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On May 2-3, 2012, David Fish published his latest CCC Smackdown XXVI series in three postings here on Seeking Alpha: Champions were companies that paid higher dividends for at least 25 straight years; Contenders had streaks of 10-24 years; and Challengers had streaks of five to nine years.

In admiration of David's reductive smack down efforts, I commented on all three articles:

Thanks, David, these are precisely the stocks that stack up favorably as buy-and-hold candidates. For kicks, I'll cobble together a Dog article ranking these rascals by yield as CCC Combo Smackdown Dogs. Your research is impeccable.

So, this article combines the top 10 yielding stocks from each group then utilizes the dogs of the index strategy to sort the combined index of 30 into a suitable grouping of 10 to trade.

This effort was part of an ongoing one to respond to the following question: Which dividend stocks were good, better, best, bad, and ugly in April? The research was also in keeping with Yale professor Robert Shiller's observation that "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 depicts the gyrations.

Dogs of the Index Metrics Cull Out Current Bargains

Given the top 10 dividend smack down champions, contenders, and challengers, this article uses two key numbers to rank those stocks: one, stock price and, two, annual projected dividend. Dividing the annual dividend by the price declares 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 hoped 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 CCC Combo Smackdown XXVI Dogs listed below were ranked by yields calculated as of April 30.

Click to enlarge images.

CCC Combo Smackdown Index Dogs posting the biggest dividend yields in April included firms representing six of nine market sectors.

Top stock Meredith (NYSE:MDP) was the lone services sector representative. The balance of the top 10 included two industrial goods firms, Lockheed Martin (NYSE:LMT) and Raytheon (NYSE:RTN); three technology, Rogers Communication (NYSE:RCI), NTT DoCoMo (NYSE:DCM), and Nippon Tel&Tel (NYSE:NTT); one consumer goods, Hasbro (NASDAQ:HAS); two utilities, NextEra Energy (NYSE:NEE) and Sempra Energy (NYSE:SRE); and one financial, Tower Group (NASDAQ:TWGP).

The Ever-Changing Kennel of CCC Combo Smackdown Dogs of 2012

The past four months' color code shows (Yellow) Nippon Tel&Tel listed every month between January and April. Six firms were listed three of the four months: (Purple) Raytheon; (Blue) Darden Restaurants (NYSE:DRI); (Pink) BHP Billiton (NYSE:BBL); (Green) Owens & Minor (NYSE:OMI); (Orange) Aflac (NYSE:AFL); and (Magenta) National Healthcare (NYSEMKT:NHC).

(click to enlarge)

The diversity in the lists was caused by variable sorting standards used by David Fish to smack down the Champions, Contenders, and Challengers each month.

Smackdown XXIII Sorting (January)

Step 1: After eliminating companies that had not raised their dividends in more than a year and those that had agreed to be acquired, the list was sorted by five-year Estimated Total Payback Percentage (high to low), eliminating companies that were below the Champions/Contenders/Challengers' average (16.8%).

Step 2: Sorted the companies by Estimated five-year Earnings Per Share Growth (high to low), eliminating companies with expected earnings growth of less than the Champions/Contenders/Challengers' average of 7.3%.

Step 3: Sorted the companies by their five-year Dividend Growth Rate in order to ensure that the remaining candidates had consistent histories of dividend increases, eliminating any company with a DGR of less than the Champions/Contenders/Challengers' average of 11.6%.

Step 4: Sorted the companies by the Most Recent Dividend Increase Percentage in order to eliminate more recent "stinginess" for dividend increases, dropping those with increases of less than the Champions/Contenders/Challengers' average of 9.36%.

Smackdown XXIV Sorting (February)

Step 1: After eliminating companies that had not raised their dividends in more than a year and those that had agreed to be acquired, sorted remaining firms by percentage below the 52-week high , eliminating companies that were not down at least 10% from their 52-week highs.

Step 2: Sorted the companies by their trailing 12 months' Price/Earnings Ratio (low to high), eliminating companies with P/Es above 20 (or negative), assuming that companies with earnings difficulty might have been sold off.

Step 3: Sorted the candidates by their Yield, high to low, dropping those with yields below 2%.

Step 4: Sorted the companies by their five-year Dividend Growth Rate, eliminating any company with a DGR of less than 8%. This ensured that the remaining candidates had consistent histories of dividend increases.

Step 5: Sorted the companies by the Most Recent Dividend Increase Percentage, in order to eliminate more recent "stinginess" for dividend increases, dropping those with increases of less than 7%.

Smackdown XXV Sorting (March)

Step 1: After eliminating companies that had not raised their dividends in more than a year and those that had agreed to be acquired, sorted the remaining list by Beta (low to high), eliminating companies with Betas above 0.90. Also, reasoning that investors don't want stocks that seem almost "dead," or are inclined to achieve almost no price appreciation, eliminated companies that had Betas below 0.30.

Step 2: Sorted the companies by their Estimated Earnings Per Share for This Year, Next Year, and the Next Five Years, dropping any company that had a negative projection in any of these columns.

Step 3: Sorted the candidates by their Yield, high to low. Dropped those with yields below 2%.

Step 4: Sorted the companies by their five-year Dividend Growth Rate, eliminating any company with a DGR less than 8%. This ensured that the remaining candidates had consistent histories of dividend increases.

Step 5: Sorted the companies by the Most Recent Dividend Increase Percentage, dropping those with increases of less than 7%. This eliminated more recent "stinginess" for dividend increases.

Smackdown XXVI Sorting (April)

Step 1: After eliminating companies that had not raised their dividends in more than a year and those that had agreed to be acquired, sorted remainder of list by Most Recent Increase (high to low), eliminating companies that had percentages below 7%.

Step 2: Sorted the candidates by their Yield, high to low, dropping those with yields below 2%.

Step 3: Sorted the companies by their five-year Dividend Growth Rate , eliminating any company with a DGR of less than 8% (or "n/a"). This ensured that the remaining candidates had consistent histories of dividend increases.

Step 4: Sorted the companies by their Price/Earnings ratio, dropping those with P/Es over 15. This was intended to filter out stocks that may be overvalued.

Up and Down Moves for CCC Combo Smackdown Dogs

Bullish upward price moves since March 26 were made by three of the seven dogs listed three or more times in the top 30. Raytheon made a 12.82% price gain between January and April, Darden Restaurants served a 9.18% price gain, and National Healthcare nursed a 1.74% gain in price between Feb. 29 and April 30.

One dog listed three times showed no gain or loss in price on the top 30 CCC Combo Smackdown Dogs list. Owens & Minor stayed at $30.41 between Jan. 31 and March 30.

Bearish downward price moves for the same period hit the remaining three firms listed three or more times in the top 30 list : Nippon Tel&Tel dialed a 9.91% price drop, BHP Billiton drilled a 4.41% price hole, and Aflac wrote down a 6.61% decline in price.

CCC Smackdown Dogs and Dow Dividend vs. Price Results

Graphs below show relative strengths of the top 10 dividend CCC Combo Index Smackdown Dogs by yield and price from January to April, along with those of the Dow Index. Using four months of historic projected annual dividends from $1,000 invested in the 10 highest-yielding stocks each month and the aggregate single share prices of those 10 stocks created the data points for each month shown in green for price and blue for dividends.

The CCC Combo Smackdown group of top 10 dividend stocks by yield in April showed annual projected dividends from $1,000 invested in each of the 10 stocks rose 11.62%, cracking the $400 mark as their aggregate single share prices sank 0.248% to pull just $10 away from those of the Dow. An overbought condition was signaled whenever aggregate single share prices exceed projected dividends from $1,000 invested in those stocks. This overbought signal flashed on the CCC Combo Smackdown Dogs for three of the four months surveyed.

The Dow index, on the other hand, saw the projected dividend from $1,000 invested in each of the top 10 dogs creep up 2.12% in the month past. Aggregate total single share price jumped 11.18% to exceed dividends by $44.50 past the $400 mark in April, which also signaled an overbought condition.

The top 10 CCC Composite Smackdown Index stocks in April projected 0.466% lower annual dividends from an aggregate single share price 2.24% lower than that of the Dow.

What new twists are in store for the CCC Combo Smackdown Index in May? Stay tuned for more dog tales.

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.

Source: CCC Combo Smackdown Dogs Zig As Dow Dogs Zag