Results from IndexArb.com tallied for 51 NASDAQ 100 Index members as of market closing prices November 11, 2014 were stacked against analyst mean target price projections one year out. The resulting chart of that data shown below turned up nine stocks exhibiting 10% to nearly 23% price upsides.
Viacom B, (NASDAQ:VIAB) the brash, innovative video content services provider (think Comedy Central, and MTV), showed the 22.97% upside that led the NASDAQ 100 Index. One lesser upsider trailed the nine double-digit "percentageers" with a 7.92% projected price puff.
Arnold top NASDAQ dog selections for October/November 2015 were disclosed below step by step. Six actionable conclusions were drawn.
Actionable Conclusions: (1) 10 NASDAQ Dogs Press Bears 8% to 23% October/November 2015 Upsides; (2) 3 Drag 6% to 13% As Downcast Dogs
The chart above used one-year mean target price set by brokerage analysts matched against November 11 closing price to compare ten NASDAQ index stocks showing the highest upside price potential into 2015 out of 30 selected by yield from indexArb.com dividend data. 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.
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 1000; Russell 2000; Russell Combined; NASDAQ 100; Champions; Contenders; Challengers; CCC Combined; Global. Bonus reports covered, Bad Boy AllStars, and Sector Leaders.
Fifty-one For the Money
This article revealed bargain stocks to buy and hold from November to May or as long as one year. Stocks reported were termed dogs because they were all selected based on Michael B. O'Higgins' book, Beating The Dow (HarperCollins, 1991), which revealed how high-yielding stocks whose prices increased (and whose dividend yields therefore decreased) could be sold off once a year to sweep gains and reinvest the seed money into higher-yielding stocks in the same index. 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.
Dog Metrics Screened 51 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 again were represented in the top ten NASDAQ dogs by yield as of November 11, 2014 per IndexARB.com data: consumer goods; technology; services.
One of two consumer goods representatives, Mattel (NASDAQ:MAT) claimed the top spot. The other consumer goods representative, Kraft Foods Group, Inc. (KRFT), took fifth place.
Technology put six firms in the top ten showing high forward looking yields. Vodafone (NASDAQ:VOD) ranked second, overall. Other technology firms ranked fourth, sixth, and eighth through tenth: Maxim Integrated Products (NASDAQ:MXIM); Seagate Technology (NASDAQ:STX); Garmin (NASDAQ:GRMN); CA Technologies (NASDAQ:CA); Cisco Systems (NASDAQ:CSCO).
Dividend vs. Price Results Compared to Dow Dogs
Top ten NASDAQ 100 dogs by yield compared to those of the Dow were graphed below as of market close 11/11/2014. Annual dividend projected from $10,000 invested as $1K in each of the ten highest-yielding stocks and total single share price of those ten stocks created the data points shown in green for price and blue for dividend.
Actionable Conclusion (3): NASDAQ 100 Soared As Dow Dogs Swooned
NASDAQ 100 top dividend payers interrupted their bearish retreat since June. As WYNN vaulted in to the top ten replacing PAYX, the aggregate single share price for the ten skied, up 40% since September. At the same time aggregate dividend from $10k invested as $1k in each of the top ten NASDAQ 100 stocks fell at a 2% rate to confirm the new bully trend.
Dow dogs were bearish showing almost 1% more annual dividend from $10k invested as $1K in each of the top ten, while aggregate single share price dropped 6% between September 24, & November 5.
As a result, the Dow dogs overbought condition (in which aggregate single share price of the ten exceeded projected annual dividend from $10k invested as $1k each in those ten) fell from its new record September high. The overhang was $145 or 38% for January; retreated to $125 or 33% in February; swelled to $149 or 40% in March; expanded to $173 or 47% in April; shrank to $170 or 46% come May; swelled to $215 or 59% for July; fell back to $197 or 53% in August; widened to $239 or 65% in September; then fell to $199 or 53% through October.
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 Conclusion (4): Wall St. Wizards Wrung A 6% Average Net Gain from Top 30 NASDAQ 100 Dogs By October/November 2015
Top thirty dogs from the NASDAQ 100 index were graphed below to show relative strengths by dividend and price November 11, 2014 and those projected by analyst mean price target estimates to the same date in 2015.
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 dividend returns. Thereafter, the analyst mean target price was used to gauge the stock price upsides and calculate net gains including dividends less broker fees as of 2015.
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 2014. 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 2015 data points. Price was shown in green and blue was used for dividend.
Yahoo projected a 4% lower dividend from $1K invested in each oft his group of 30, while aggregate single share price was projected to increase 6.7% in the coming year. Notice that price still exceeded dividend signaling an analyst-predicted overbought NASDAQ 100 index into 2015. 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 was considered optimal for a valid estimate.
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's movement opposite of market direction.
Actionable Conclusion (5): Analysts Predicted 10 NASDAQ 100 DiviDogs to Net 9.36% to Over 22.98% By November 2015
Three of the ten top dividend-yielding NASDAQ 100 dogs were verified as being among the top ten gainers for the coming year based on analyst 1-year target prices. So the October/November dog strategy was graded by Wall St. Wizards as 30% accurate.
Ten probable profit generating trades revealed by Yahoo Finance into 2015 were led by Viacom B, Comcast, and Wynn:
Viacom was projected to net $229.82 based on dividends plus the mean of annual price estimates from twenty-six analysts less broker fees. The Beta number showed this estimate subject to volatility 43% less than the market as a whole.
Comcast (NASDAQ:CMCSA) was projected to net $226.32 based on dividends plus mean target price estimate from twenty-three analysts less broker fees. The Beta number showed this estimate subject to volatility 15% less than the market as a whole.
Wynn Resorts was projected to net $184.60 based on dividends plus mean target price estimate from nineteen analysts less broker fees. The Beta number showed this estimate subject to volatility 28% more than the market as a whole.
QUALCOMM Incorporated (NASDAQ:QCOM) was projected to net $183.62 based on a mean target price estimate from thirty-one analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 5% more than the market as a whole.
Analog Devices (NASDAQ:ADI) was projected to net $136.96 based on dividends plus mean target price estimate from twenty-seven analysts less broker fees. The Beta number showed this estimate subject to volatility 22% more than the market as a whole.
Fastenal (NASDAQ:FAST) was projected to net $130.57 based on dividends plus a mean target price estimate from seven analysts less broker fees. The Beta number showed this estimate subject to volatility 27% more than the market as a whole.
Cisco Systems was projected to net $127.12 based on dividends plus mean target price estimate from thirty-four analysts less broker fees. The Beta number showed this estimate subject to volatility 30% more than the market as a whole.
Xilinx Inc. (NASDAQ:XLNX) was projected to net $113.64 based on a mean target price estimate from twenty analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 50% greater than the market as a whole.
Applied Materials (NASDAQ:AMAT) was projected to net $108.22 based on dividends plus mean target price estimate from twenty analysts less broker fees. The Beta number showed this estimate subject to volatility 114% greater than the market as a whole.
Garmin was projected to net $93.60 based on a mean target price estimate from thirteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 3% less than the market as a whole.
The average net gain in dividend and price was over 15.3% on $10k invested as $1k in each of these dogs. This gain estimate was subject to average volatility 22% more than the market as a whole.
Conclusion (6): (Bear Alert) Analysts Forecast SPLS & KLAC DiviDogs to Both Post Net Losses of 4.7% By November 2015
Three probable losing trades revealed by analysts reported by Thomson/First Call in Yahoo Finance into 2015 were:
Automatic Data Processing (NASDAQ:ADP) was projected to lose $55.20 based on dividend and a mean target price estimate from eighteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 17% less than the market as a whole.
Paychex, Inc. (NASDAQ:PAYX) was projected to lose $75.63 based on dividend and a mean target price estimate from fifteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 17% less than the market as a whole.
Staples was projected to lose $113.56 based on dividend and a mean target price estimate from sixteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 81% more than the market as a whole.
The average estimated net loss in dividend and price including $30 of brokerage fees was 8.15% on $3k invested as $1k in each of these three dogs. This loss estimate was subject to average volatility 16% more than the market as a whole.
The net gain/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.
Stocks listed above were suggested only as possible starting points for your index dog dividend stock purchase/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.
Disclosure: The author is long CSCO, GE, PFE, T, VZ.
The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.