This article reports results for the NYSE International 100 Index as of July 2 based on "Dogs of the Index," a once per year trading system based on yield used to determine the best of the best dividend stocks.
Previous articles in this series reported results from two sector-based indices, plus the Russell 1000, and S&P 500. Upcoming articles this week will report Dog Metrics applied to four additional indices: S&P 500 Aristocrats, Nasdaq 100, Dow 30 Industrials, and JPMorgan New Sovereigns.
Dogs of the Index Metrics
Two key numbers determined the yields that ranked the stocks in each index: (1) stock price, and (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 dividend dog investors utilized this ranking system to select portfolios of five or 10 stocks in any one index, sector, or survey to trade. They 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).
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) could be sold off once each year to sweep gains and reinvest seed money into higher-yielding stocks in the same index.
Investor Empowerment From the NYSE International 100
Listed below are the top 30 NYSE International100 stocks by yield as of July 2, per Yahoo Finance data.
The NYSE states that "the NYSE International 100 Index tracks the largest 100 non-U.S. common stocks listed on the New York Stock Exchange. As of year-end 2004, the companies represented have a combined market capitalization (float-adjusted) of $4.3 trillion. Together they represent over one-quarter of the total market capitalization of all common stocks listed on the NYSE."
As of July 2, four of the top 10 stocks that showed the biggest dividend yields in this index were technology firms: France Telecom (FTE), Telef S.A. (NYSE:TEF), VimpelCom Ltd. (NYSE:VIP), and Nokia (NYSE:NOK). Top dog Banco Santander S.A. (NYSE:SAN) was one of two financial companies; the other was Westpac Banking (NYSE:WBK). Two basic materials firms were represented: Companhia Siderurgica (NYSE:SID) and Vale S.A. (NYSE:VALE). One utility was in the top 10, National Grid (NYSE:NGG), along with one healthcare firm, AstraZeneca (NYSE:AZN).
Out of 30 NYSE International dividend payers, seven technology companies, no consumer goods, 10 financials, one service, six basic materials, one industrial goods, four healthcare, one utility, and no conglomerates represented the sectors.
Dividend Vs. Price Results
Relative strengths of the top 10 NYSE International 100 Index stocks by yield was graphed as of July 2, 2012. Projected annual dividend history from $1,000 invested in the 10 highest-yielding stocks each month and the total single share prices of those 10 stocks created the data points for each of the past five months (shown in green for price and blue for dividends).
Conclusion: Bull Roar in May Extended Through June
The May team showed a 16.2% bullish drop in projected dividends from $1,000 invested in each along with a 0.886% rise in aggregate single share price after April 17. From June 1 to July 2 the projected dividend from $1,000 invested in each dog dropped 5.68%, while their total single share price popped .885%.
Since the first of the year, however, both dividends and price have moved within 2.25 % of their starting values.
Conclusion, Part 2: Analysts Forecast July 2013 Gains up to 40.05% for NYSE International 100 Dogs
Top 10 dogs for the NYSE International 100 Index component list were graphed below to show relative strengths by dividend and price as of July 2, 2012, and those projected to July 2, 2013.
Historic prices and actual dividends paid from $1,000 invested in the 10 highest-yielding stocks and the aggregate single share prices of those 10 stocks created the data points for 2012. Projections based on estimated increases in dividend amounts from $1,000 invested in the 10 highest-yielding stocks, and aggregate one-year analyst mean target prices (as reported by Yahoo Finance) created the 2013 data points (shown in green for price and blue for dividends).
For the coming year, Yahoo Finance projected a 5.04% lower dividend from $1,000 invested in each stock within this group, while aggregate single share price for the 10 was projected by analysts to increase by 10.95%. Probable profit generating trades one year from now, as revealed by Yahoo, were Banco Santander S.A. (netting $649.28 based on a mean target price set by one analyst), Telefonica S.A. (netting $860.00 based on a mean target price set by one analyst), Companhia Siderurgica (netting $1048.41 based on a mean target price set by seven analysts), Vale S.A. (netting $504.38 based on a mean target price set by 19 analysts), and VimpelCom (netting $297.74 as of next July based on a mean target price set by 17 analysts). The resulting net gain from dividends and swept price gains was 40.05% from $10,000 invested, according to analyst estimates.
Will the NYSE International 100 Index dog price gains continue through the summer or will they pull back? Look also for periodic updates on whether or not projected 40% gains for 2013 hold.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: This article is for informational and educational purposes only and should 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 except as noted are listed without consideration of fees, commissions, taxes, penalties, or interest payable due to purchasing, holding, or selling same.