYSEMKT:BWL.A). The balance of the top ten included: two consumer goods, Leggett & Platt Inc. (NYSE:LEG), and Procter & Gamble Co. (PG); two basic material, Nucor Corp.(NYSE:NUE), and RPM International Inc. (NYSE:RPM); three utilities, Consolidated Edison (NYSE:ED), Northwest Natural Gas (NYSE:NWN), and Connecticut Water Service (NASDAQ:CTWS); one financial firm, United Bankshares Inc. (NASDAQ:UBSI).
Bullish upward price moves since March 26 were made by four of the top ten super 29 dogs: Leggett & Platt Inc. made a 2.56% price gain; Consolidated Edison connected with a 1.03% gain; Conn. Water Service poured out a .318% hike; RPM International Inc. extracted a 1.57% price boost.
Overall dividends from $1k invested in the top ten dropped .995% from December 30 to April 23. Meanwhile aggregate single share stock price for these Carnevale Super 29 increased 10.73% for the period.
David Fish's 3/30/12 Champions list of 103 companies paying increasing dividends for 25 consecutive years or more were sorted by yield as of April 27 to reveal the top thirty. Data for all four Fish indices is sourced from Mr. Fish's drip investing tools.
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. (LEG). The balance of the top ten 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 (BWL.A); one healthcare , HCP Inc. (NYSE:HCP); one utility, Vectren Corp. (NYSE:VVC); represent market sectors.
Bullish upward price moves since March 29 were made by six of the top ten 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.
The Champions top ten reliable dividend stocks showed 7.04% aggregated ten share price gains over the past four months while their dividends from $1k invested in each of the top ten stocks sank 2.65%.
The Contenders list (from here) as of March 30th showed 167 companies that paid increasing dividends for 10 - 24 years. Updated with pricing information from Yahoo Finance as of April 27, the list was sorted by yield to reveal the top ten stocks. Their market performance was then reviewed using four months of historic projected annual dividend history.
Ten contender dogs showing the highest yields 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 (ARLP), and Kinder Morgan Energy Partners (NYSE:KMP) representing market sectors.
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.
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%.
David Fish's Challengers list (from here) as of March 30th showing 194 companies increasing dividends for 5 - 9 years was updated with pricing information from Yahoo Finance as of April 27, then sorted by yield to reveal the top ten.
Ten challenger dogs posting the biggest dividend yields in April included firms representing three of nine market sectors. The top stock Dynex Capital Inc. (NYSE:DX) was one of four in the financial sector. The other financial firms in the top ten were: PennantPark Investment Corp. (NASDAQ:PNNT); Triangle Capital Corp. (NYSE:TCAP); United Community Bancorp (NASDAQ:UCBA). The balance of the top ten included one service, StoneMor Partners LP (NYSE:STON), and five basic materials firms, Exterran Partners LP (NASDAQ:EXLP); Natural Resource Partners LP (NYSE:NRP); Vanguard Natural Resources LLC (NASDAQ:VNR); Crestwood Midstream Partners LP (NYSE:CMLP); Boardwalk Pipeline Partners LP (NYSE:BWP), representing market sectors.
Bullish upward price moves since March 26 were made by four top ten dividend challenger stocks: Triangle Capital Corp entered a 2.58% price gain; StoneMor Partners LP etched a 5.63% gain; Vanguard Natural Resources grew a 1.91% price improvement; Boardwalk Pipeline Partners LP flowed out a .365% gain.
This Challengers collection of ten up and coming dividend yielders in April showed a .471% nudge in dividends from $1k invested in each of the top ten stocks as their aggregate single share price tumbled 6.68%. Who let the bear out?
CCC Combined Index
The combination of David Fish's lists (from here) as of March 30th of 103 Champions, 167 Contenders, and 194 Challengers were updated with pricing information from Yahoo Finance as of April 27 then sorted by yield to reveal the top ten stocks.
Stocks in the CCC index posting the biggest dividend yields in April included firms representing five of nine market sectors. Top stock Inergy LP was the lone utility sector representative. The balance of the top ten included three financial, Dynex Capital Inc. (DX), PennantPark Investment Corp. (PNNT), and Triangle Capital Corp. (TCAP); two consumer goods, Vector Group Ltd. (VGR), and Pitney Bowes Inc. (PBI); one service, StoneMor Partners LP (STON); three basic materials firms, Exterran Partners LP (EXLP), Natural Resource Partners LP (NRP), and Vanguard Natural Resources LLC (VNR), represented market sectors.
Bullish upward price moves since March 26 were made by four of the top ten ccc combo stocks: Top dog Inergy LP delivered a 17.76% price gain; Triangle Capital Corp posted a 2.58% price gain; StoneMor Partners LP etched a 5.63% gain; Vanguard Natural Resources grew 1.912% in price.
The CCC group of top ten dividend stocks by yield in April showed annual dividends from $1000 invested in each of the ten stocks coming down 1.924% from their brief flight over the $1000 level as their aggregate single share prices rebounded 1.19%% toward the $200 mark.
Dividend AchieversTM 50
Dividend AchieversTM 50 Index was chosen from here. The selected subset below was constituted from "the 50 US 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, February 27, March 29, and April 27, 2012 from historical prices available on Yahoo Finance.
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 Peoples United Financial (NASDAQ:PBCT); one technology, AT&T Inc (T); one utility, PPL Corporation (NYSE:PPL); one service, Meredith Corp (NYSE:MDP) representing the sectors.
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.
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%.
Dow 30 Index
CME Group, publisher if this index, states, "The Dow Jones Industrial Average (DJIA) is a price-weighted index of 30 blue-chip U.S. companies representing nine economic sectors including financial service, technology, retail, entertainment and consumer goods."
Three technology firms showing the biggest dividend yields on the Dow as of April 18 were: (1) AT&T (T); (2) Verizon (NYSE:VZ); (8) Intel (INTC). The rest of the Dow 10 dogs include three healthcare, one industrial, one basic materials, and two consumer firms. Thirty Dow stocks include seven technology companies, three consumer goods, four financial, four services, four basic materials, two industrial, three health care, no utilities, and three conglomerates representing the market sectors.
Bullish upward price moves since March 13 were made by just four of the top ten Dow 30 dogs: Merck & Company (NYSE:MRK) price increased .3135%; Pfizer Inc. (NYSE:PFE) saw share price pop 1.99%; Intel Corporation showed a price gain of 1.67%; Dupont (NYSE:DD) showed a 1.12% price improvement for April and dropped out of the top ten.
Dow 30 Index dogs reflected slight bull market symptoms as projected dividend totals for $1000 invested in the top ten stayed relatively flat as they increased just 2.36% while their aggregate total single share prices increased 14.57% over four months graphed.
The pattern mostly continued bullish between March 13 and April 18 as Dow 30 top ten dividends from $1k invested in each of the dogs increased 2.11% while single share prices for those stocks increased 11.18% for the month. This double increase was mostly caused by Chevron jumping into the top ten bringing nearly double the share price and double the dividend amount into the dog pound than the stock it replaced, Dupont.
All Together Now
Each graph below shows monthly points of comparison between annual projected dividends resulting from $10,000 invested as $1,000 each in the top ten high yield stocks (blue points) versus the total prices of one share of each of the ten stocks (green points) by index. Grouped together the graphs display four months of comparative gyrations of the eight indices described.
Dog Teams Vie for Dividend Dominance
The following graph shows annual dividends projected from $1000 invested in each of ten stocks with the top yields in eight indices.
Annual Dividends Forecast from $1k Invested in each of 10 Top Yielding Stocks in 7 Indices & Dow
The chart plotted projected yields as of a specific purchase date each month since January. Three of the eight indices showed dividends decreasing in bull market fashion. Just the Carnevale Super 29, Champions, and Challengers indices showed these decreases in dividends since January.
Projected dividend yield amounts from these seven indices and the Dow over the past four months displayed eight distinct yield levels.
These indices were ranked for risk as of April 27, 2012 in the following manner: (1) Add the single share prices of the top ten stocks on an index list. Then, (2) add the total annual dividend amounts projected from $1000 invested in each of those ten stocks. Finally, (3) compare the resulting two numbers. Lesser divergence between dividend amounts above single share prices revealed the indices with lesser risk. Overvalued stock indices showed negative divergence.
By that baseline standard of divergence, these seven indices and the Dow rank themselves by risk as follows:
These seven indices and the Dow component stocks have ongoing stories to tell. These graphs and lists will be updated again for publication following a review of each index in late May and thereafter.
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.