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Champion Divi-Dog, National Fuel Gas, Flashed 43% November Net Gain Per Analyst

Dec. 04, 2015 1:54 PM ETNFG
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

There is Something To Those Champs

Yield (dividend/price) results from David Fish's Dividend ChampionsIndex members (as of November 25 market closing prices paired with annual dividends projected October 30) were compared with analyst median target price estimates one year out to find the top ten. That data, charted below, showed six of nine business sectors moving to the upside as represented by one financial, one technology, four utilities, two consumer goods, one basic materials, and one service firms. Those ten stocks posted 10.01% to 41.77% predicted price upsides. Then, on the downside, one basic materials and utility, were predicted to drop 7.68% and 9.34%.

This article was written to reveal bargain stocks to buy and hold up to one full year. It was preceded by this article detailing the top yield Champion dividend dogs for this period. That report presumed yield (dividend / price) dividend dog methodology applied to any index and compared that index side by side with the Dow.

Below, Arnold active dog selections for November were disclosed step by step. Six actionable conclusions were drawn.

Actionable Conclusions: (1) Ten Champion Dogs Pursued 18.32% Average Upsides into October 2016; (2) Two Dogs Tumbled To A 8.51% Average Downside

Seeking Alpha reader requests prompted this series of index-specific articles reporting dividend yield plus price upside results for these indices: Dow 30; S&P 500; S&P Aristocrats; Russell 2000; NASDAQ 100; Champions; Contenders; Challengers; CCC Combined; and Global. Bonus reports cover Bad Boy AllStars, and Sector Leaders.

Fifty For the Money

See Dow 30 article for explanation of the term "dogs" for stocks reported based on Michael B. O'Higgins book "Beating The Dow" (HarperCollins, 1991), now named Dogs of the Dow. O'Higgins system works to find bargains in any collection of dividend paying stocks. Utilizing analyst price upside estimates expanded the stock universe to include popular growth equities, if desired.

David Fish's Champions list (from here) as of October 30 contained stocks distinguished as having paid increasing dividends for 25 years or longer. Champion stocks listed below were ranked by yields calculated as of November 25 to reveal the top ten. Price data was sourced from Yahoo.com. Annual dividend calculations as of 10/30 came from dripinvesting.org.

To quantify top dog rankings, analyst mean price target estimates provide a "market sentiment" gauge of upside potential. Added to the simple high yield "dog" metrics, analyst mean price target estimates provided another tool to dig out bargains.

Actionable Conclusions: Wall St. Wizards Wished (3) 6.81% Average Upside & (4) 8.70% Average Net Gain from Top 30Dividend Champions By November 2016

Top thirty dogs from David Fish's Dividend Champions index were graphed below as of November 25, 2015 as compared to analyst mean price target estimates for the same date in 2016.

A hypothetical $1000 investment in each equity was divided by the current share price to find the number of shares purchased. The shares number was then multiplied by projected annual per share dividend amounts to find the dividend return. Thereafter the analyst mean target price was used to gauge the stock price upsides and net gains including dividends less broker fees as of 2016.

Historic prices and actual dividends paid from $30,000 invested as $1k in each of the highest yielding stocks and the aggregate single share prices of those thirty stocks divided by 3 created data points for 2015. Projections based on estimated increases in dividend amounts from $1000 invested in the thirty highest yielding stocks and aggregate one year analyst target share prices from Yahoo Finance divided by 3 created the 2016 data points green for price and blue for dividend.

Analyst data reported by Yahoo finance projected a 5.4% lower dividend from $30K invested as $1k in each stock in this group while aggregate single share price was projected to increase 6.7% in the coming year.

Notice that the chart showed price exceeded dividend. So, analysts predicted the an overbought Champions index returning by 2016. The number of analysts contributing to the mean target price estimate for each stock was noted in the next to the last column on the charts. Three to nine analysts had a better history of accurate estimates.

A beta (risk) ranking for each analyst rated stock was provided in the far right column on the above chart. A beta of 1 meant the stock's price would move with the market. Less than 1 showed lower than market movement. Higher than 1 showed greater than market movement. A negative beta number indicated the degree of a stock price movement opposite of market direction.

Actionable Conclusion (5): Analysts Alleged Ten Dividend Champion Dogs Would Net 12.16% to 43.21% By November 2016

Three of the ten top dividend yielding Champion dogs were among the ten gainers for the coming year based on analyst 1 year target prices. So this month the dog strategy as graded by Wall St. wizards was all of 30% accurate.

Ten probable profit generating trades were revealed by Thomson/First Call in Yahoo Finance into 2016:

National Fuel Gas (NFG) was projected to net $432.13 based on dividends plus a median target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility equal to the market as a whole.

California Water Service (CWT) was projected to net $242.89 based on dividends plus median target price estimate from three analysts less broker fees. The Beta number showed this estimate subject to volatility 15% less than the market as a whole.

Black Hills Corp (BKH) was projected to net $236.33 based on dividends plus a median target price estimate from three analysts less broker fees. The Beta number showed this estimate subject to volatility 20% more than the market as a whole.

Nucor Corp. (NUE) was projected to net $216.55 based on dividends plus a median target price estimate from eighteen analysts less broker fees. The Beta number showed this estimate subject to volatility 361% more than the market as a whole.

Questar Corp. (STR) was projected to net $178.95 based a median target price estimate from six analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 7% less than the market as a whole.

AT&T Inc. (T) was projected to net $172.23 based on a median target price estimate from twenty-six analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 51% less than the market as a whole.

Altria Group Inc. (MO) was projected to net $149.74 based on dividends plus a median target price estimate from seven analysts less broker fees. The Beta number showed this estimate subject to volatility 11% less than the market as a whole.

Target Corp. (TGT) was projected to net $145.120 based on a median target price estimate from twenty-two analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 13% more than the market as a whole.

HCP Inc. (HCP) was projected to net $143.39 based on dividends plus a median target price estimate from thirteen analysts less broker fees. The Beta number showed this estimate subject to volatility 98% less than the market as a whole.

Procter & Gamble Co. (PG) was projected to net $121.631 based on dividends plus a median target price estimate from seventeen analysts less broker fees. The Beta number showed volatility 5% less than the market as a whole.

The average net gain in dividend and price was predicted to be 20.39% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 12% less than the market as a whole.

Actionable Conclusion (6): (Bear Alert) Analysts Predicted Two Champion Dogs To Show A Net Losses Averaging 6.21% By 2016

Two probable losing trades revealed by Thomson/First Call in Yahoo Finance in 2015 were:

Helmerich & Payne Inc. (HP) was projected to lose $49.75 based on dividend and a median target price estimate from twenty-one analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 28% more than the market as a whole.

Northwest Natural Gas (NWN) was projected to lose $74.40 based on dividend and a median target price estimate from two analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 54% less than the market as a whole.

The average net loss in price plus broker fees including annual dividends was predicted to be 6.21% on $2k invested as $1k in each of these two dogs. This loss estimate was subject to average volatility 13% less than the market as a whole.

The net gain and loss estimates above did not factor-in any foreign or domestic tax problems resulting from distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.

See my instablog for specific instructions about how to best apply the dividend dog data featured in this article.--Fredrik Arnold

Stocks listed above were suggested only as possible starting points for your index dog dividend stock purchase or sale research process. These were not recommendations.

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.

Graphs and charts were compiled by Rydlun & Co., LLC from data derived from www.indexarb.com; http://dripinvesting.org/Tools/Tools.asp; finance.yahoo.com; analyst mean target prices by Thomson/First Call in Yahoo Finance.

Analyst's Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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