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Last November Seeking Alpha blogger, respected stock analyst, and creator of Fastgraphs, Chuck Carnevale, published Our 25 Dividend Growth Stocks Are Dirt Cheap. 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.

This portfolio of companies he said:

offers a three-pronged opportunity for above-average future total returns at below-average risk. We expect that each company will benefit in the future from a potential expansion in their PE ratios coupled with future earnings growth and finally followed by dividend increases offering a return kicker.

That article ranked these stocks by 5 year estimated total returns ranging from a high of 38.2% down to 10.8%.

In this article these are known as the Carnevale Power 25 stocks.

Second, come April, Mr. 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.

Mr. Carnevale's April article was a follow-up to an earlier article on March 28, that was stimulated by commentary on an article on March 16 by David Van Knapp titled Has Dividend Growth Kept Up With Inflation? He noted that culling companies overvalued in 2001 eliminated many of his personally biased favorites. His April article was:

offered as an in-depth look at each of these select Dividend Champions and how they all produced different results based on their own specific operating histories.

In this article these are known as the Carnevale Super 29 stocks.

Dogs of the Index Metrics Cull Out Current Bargains

Given the Carnevale Power 25 and Super 29 index lists this article used two key numbers as of August 7 to rank his 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 index or sector to trade. They 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.

The Carnevale Power 25 and Super 29 lists below were ranked by yields based on estimated annual dividends to reveal the dogs therein as of August 7.

The Carnevale Power 25 for June & July

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For the Power 25 list, Numbers after the company names in brackets [] indicate Mr. Carnevale's ranking for each stock by total estimated returns.

Carnevale's top ten Power 25 stocks paying the biggest dividends as of August 7 included firms representing six 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 Power 25 included: one basic materials, Alliance Resource (NASDAQ:ARLP); two consumer goods, Avon Products (NYSE:AVP), and Procter & Gamble (NYSE:PG); two healthcare firms, Novartis AG (NYSE:NVS), and Johnson & Johnson (NYSE:JNJ); one utility, Nextera Energy (NYSE:NEE); one technology, Intel Corporation (NASDAQ:INTC); one industrial goods firm, Republic Services Inc. (NYSE:RSG), representing market sectors.

The full list of 25 stocks has five service, five healthcare, three consumer goods, one financial, three basic materials, five industrial, one utility, one technology and no conglomerates representing market sectors.

The Carnevale Super 29 for June & July

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Numbers after the company names in brackets [] indicate Mr. Carnevale's ranking for each stock in order of highest annualized performance to lowest, which was a total return number that included dividends but not reinvested.

Carnevale's Super 29 top ten stocks showing the biggest dividend yields as of August 7 included firms representing five market sectors. The top stock as revealed by Yahoo Finance data, was one financial firm, United Bankshares Inc. (NASDAQ:UBSI). Second was one in the service sector, Bowl America Class A (NYSEMKT:BWL.A). The balance of the top ten included: three consumer goods firms, Leggett & Platt Inc. (NYSE:LEG), Diebold Inc. (NYSE:DBD), and Procter & Gamble Co. (PG); three utilities, Consolidated Edison (NYSE:ED), Northwest Natural Gas (NYSE:NWN), California Water Service (NYSE:CWT); two basic materials firms, Nucor Corp. (NYSE:NUE), and RPM International Inc. (NYSE:RPM).

The full list of 29 stocks has four service, two healthcare, six consumer goods, two financial, three basic materials, six industrial goods, four utility, no technology, and one conglomerate representing eight of nine market sectors.

Dividend vs. Price Results

Below are graphs of relative strengths for the top ten Carnevale Power 25 index and Carnevale Super 29 index stocks by yield as of May 29, 2012. Six nearly monthly collection points 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 create the data points shown in green for price and blue for dividends.

Conclusion: Carnevale Power 25 Dog Price vs. Dividends Drop

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The Carnevale Power 25 collection of top ten dividend dogs by yield displayed dividends back on the higher side of price by $18.94 or 3.9% in May, showing a healthier balance of between aggregate single share prices and projected dividends from $1k invested in each of those top ten stocks.

The recent drop in both dividends from $1k invested in the current ten and their aggregate single share price was attributable to two high priced stocks dropping out of the top ten in favor of two lower priced replacements. Chevron was replaced by Intel and Aflac was replaced by Republic Services.

Since March, this index displayed bearish price drops.

Conclusion: Carnevale Super 29 Dogs Get Bullish

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The Carnevale Super 29 collection of top ten dividend yielding stocks continued to display remarkable calm over five months graphed, becoming bullish in the most recent months. Overall dividends from $1k invested in each of the top ten dropped .027% from December 30 to August 7. Meanwhile aggregate single share stock price for these Carnevale Super 29 increased 17.05% for the period.

Conclusion: Analysts Forecast July 2013 Net Gains of 12% & 10% for Carnevale's Power 25 & Super 29 Dogs

Top ten dogs for each of these index component lists were graphed below to show relative strengths by dividend and price as of August 7, 2012 and those projected to August 7, 2013.

Historic prices and actual dividends paid from $1000 invested in the ten highest yielding stocks and the aggregate single share prices of those ten stocks created the data points for 2012. Projections based on estimated increases in dividend amounts from $1000 invested in the ten highest yielding stocks and aggregate one year analyst mean target prices as reported by Yahoo Finance created the 2013 data points green for price and blue for dividends.

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For the coming year Yahoo Finance projected a 8.97% lower dividend from $1k invested in each stock within this Power 25 group while aggregate single share price for the ten was projected by analysts to increase by 5.37%.

Likely profit generating Power 25 dog trades one year hence revealed by analysts reported by Yahoo Finance were: RR Donnelley & Sons netting $448.28 based on mean target price set by 4 analysts; Avon Products netting $184.74 based on mean target price set by 13 analysts; Johnson & Johnson netting $112.23 based on mean target price set by 15 analysts; Intel Corporation netting $103.02 based on mean target price set by 40 analysts; Republic Services Inc. netting $169.32 as of next August based on mean target price set by 7 analysts.

The resulting top ten Power 25 dog net gain to 2013 from dividends and swept price gains was forecast to be 12.34% from $10k invested according to analyst mean target price estimates.

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For the coming year Yahoo Finance projected a 6.27% lower dividend from $1k invested in each stock within this Super 29 group while aggregate single share price for the ten was projected by analysts to increase by 5.25%.

Likely profit generating Super 29 dog trades one year hence revealed by analysts reported by Yahoo Finance were: United Bankshares Inc. netting $136.83 based on mean target price set by 5 analysts; Leggett & Platt Inc. netting $216.42 based on mean target price set by 3 analysts; Nucor Corporation netting $132.20 based on mean target price set by 15 analysts; Diebold Inc. netting $234.44 based on mean target price set by 6 analysts; California Water Service netting $88.79 as of next August based on mean target price set by 5 analysts.

The resulting top ten Super 29 dog net gain to 2013 from dividends and swept price gains was forecast to be 9.99% from $10k invested according to analyst mean target price estimates.

Will these price drops for the Power 25 or gains for the Super 29 dogs continue into the fall or will they reverse? Look also for periodic updates on how well or whether analyst projected 12.34% Power dog gains or 9.99% Super dog gains hold in 2013.

A monthly summary will soon compare results in yield and price for nine indices reported in this series: Carnevale Power 25; Super 29; Champions; Contenders; Challengers; CCC Composite; Achievers; Russell 50; Dow 30.

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.

Source: Power 25 And Super 29 Dogs To Fetch 12% And 9.99% Net Gains