Macquarie Infrastructure Leads Strategic Dividend Dogs With 6.9% Yield, 54.9% Upside, And 58.8% Net As Of December 2016

| About: Macquarie Infrastructure (MIC)

Summary

30 Strategic Dividend Index (SDI) stocks ranked themselves by yield from 2.37% to 5.70% as of December 14.

SDI selection criteria: (1) Dividend yield; (2) Asset valuation; (3) Profitability; (4) Estimated growth of yield; and (5) Momentum.

Miller/Howard Investments (M/H) of Woodstock New York started the index in July, 2014 and updates it quarterly. The most recent components shown were posted per a November 2, 2015, rebalancing.

Thirty M/H SDI firm upsides averaged 23.13% with net gains 14.2% per analyst 1-year targets. ALB, ADM, HPQ, AMP, JCI, STX, WNR, STLD, MPC, and MIC showed top 2016 gains.

$5k invested in the lowest-priced five showed 2.03% more net gain than from $5k invested in all ten top-yield M/H-SDI stocks. Use these lists as guides for your mid-December research.

Grading M/H SDI Dogs

Yield (dividend/price) results from here, verified by Yahoo! Finance for ten stocks from five of nine Yahoo! Finance sectors as of market closing prices December 14, revealed the actionable conclusions discussed below. Miller/Howard Investments, publisher of the index states:

"The Miller/Howard Strategic Dividend Index (MHDT) seeks to capture and distill all we have learned over nearly a quarter century of active management of dividend companies. Our strategic, rules-based index is created to enhance current passive approaches to asset allocation, going beyond market exposure by applying persistent, strategic factors we have observed and confirmed through our active management. We seek to find and retain the "good," as opposed to cap-weighted indexes, which in our view hold the good, the bad, and the ugly - by their very nature and definition."

The Current Strategic Dividend Index List

"The Miller/Howard Strategic Dividend Index is a composite of 30 publicly traded equities that provide above-average dividend yields and dividend growth, and are equal weighted based on certain quantitative fundamental factors."

Actionable Conclusion (1) Dog Metrics Singled Out 10 Top Strategic Dividend Index Stocks By Yield

Top-ten Miller/Howard Strategic Dividend Index dogs showing the biggest dividend yields as of December 14, 2015, represented six of nine sectors: (1) technology [1 listed]; (2) services [3 listed]; (3) utilities [1 listed]; (4) industrial goods [2 listed]; (5) basic materials [4 listed]; (6) consumer goods [1 listed].

Top M/H SDI stock by yield, Seagate Technology PLC. (NASDAQ:STX)[1] was the top of two technology firms listed the other placed eighth, Hewlett-Packard Co (NYSE:HPQ)[8].

Three services filled the Strategic Dividend Index second, sixth, and ninth slots by yield: Macquarie Infrastructure Corp. (NYSE:MIC)[2], Meredith Corp. (NYSE:MDP)[6], and Macy's Inc. (NYSE:M)[9].

A utility placed third, FirstEnergy Corp. (NYSE:FE)[3]. Two industrial goods firms placed fourth and fifth by yield: Cummins Inc. (NYSE:CMI)[4]; and Eaton Corp PLC (NYSE:ETN)[5].

Finally, two basic-materials firms placed seventh, and tenth: Western Refining Inc. (NYSE:WNR)[7], and Agrium Inc. (AGU)[10] to complete the top-ten Fall quarterly M/H SDI dogs by yield.

Ten M/H SDI Top Dividend Vs. Price Results Compared To Dow Dogs

Graphs below compared relative strengths of the top-ten M/H SDI dogs by yield as of market close 12/14/2015 with those of the Dow industrials index. Annual dividend history from $10,000 invested as $1k in each of the ten highest-yielding stocks along with the total single share price of those ten stocks made the data points shown in green for price and blue for dividends.

Actionable Conclusion (2): M/H SDI Dogs Retreated Fast As Dow Dogs Mixed Down Into December

M/H SDI top-ten index fell back most bearishly since the September quarter. Dividend from $10k invested as $1k in each of the top-ten stocks soared, while aggregate single share price of those ten plummeted. Dividend flew skyward at a rate of 20.5% to end the quarter, while total single share price dropped 20.8% for the period.

In March, M/H SDI top-ten index dogs were within $13 of being equal aggregate single share price paid and dividends earned from $10k invested as $1k in each. The September index showed itself as very overbought with price exceeding dividend by $220 or 55%. In December the vectors for price and dividend are back within $10 of each other.

Meanwhile, Dow dogs mixed down. They fell 1.4% in estimated annual dividend from $10k invested as $1k in each of the top-ten since September, while aggregate single share price slumped 6.2% for the quarter.

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) narrowed upon its record September gap.

Actionable Conclusion (3): Dow Dogs Remain Overbought

Historically, the overhang was $179 or 49% for June, 2014; widened to $239 or 65% in September 2014; narrowed to $198 or 50% in December 2014; gapped wider to a record $283 or 77% come March; and narrowed a bit to $278 or 75% in June. September saw the gap widen to $331 or 84%. December posted a gap of $292 or 75%.

This gap between high share price and low dividend per $1k invested shows an overbought condition. Meaning, no matter which chart you read, these are low-risk and low-opportunity Dow dogs.

Similarly, the Miller/Howard Strategic Dividend Index chart shows their list to perhaps become composed of increasingly moderate risk and moderate opportunity M/H SDI pups.

Actionable Conclusion (4): Ten M/H SDI Dogs Displayed 25.63% To 54.91% Median Target Price Upsides To December 2016

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 Conclusions: Wall St. Wizards Wished (3) A 26.5% Average Median Target Price Upside For 30 Miller/Howard SDI Upside Dogs Come December 2016

Miller/Howard SDI stocks were graphed below to show relative strengths by dividend and price as of December 14, 2015, and those projected by analyst mean price target estimates to the same date in 2016.

A hypothetical $1,000 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 gauged the stock price upsides and net gains, including dividends, less broker fees, as of 2016.

Historic prices and actual dividends paid from $10,000 invested as $1k in each of the stocks and the aggregate single share prices of those ten stocks created data points for 2015. Projections based on estimated dividend amounts from $1,000 invested in the ten stocks and aggregate one-year analyst target share prices from Yahoo! Finance created the 2016 data points green for price and blue for dividend.

Yahoo! Finance analysts' median one-year targets projected a 19% lower dividend from $10k invested as $1k in ten dogs in this group, while aggregate single share price for those ten was projected to increase by 23% in the coming year. Notice, price exceeding dividend in the coming year forecasts a continuing overbought condition for the Miller/Howard SDI top-yield dogs.

The number of analysts contributing to the 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 projection estimate. Estimates provided by one analyst were not applied (n/a).

A beta (risk) ranking for each 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 (4): Analysts Asserted 21.12% To 36.12% Net Gains For Ten Miller/Howard SDI Dogs By mid-December 2016

Four of ten top dividend-yielding Miller/Howard SDI dogs were verified as being among the top ten of thirty gainers for the coming year based on analyst one-year target prices. So this quarter the dog strategy for the Miller/Howard SDI as graded by Wall Street wizards was 40% accurate.

Ten probable profit-generating trades were revealed by Thomson/First Call in Yahoo Finance for December 2016:

Macquarie Infrastructure Corp. was projected to net $598.13, based on dividends, plus mean target price estimates from six analysts, less broker fees. The beta number showed this estimate subject to volatility 19% less than the market as a whole.

Marathon Petroleum Corp (NYSE:MPC) was projected to net $444.47, based on dividends, plus the mean of annual price estimates from fifteen analysts, less broker fees. The beta number showed this estimate subject to volatility 42% greater than the market as a whole.

Steel Dynamics Inc. was projected to net $375.97, based on dividends, plus mean target price estimates from seventeen analysts, less broker fees. The beta number showed this estimate subject to volatility 29% greater than the market as a whole.

Western Refining Inc was projected to net $366.04, based on dividends, plus a mean target price estimate from ten analysts, less broker fees. The beta number showed this estimate subject to volatility 16% more than the market as a whole.

Seagate Technology PLC. was projected to net $363.41, based on dividends, plus a mean target price estimate from twenty-two analysts, less broker fees. The beta number showed this estimate subject to volatility 12% more than the market as a whole.

Johnson Controls Inc (NYSE:JCI) was projected to net $317.03, based on a median target price estimate from seventeen analysts, combined with projected annual dividend, less broker fees. The beta number showed this estimate subject to volatility 56% more than the market as a whole.

Ameriprise Financial Inc. (NYSE:AMP) was projected to net $310.79, based on dividends, plus mean target price estimates from ten analysts, less broker fees. The beta number showed this estimate subject to volatility 41% greater than the market as a whole.

Hewlett-Packard Co. was projected to net $295.79, based on dividends, plus mean target price estimates from twenty-two analysts, less broker fees. The beta number showed this estimate subject to volatility 46% more than the market as a whole.

Archer-Daniels-Midland Co (NYSE:ADM) was projected to net $270.81, based on a mean target price estimate from nine analysts, combined with projected annual dividend, less broker fees. The beta number showed this estimate subject to volatility 28% more than the market as a whole.

Albemarle Corp (NYSE:ALB) was projected to net $260.57 based on dividends, plus mean target price estimates by fifteen analysts, less broker fees. The beta number showed this estimate subject to volatility 78% more than the market as a whole.

Average net gain in dividend and price was estimated at 36% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 33% more than the market as a whole.

Analysts Predict 2.37% Edge For 5 Highest Yield, Lowest-Priced Strategic Index Stocks In Winter Quarter Using Dog Metrics

Ten Miller/Howard Strategic Dividend Index equities were culled by yield from the seventh quarterly update from here. Yield (dividend/price) results verified by Yahoo! Finance did the ranking.

As noted above, top ten Miller/Howard Strategic Dividend Index dogs showing the highest dividend yields as of December 14, 2015, represented six of nine sectors: (1) technology [1 listed]; (2) services [3 listed]; (3) utilities [1 listed]; (4) industrial goods [2 listed]; (5) basic materials [4 listed]; (6) consumer goods [1 listed].

Actionable Conclusions: (1) Analysts Argue 5 Lowest-Priced of the Top Ten Highest-Yield Strategic Dividend Index Dogs Deliver 29.99% Vs. (2) 29.29% Net Gains by All Ten by December 14, 2016.

$5,000 invested as $1k in each of the five lowest-priced stocks in the top-ten M/H SDI kennel by yield were predicted by analyst one-year targets to deliver 2.37% more net gain than $5,000 invested as $.5k in each of all ten. The third-highest priced M/H SDI dividend dog, Macquarie Infrastructure Corp., was projected to deliver the best net gain of 59.81%.

The five lowest-priced M/H SDI dividend dogs for December 14 were: Hewlett-Packard Co.; FirstEnergy Corp.; Seagate Technology PLC.; Macy's Inc.; Western Refining Inc., with prices ranging from $12.16 to $48.25.

Five higher-priced M/H SDI dividend dogs for December 14 were: Meredith Corp.; Eaton Corp PLC; Macquarie Infrastructure Corp.; Cummins Inc.; and Agrium Inc., whose prices ranged from $42.70 to $93.01.

That distinction between the five low-priced dividend dogs and the general field of ten reflected Michael B. O'Higgins' "basic method" for beating the Dow. The scale of projected gains based on analyst targets added a unique element of "market sentiment" gauging upside potential. It provided a here-and-now equivalent of waiting a year to find out what might happen in the market. Caution is advised, since analysts are historically only 20% to 80% accurate on the direction of change and just 0% to 20% accurate on the degree of change.

See my instablog for specific instructions about how to best use the dividend dog data featured in this article.

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 reference points for your M/H SDI index dog dividend stock purchase or 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 www.indexarb.com; www.dividend.com; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance.

Disclosure: I am/we are long CSCO, PFE, 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.

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