Russell 2K And 1K: Top Dividend Dogs Average 25% December Upsides

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Includes: AMTG, CLF, CLNS, CORR, IVR, RAS, RESI, RSO, SFL, VER
by: Fredrik Arnold

Summary

7 Russell 2000 small cap dividend dogs showed 1-year analyst target price upsides averaging 23.2% as of December 8, while 3 Russell 1000 large-cap dogs retrieved 30.9% average upside.

Analysts projected average 34.2% 1-year net gains for CORR, CLF, SFL, RESI, NRF, RAS, IVR, ARCP, RSO, and AMTG.

3 large Russell dogs in the top ten bared 35.6% average net gains; 7 small Russells flashed 33.6% average net gains per analyst 1-year targets.

Consider these as starting points for your December Russell 2000 and Russell 1000 index dividend dog stock purchase/sale research.

How Russell Large and Small Caps Were Combined

This article combined the two Russell Investments, Russell 2000 Small-Cap & Russell 1000 Large-Cap indices, as of market closing prices December 8, and engaged analyst mean target prices to project top Russell stock upsides one year out. Yield (dividend / price) dividend dog methodology was applied. See the 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.

Below, Arnold active dog selections for December combined Russell 2000 and 1000 indices were disclosed step by step. Three actionable conclusions were drawn.

Actionable Conclusion (1): 10 Russell Combo Dogs Sought 14% to 37.5% December Upsides Per Analyst 1-year Targets

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 ten Russell 2000/1000 Index stocks showing the highest upside price potential into 2015 out of 40 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.

Average upsides were calculated for all three components of this list: (1) all ten Russell 2000/1000 Index top gaining stocks = 25.49%; (2) three Russell 1000 large cap stocks = 30.87%; (3) seven Russell 2000 small cap stocks = 23.19%.

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.

Sixty For the Money

Bargain stocks to buy and hold for at least one year are but one component in this ongoing series that has reported (1) dividend yield; (2) price upside; (3) net gain results based on analyst 1-year target projections.

Dog Metrics Measured Russell Index Stocks by Yield

Top 50 dividend-paying stocks from each index for December made up the consolidation of the Russell 2000 and Russell 1000 Indices constituents. Listed as of market closing prices on December 8 and re-named Russell 2000/1000, they ranked themselves by yield as follows:

To quantify the top dog rankings, analyst mean price target estimates provide a "market sentiment" gauge of upside potential, and was added to the simple high-yield "dog" metric used to dig out bargains.

Actionable Conclusion (2): Wall St. Wizards Wanted A 16.67% Net Gain from the Top 40 Russell 2000/1000 Dogs For December 2015

Top forty dogs from the Russell 2000/1000 index were graphed below to show relative strengths by dividend and price as of December 8, 2014, along with dividend and price 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 dividends to find the projected 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 2015.

Historical prices and actual dividends paid from $1000 invested in the highest-yielding stocks and the aggregate single share prices of those forty stocks divided by 4 created data points for 2014. Projections based on estimated increases in dividend amounts from $1000 invested in the forty highest-yielding stocks and aggregate one-year analyst target share prices from Yahoo Finance divided by 4 created the 2015 data points shown here in green for price and blue for dividends.

Yahoo projected 8.6% lower dividend from $10K invested as $1k in the average stock in this group, while the aggregate single share price of those ten average stocks was projected to increase 11% in the coming year. 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 beta column on the right side 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 opposed to market direction.

Actionable Conclusion (3): Analysts Augured 10 Russell 2000/1000 DiviDogs to Net 16.2% to 43.8% By December, 2015

Two of the top dividend-yielding Russell 2000/1000 dogs were verified as being among the top 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 20% accurate.

Ten probable profit-generating trades revealed by analysts reported by Thomson/First Call in Yahoo Finance for 2015 were:

CorEnergy Infrastructure Trust (NYSE:CORR) was projected to net $438.33, based on dividends plus the mean of annual price estimates from four analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 54% less than the market as a whole.

Cliffs Natural Resources (NYSE:CLF) was projected to net $420.22, based on dividends plus the mean of annual price estimates from fourteen analysts less broker fees. The Beta number showed this estimate subject to volatility 110% greater than the market as a whole.

Ship Finance International (NYSE:SFL) was projected to net $411.28, based on dividends plus the mean of annual price estimates from six analysts less broker fees. The Beta number showed this estimate subject to volatility 18% more than the market as a whole.

Altisource Residential Corporation (NYSE:RESI) was projected to net $364.39, based on dividends plus the mean of annual price estimates from seven analysts less broker fees. The Beta number showed this estimate subject to volatility 163% more than the market as a whole.

Northstar Realty Finance (NRF) was projected to net $361.95, based on a mean target price estimate from six 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.

RAIT Financial Trust (NYSE:RAS) was projected to net $306.34, based on dividends plus a mean target price estimate by six analysts less broker fees. The Beta number showed this estimate subject to volatility 113% greater than the market as a whole.

Invesco Mortgage Capital (NYSE:IVR) was projected to net $291.63, based on dividend plus a mean target price estimate from eight analysts less broker fees. The Beta number showed this estimate subject to volatility 30% less than the market as a whole.

American Realty Capital Properties (ARCP) was projected to net $285.77, based on a mean target price estimate from three analysts, combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 77% less than the market as a whole.

Resource Capital Corp. (NYSE:RSO) was projected to net $277.09, based on dividends plus a mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 26% less than the market as a whole.

Apollo Residential Mortgage (NYSE:AMTG) was projected to net $261.88, based on dividends plus a mean target price estimate from six analysts less broker fees. The Beta number showed this estimate subject to volatility 29% less than the market as a whole.

The average net gain in dividend and price was 34.2% on $1k invested in each of these ten dogs. This gain estimate was subject to average volatility 20% greater than the market as a whole.

The average net gain in dividend and price was 35.6% on $1k invested in the three top Russell 1000 dogs. This gain estimate was subject to average volatility 39% less than the market as a whole.

The average net gain in dividend and price was 33.6% on $7k invested as $1k in each of the seven top Russell 2000 dogs. This gain estimate was subject to average volatility 22% greater than the market as a whole.

Net gain/loss estimates above did not factor in any tax problems resulting from return of capital or dividend 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 November Russell 1000 and 2000 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.

Graphs and charts were compiled by Rydlun & Co., LLC from data derived from Russell Investments; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance.

Disclosure: The author is long ARR.

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.