November 18, 2013 Bloomberg Business Week published a special The Year Ahead 2014 issue covering 55 industries and 600 companies. Using a combination of yield and analyst mean 1 yr. target price data, this article studiously narrowed the Bloomberg field of 600 to 50 representing upside prospects for 50 different industries from aerospace to utilities.
The Alpha Market Leader Lists
This report presumed yield (dividend / price) dividend dog methodology applied to any index, sector, survey, or list. This article's 50 market leaders based on share of revenue in their industries were sorted as of November 27, 2013 closing prices to select the top ten by yield.
Action Strategy One: Buy and Hold for Income
Ten market leaders showing the biggest yields as of November 27 included equities representing seven of nine market sectors. Only financials and conglomerates were missing. The two top yielding stocks as revealed by Yahoo Finance data, were two in the technology sector, AT&T Inc.(NYSE:T), and STMicroelectronics NV (NYSE:STM). Third place went to a utility, Southern Company (NYSE:SO). Two consumer goods firms, Phillip Morris International (NYSE:PM), and Unilever NV (NYSE:UN), placed fourth, and eighth while a basic materials firm,Freeport-McMoRan Copper & Gold, Inc. (NYSE:FCX), took fifth.
The balance of the top ten included: one services firm, McDonald's Corp. (NYSE:MCD) in sixth; one healthcare firm, AbbVie (NYSE:ABBV); two industrial goods firms, International Paper Co. (NYSE:IP), and DR Horton Inc. (NYSE:DHI) in ninth and tenth places completed the sectors.
A $10k investment as $1k in each one of this collection of ten market leaders portend $389.50 in dividend income in the next year, nearly 4% or about four times the current best bank savings rate.
Action Strategy Two: Go For the Best One Year Gains
Dividend Dog strategists buy with an intent of sweeping gains in one year as high yields get trampled by surging price gains. This collection of market leaders was not selected for dividend results but was based on gains from price upsides predicted by three to twenty-eight analysts for each equity.
Wall Street Wizard Weighting Workings
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 ten probable profit generating trades revealed by Thompson/First Call analyst mean target price data in Yahoo Finance were used to gauge the stock upsides to 2014.
Ten market leaders showing the biggest 1 year net gain as of November 27 included equities representing five of nine market sectors. Consumer goods, utilities, healthcare, and conglomerates were missing here. The top yielding stock by net gains as revealed by Yahoo Finance data, was one of three in the basic materials sector, Schlumberger Limited (NYSE:SLB) other basic material industry leaders, placed third and seventh by gains: POSCO (NYSE:PKX), and Freeport-McMoRan Copper & Gold, Inc.
The lone financial sector representative, Credit Suisse Group (NYSE:CS), placed second. Fourth through sixth places went to industrial goods firms, DR Horton Inc., International Paper Co., and Cemex, S.A.B. de C.V. (NYSE:CX). Two services firms, Time Warner Inc. (NYSE:TWX) and Magna International (NYSE:MGA) grabbed the eight and nine slots. The one technology firm in this list, Symantec Corporation in tenth place completed the gainer sectors.
A $10k investment as $1k in each one of this collection of ten market leaders would produce just $183 in dividend income in the next year. However the net gain calculation based on dividends plus mean target price estimate from analysts less $15 in broker fees showed a possible gain of over $1800 swept from $10k invested as $1k in each of these market leaders.
Action Strategy Three: Select Market Leader Stocks By Best Available In Both The Dividend and Price Upside Worlds
Ten market leaders fusing dividends along with strong 1 year net gain as of November 27 closing prices included equities representing six of nine market sectors. Healthcare, services, and conglomerates sectors did not make this list. The top two fusion stocks as revealed by Yahoo Finance data, were industrial goods firms, DR Horton Inc., and International Paper Co., A lone basic materials sector representative, Freeport-McMoRan Copper & Gold, Inc. was third. Technology sector firms, Symantec Corporation (NASDAQ:SYMC), and STMicroelectronics NV placed fourth and seventh.
Two consumer goods firms, Coca-Cola Co. (NYSE:KO), and Phillip Morris International, in fifth and sixth places were sandwiched by those Tecs. Eighth place went to a utility, Southern Company. Finally, Unilever NV, another consumer goods firm placed ninth before the lone financial sector representative, Host Hotels & Resorts (NYSE:HST), in tenth place completed the fusion market leader sectors.
A $10k investment as $1k in each one of this collection of ten market leaders would produce $352 in dividend income in the next year. As an alternative strategy the net gain calculation based on dividends plus mean target price estimate from analysts less $15 in broker fees showed a possible gain of over $1346 swept from $10k invested as $1k in each of these market leaders.
Comparing Those 3 Ways To Play Market Leaders Like Dogs Into 2014
Top dog results for the market leader stock action strategies were graphed below to show relative strengths of annual dividend and analyst 1yr mean price target estimates as of November 27, 2013. Three pictures are worth a lot of words.
Actionable Conclusion: Future Comparisons of Stock Prices to Analyst Upside Predictions
Watch this space as the charts below are filled with monthly price updates for the nineteen market leaders introduced above. We know what the wizards 0f Wall St. weighed in with. By February the steady progressive upward sloping lines below should be interrupted by some higher highs and lower lows. Stay tuned.
Net gain 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.
The stocks listed above were suggested only as decent starting points for your Market Leader stock purchase 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.
Disclosure: I am long MCD, T. 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.