Champion Dividend Dogs: 13% Edge For 5 Lowest-Priced, High-Yield December Stocks

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Includes: BWL.A, HCP, HP, MCY, MO, NNN, ORI, T, UHT, UVV
by: Fredrik Arnold

Summary

Top Champion dividend stocks by yield showed over 13% higher net gain from a $5k investment in the lowest-priced five than from an equal amount invested in all ten.

Annual dividends divided by closing stock prices as of December 17 determined yields. Analyst net targets were used to calculate gains one year hence.

The five lowest-priced, high-yield Champion stocks were: ORI; BWL.A; T; NNN; UVV. The five higher-priced stocks completing the ten were: HCP; UHT; MO; MCY; HP.

Consider these stocks as starting points for your December Champion dividend stock investment research.

Top Ten For the Money

This article refines and distinguishes an earlier report that revealed Champion bargain stocks to buy and hold from December to June, or perhaps as long as one year. 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, as desired.

Dog Metrics Extracted Bargains

Ten Champion equities were culled. Yield (dividend/price) results created the ranking.

David Fish's December Champions list (from here) listed November 28 contained stocks distinguished as having paid increasing dividends for 25 years or longer. Champion stocks listed below were ranked by yields calculated based on December 17 prices and November 28 dividends to reveal the top ten. Price data was sourced from Yahoo. Annual dividend calculations came from dripinvesting.org.

Five of nine Yahoo Finance market sectors were represented in the top ten champions dog list selected by yield below: technology; financials; consumer goods; services; basic materials. Top dog was the lone technology representative, AT&T Inc. (NYSE:T) [1].

In second place, Universal Health Realty Trust (NYSE:UHT) [2], was tops of five financial firms. The other financials placed third, fifth, seventh, and eighth: Old Republic International (NYSE:ORI) [3]; HCP Inc. (NYSE:HCP)[5]; Mercury General Corp. (NYSE:MCY) [7]; National Retail Properties (NYSE:NNN) [8].

In fourth place was the tops of two consumer goods firms on the list, Universal Corp. (NYSE:UVV) [4]. Tenth place went to the other consumer goods firm, Altria Group Inc.(NYSE:MO) [10].

The balance of the top ten contenders occupied sixth and ninth places. Sixth was one little services stock, Bowl America Class A (NYSEMKT:BWL.A) [6]. Last, but not least was the basic materials representative in ninth place, Helmerich & Payne Inc. (NYSE:HP) [9], which completed the top ten champion dogs for December.

Actionable Conclusions: (1) Analysts assert 5 Lowest-Priced of Top Ten Highest-Yield Champion Dividend Dogs Deliver 7.29% vs. (2) 6.44% Net Gains by All Ten by December 17, 2015

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten champion dividend kennel by yield were predicted by analyst 1-year targets to deliver 13.15% more net gain than $5,000 invested as $.5k in each of all ten. The tenth lowest-priced Champion dividend dog, Helmerich & Payne Inc., was projected to deliver the best net gains of 33.86%, however.

The lowest-priced five Champion dividend dogs for December 17 were: Old Republic International; Bowl America Class A; AT&T Inc.; National Retail Properties; and Universal Corp., with prices ranging from $14.36 to $42.44.

The higher-priced five Champion dividend dogs for December 17 were: HCP Inc.; Universal Health Realty Trust; Altria Group Inc.; Mercury General Corp.; and Helmerich & Payne Inc., whose prices ranged from $45.90 to $66.43.

This distinction between the five low-priced dividend dogs and the general field of ten reflects Michael B. O'Higgins' "basic method" for beating the Dow. The added scale of projected gains based on analyst targets adds a unique element of "market sentiment" gauging upside potential. It's a here and now equivalent of waiting a year to find out what will happen in the market. Analysts are historically 20% to 80% accurate on the direction of change and about 0% to 20% accurate on the degree of the change.

The stocks listed above were suggested only as decent starting points for a Champion equities dog dividend stock purchase/sale research process in mid-December 2014. These were not recommendations.

Gains/declines as reported do not factor in any tax problems resulting from dividend, profit, or return of capital distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.

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; finance.yahoo.com; http://dripinvesting.org/Tools/Tools.asp; analyst mean target price by Thomson/First Call in Yahoo Finance.

Disclosure: The author is long T.

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.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.