NASDAQ Dogs of The New Year
NASDAQ 100 Index members paying dividends were tallied as of market closing prices January 20. Yield (dividend / price) results 46 dividend paying NASDAQ stocks as stacked against analyst 1-yr target projections led to the actionable conclusions described below.
Actionable Conclusion (1) 10 Top NASDAQ Dogs Cast 3.71% to 8.75% Yields as of January 20
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 2000; NASDAQ 100; Champions; Contenders; Challengers; CCC Combined; and Global. Bonus reports cover Bad Boy AllStars, and Sector Leaders.
Forty-Six For the Money
This article was written to reveal bargain stocks to buy and hold up to one full 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 Marked 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."
Again, just three of nine sectors were represented in the top ten NASDAQ dogs by yield as of January 20, 2016 per IndexARB.com data: technology; consumer goods; services.
Technology put seven firms in the top ten by yield. Tops for tech and overall was Seagate Technology (NASDAQ:STX) . The remaining six tech firms placed second, fourth, fifth, seventh, eighth, and ninth: Vodafone Group plc (NASDAQ:VOD) ; Garmin (NASDAQ:GRMN) ; QUALCOMM (NASDAQ:QCOM) ; Western Digital (NYSE:WDC) ; CA Technologies (NASDAQ:CA) ; Cisco Systems (NASDAQ:CSCO).
A lone consumer goods representative placed in the third slot, Mattel (NASDAQ:MAT) . Two services reps both placed near and at the bottom on the NASDAQ high yield list in sixth, and tenth places: Viacom B (NASDAQ:VIAB), and Paychex (NASDAQ:PAYX) . These completed the top ten NASDAQ 100 dogs for January by yield.
Dividend vs. Price Results Compared to Dow Dogs
Top ten NASDAQ 100 dogs compared to those of the Dow by yield were graphed below as of market close 1/20/2016. 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 Conclusions: (1) NASDAQ 100 Dogs Retreated As (2) Dow Dogs Mixed Up After December
NASDAQ 100 top dividend payers increased in dividend and dropped in price after December. Aggregate single share price fell 3.74% as aggregate dividend from $10k invested rose up 8% to confirm the retreat.
Dow dogs mixed up, however, with aggregate single share price for the ten increasing 4.9% between November 25, and January 20, while annual dividend from $10k invested as $1K in each of the top ten soared 9.73% according to IndexArb.
As a result, the Dow dogs overbought condition (where aggregate single share price of the ten exceeded projected annual dividend from $10k invested as $1k each in those ten) barely changed after December.
Actionable Conclusion (3): Dow Dogs Are Overbought
The overhang was $250 or 65% for February; slid to $243 or 62% in March; gapped to $295 or 81% for a new record in April; then broke the new annual record again in May at $311 or 87%. June saw the gap narrow to $286 or 77%. The July/August market set a new high for the gap at $329 or 85%. September shrank the gap to $279 or 67%. October expanded the chasm again to $323 or 82%. November-December constricted the gap somewhat to $271 or 70%. January narrowed the gap slightly to $267 or 63%.
This gap between high share price and low dividend per $1k invested shows an overbought condition. Meaning, these are low risk and low opportunity Dow dogs.
Compared to the DOW these NASDAQ ten, appear to be tracking a little past a "normal" pattern of aggregate dividend value of $1k investments in each exceeding the aggregate single share price. At least these NASDAQ dogs showed normal could be achieved. (Notice the crossing point in July where dividends moved above price.) Maybe the old Dow dogs can learn some new tricks here. We shall see...
[I invite you to sign on to my premium site, The Dividend Dog Catcher, to share my discussion about how the Dow (short of tossing out IBM and Boeing) could return to a "normal" balance where dividends from 10 $1k investments can again exceed the aggregate single share price of those ten stocks.]
NASDAQ Upside New Year Dogs
Results from IndexArb.com tallied for 46 NASDAQ 100 Index members paying dividends as of market closing prices January 20, 2015 were stacked against analyst mean target price projections one year out. The results led to the actionable conclusions discussed below.
Actionable Conclusions: (4) 10 Leading NASDAQ 100 Dogs Displayed 45.21% Average Upsides By January 2017 Analyst Target Readings
Actionable Conclusion (5): Wall St. Wizards Projected A 26.82% Average 1 yr. Upside for Top 30 NASDAQ 100 Dogs To January 20, 2017
Top 30 dogs on the NASDAQ 100 index stock list graphed below show relative strengths by dividend and price as of January 20, 2016 and those projected by analyst median price target estimates to the same date in 2017.
A hypothetical $1000 investment in each equity was divided by the current share price to find the number of shares purchased. The number of shares was then multiplied by projected annual dividend amounts to find the dividend return. Thereafter the analyst mean target price was used to gauge each stock's upside to 2017.
Historic prices and actual dividends paid from $1000 invested in each of the highest yielding stocks and the aggregate single share prices of those thirty stocks divided by 3 created the data points for 2016. 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 2017 data points on the chart below: green for price and blue for dividend.
Actionable Conclusion (6): Wall St. Wizards Project A 21.09% Average Net Gain from Top 30 NASDAQ 100 Dogs By January 2017
Yahoo reported Thomson/First Call analyst survey numbers predicted a 19.6% lower dividend from $10K invested as $1k in the average ten of this group, while aggregate single share price of those ten was predicted to increase 28.3% in the coming year. Notice that the 2015-16 graph shows price above dividend. Apparently analysts believe the Dow overbought condition will return to the NASDAQ 100 in 2016.
Actionable Conclusion (5): Analysts Alleged 10 NASDAQ 100 Dividend Dogs Would Net 33.58% to 92.83% By January 2017
Just three of the top ten dividend yielding NASDAQ 100 dogs were detected among the top ten gainers for the coming year based on analyst 1 year target prices. Therefore, the past month dog strategy (as graded by Wall St. wizards) was30% accurate.
Western Digital was projected to net $925.33 based on dividends plus a median target price estimate from twenty-three analysts less broker fees. The Beta number showed this estimate subject to volatility 1% less than the market as a whole.
Skyworks Solutions (NASDAQ:SWKS) was projected to net $658.37 based on a median target price estimate from twenty-four analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 48% less than the market as a whole.
Apple, Inc. (NASDAQ:AAPL) was projected to net $482.48 based on dividends plus median target price estimate from forty-one analysts less broker fees. The Beta number showed this estimate subject to volatility equal to 6% more than the market as a whole.
Viacom [B] was projected to net $412.89 based on dividends plus median target price estimates from twenty-nine analysts less broker fees. The Beta number showed this estimate subject to volatility 75% more than the market as a whole.
Lam Research (NASDAQ:LRCX) was projected to net $408.25 based on dividends plus a median target price estimate from seventeen analysts less broker fees. The Beta number showed this estimate subject to volatility 57% greater than the market as a whole.
Gilead Sciences (NASDAQ:GILD) was projected to net $391.00 based on a mean target price estimate from seventeen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 16% more than the market as a whole.
Seagate Technology was projected to net $374.90 based on dividends plus the mean of annual price estimates from twenty-two analysts less broker fees. The Beta number showed this estimate subject to volatility 12% more than the market as a whole.
Applied Materials (NASDAQ:AMAT) was projected to net $341.70 based on a mean target price estimate from twenty-one analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 87% more than the market as a whole.
Cisco Systems was projected to net $339.33 based on dividends plus median target price estimate from thirty analysts less broker fees. The Beta number showed this estimate subject to volatility 6% more than the market as a whole.
Marriott Intl. [A] (NYSE:MAR) was projected to net $335.77 based on a median target price estimate from twenty-two analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 362% more than the market as a whole.
The average net gain in dividend and price was 46.73% on $10k invested as $1k in each of these dogs. This gain estimate was subject to average volatility 25% greater than the market as a whole.
See my instablog for specific instructions about how to best apply the dividend dog data featured in this article.--Fredrik Arnold
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The 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.
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: I am/we are long CSCO, INTC, 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.