Results from Yahoo Finance tallied for NASDAQ 100 Index members as of market closing prices on September 18 were compared to analyst mean target price projections one year hence. The resulting chart of that data shown below turned up just seven stocks exhibiting 4% to 18% price upsides. Microsoft Corporation (NASDAQ:MSFT) the Redmond, WA based staid business software and services firm from the technology sector with 3.69% showed the lowest upside of the top seven. Apple, Inc. (NASDAQ:AAPL), the Cupertino based innovative electronic equipment firm from the consumer goods sector, exhibited a 18.17% price upside to lead the NASDAQ 100 Index.
The chart above used one year mean target price set by brokerage analysts multiplied by the number of shares in a $1k investment to compare seven NASDAQ 100 Index stocks showing the highest upside price potential into 2014 out of 20 selected by yield. The number of analysts providing price estimates was noted after the name for each stock. Three to nine analysts were considered optimal for a valid mean target price estimate.
This article reported results of the NASDAQ 100 Index as one of fourteen in a series of index-specific articles devoted to dividend yield and price upside results. Prompted by Seeking Alpha reader requests, the series has supplied results for these stock indices: Dow 30; S&P 500; S&P Aristocrats; Russell 1000; NASDAQ 100; NYSE International 100; Mergent Dividend Achiever; Champions; Contenders; Challengers; Carnevale's Power 25; Carnevale's Super 29; Barron's 15 Gems; Russell 2000.
This report presumed yield (dividend / price) dividend dog methodology applied to any index and compared that index side by side with the Dow. Below, are the Arnold NASDAQ 100 Index top dog selections for September disclosed step by step.
Dog Metrics Sorted NASDAQ 100 Stocks by Yield
"The NASDAQ-100 Index includes 100 of the largest domestic and international non-financial securities listed on The Nasdaq Stock Market based on market capitalization. The Index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain securities of financial companies including investment companies."
Just three of nine sectors were represented in the top ten NASDAQ dogs by yield as of September 18 per IndexARB.com data. Technology had seven firms in the top ten showing high forward looking yields. Vodafone (NASDAQ:VOD) claimed the top spot. The other six technology firms in declining order were: Seagate Technology (NASDAQ:STX); Garmin (NASDAQ:GRMN); Intel (NASDAQ:INTC); Maxim Integrated Products (NASDAQ:MXIM); Microchip Technology (NASDAQ:MCHP); Microsoft. The remaining two NASDAQ high yield sectors for June included two consumer goods representatives, Kraft Foods Group, Inc. (KRFT), and Mattel (NASDAQ:MAT). One service firm, Paychex (NASDAQ:PAYX) filled out the top ten NASDAQ 100 dogs.
Dividend vs. Price Results Compared to Dow Dogs
The graph below displays the relative strengths of the top ten NASDAQ 100 dogs by yield as of market close 9/18/2013 compared to those of the Dow. Historic projected annual dividend history from $1000 invested in each of the ten highest yielding stocks and the total single share prices of those ten stocks created the data points shown in green for price and blue for dividend.
Actionable Conclusion One: NASDAQ 100 and Dow Dogs Were Bullish
NASDAQ 100 top September dividend payers continued a bullish price course set since November, 2012. Total single share price has increased over 46% in that period. Aggregate dividend from $10k invested as $1k in each of the top ten NASDAQ 100 stocks has dropped at a 22% rate since November. In the past month NASDAQ 100 top ten dog dividend dropped 4% while price rose 6%. The September index showed as overbought when aggregate single share price for the top ten dogs exceeded dividend from $10k invested as $1k in each dog. The excess was $5.
For the Dow dogs, meanwhile, annual dividend from $10k invested as $1k in each of the top ten dropped 1.5% since August, while aggregate single share price hopped up 6%, ending a bear track since June. Dow dogs increased their overbought condition in which aggregate single share price of the ten exceeded projected annual dividend from $1k invested in each of the ten by over $198 or 53% in June, compressed to $125 or 33% in August then expanded to $161 or 43% for September.
To quantify the top dog rankings, analyst mean price target estimates provide a "market sentiment" gauge of upside potential and so were added to the simple high yield "dog" metric used to scratch out bargains.
Actionable Conclusion Two: Wall St. Wizards Wonk 6% Net Gain from Top 20 NASDAQ 100 Dogs By 2014
Top twenty dogs from the NASDAQ 100 index were graphed below to show relative strengths by dividend and price as of September 18, 2013 and those projected by analyst mean price target estimates to the same date in 2014.
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 2014.
Historic prices and actual dividends paid from $1000 invested in the ten highest yielding stocks and the aggregate single share prices of those twenty stocks divided by 2 created data points for 2013. Projections based on estimated increases in dividend amounts from $1000 invested in the twenty highest yielding stocks and aggregate one year analyst target share prices from Yahoo Finance divided by 2 created the 2014 data points green for price and blue for dividend.
Yahoo projected a 2% lower dividend from $10K invested in this group while aggregate single share price was projected to increase over 7% in the coming year. The number of analysts contributing to the mean target price estimate for each stock was noted in the next to last column on the charts. Three to nine analysts was considered optimal for a valid estimate.
A beta (risk) ranking for each analyst rated stock was provided in the far right column of 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's movement opposite of market direction.
Actionable Conclusion Three: Analysts Forecast 7 NASDAQ 100 DiviDogs to Net 5% to 19% By September 2014
Five of the seven top dividend yielding Russell 2000 dogs were verified as being among the top ten gainers for the coming year based on analysts' 1 year target prices. So this month the dog strategy as graded by Wall St. wizards is 71% accurate.
The seven probable profit generating trades revealed by Yahoo Finance for 2014 were led by Apple's upside:
Apple, Inc. netted $189.65 based on dividends plus mean target price estimate from forty-nine analysts less broker fees. The Beta number showed this estimate subject to volatility 24% less than the market as a whole.
Seagate Technology netted $135.86, based on dividend plus mean target price estimates from twenty analysts less broker fees. The Beta number showed this estimate subject to volatility 196% greater than the market as a whole.
Mattel netted $126.87 based on dividends plus the mean of annual price estimates from ten analysts less broker fees. The Beta number showed this estimate subject to volatility 39% less than the market as a whole.
Microchip Technology netted $118.73 based on dividends plus mean target price estimate from fourteen analysts less broker fees. The Beta number showed this estimate subject to volatility 14% more than the market as a whole.
Cisco Systems (NASDAQ:CSCO) netted $85.651 based on dividends plus a mean target price estimate by thirty-three analysts less broker fees. The Beta number showed this estimate subject to volatility 40% greater than the market as a whole.
Kraft Foods Group netted $61.85 based on dividends plus mean target price estimate from seventeen analysts less broker fees. The Beta number showed this estimate subject to volatility 18% less than the market as a whole.
Microsoft netted $50.53 based on a mean target price estimate from twenty-eight analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 23% less than the market as a whole.
The average net gain in dividend and price was over 10.9% on $1k invested in each of these ten dogs. This gain estimate was subject to average volatility 21% greater than the market as a whole.
The stocks listed above were suggested only as decent starting points for your index dog dividend stock purchase research process as of September 18, 2013. 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.
Disclosure: I am long GE, INTC, MCD, MSFT, T, VZ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.