Old Republic Leads 10 Champion Dogs Up As Raven Ushers 10 Down In April

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Includes: BRC, BWL.A, CVX, ED, EMR, ERIE, EV, HCP, HP, MCY, MDU, NWN, ORI, RAVN, T, UHT, UVV, VVC
by: Fredrik Arnold
Summary

ORI led a pack of ten Champions to price upsides averaging 5.38% with net gains averaging 6.98%. Ten downsides averaged 12.57% paced by RAVN per April analyst 1yr. targets.

Ten leading March Champion dogs, UVV; MDU; ORI; CVX; UHT; MCY; HP; BWL.A; T; HCP, posted yields averaging 4.72%. These charged as Dow dogs did, too.

50 Dividend Champions (sporting 25 or more years of regular dividend increases) ranged in yield from 2.63% to 6.64% as of April 8.

Analysts -1.57% average downside forecast predicted a +0.074% net gain for 30 Champions. Gainers, PG, NFG, TROW, MO, NUE, ERIE, T, CTBI, UVV, & ORI, ranged upward 3.35% to 13.79%.

Ten Top Champion dividend dogs ranked by yield projected 55.33% more gain from $5k invested in the lowest priced five than from the same investment in all ten.

April Champion Dogs

Yield (dividend/price) results from David Fish's Dividend Champions Index members (as of April 8 market closing prices) were paired with annual dividends projected by dripinvesting.org as of March 31. Results from that data charted below showed six of nine business sectors represented by ten top yield Champions: four financials; one technology; one service; two basic materials; one utility; one consumer goods. Those ten stocks posted yields averaging 4.72%.

Actionable conclusions by yield, target price upsides, and net gains were drawn below as top Champion dog selections for April were examined, step by step.

Actionable Conclusion (1) Ten Dividend Champion Dogs Showed 3.97% to 6.64% Yields as of April 8

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; NASDAQ 100; Champions; Contenders; Challengers; CCC Combined; and Global. Bonus reports cover Bad Boy AllStars, and Sector Leaders.

Fifty 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 Determined 50 Champion Stocks by Yield

David Fish's Champions list (from here) as of March 31 contained stocks distinguished as having paid increasing dividends for 25 years or longer. Champion stocks listed below were ranked by yields calculated as of April 8 prices to reveal the top ten. Price data was sourced from Yahoo.com. Annual dividend calculations as of 3/31 came from dripinvesting.org.

As mentioned previously, six of nine Yahoo Finance market sectors were represented in the top ten champions dog list selected by yield below: financials; technology; services; basic materials; utilities; consumer goods.

Top dog HCP Inc. (NYSE:HCP) [1] was tops of the four financial firms. Other financials placed fifth, sixth, and eighth: Mercury General Corp. (NYSE:MCY) [5]; Universal Health Realty Trust [6]; Old Republic International [8].

Second place was secured by a lone technology representative, AT&T Inc. (NYSE:T) [2]. Third place was held by the steadfast services stock, Bowl America Class A (NYSEMKT:BWL.A) [3]. Fourth and seventh positions were taken by two basic materials firms, Helmerich & Payne Inc. (NYSE:HP) [4], and Chevron Corp. (NYSE:CVX) [7].

The balance of the top ten champions in utilities and consumer goods occupied the ninth, and tenth places. A lone utility took the ninth place, MDU Resources (NYSE:MDU) [9], and the consumer goods champion, Universal Corp. (NYSE:UVV) [10] completed the top ten champion dogs by yield for April.

Champion Dividend vs. Price Results Mimicked Dow Dogs

Periodic strength of ten top Champions by yield was graphed below as of market closing prices on 4/8/2016 and compared to those of the Dow. Projected annual dividend history from $10,000 invested as $1k in each of the ten highest yielding stocks and the total single share price history of those ten stocks created the data points shown in green for price and blue for dividend.

Actionable Conclusions: (2) Champions Charged Bullishly Along With (3) Dow Dogs

Champions dividend from $10k invested as $1k in each dog dropped as aggregate single share price for the ten increased after March to sustain their charge. Champions top ten dog dividend tumbled 0.69% while price rose 2.48% higher. The Champions narrowed the gap closer to overbought as aggregate single share price of the ten top dogs rose to a level just 7% away from dividends derived from $10k invested as $1k in each.

Dow dogs, also charged into April, as aggregate single share price for those ten jumped 10.8% between March 22, and April 8 while annual dividend from $10k invested as $1K in each of the top ten declined 7.3% 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) swelled wider again after March.

Actionable Conclusion (4): Dow Dogs Remain Overbought

The overhang set a new annual record in May at $421 or 117%. The July/August market set the gap at $392 or 106%. 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 $246 or 57%. In February when $30 Intel with its dividend dollar replaced Procter & Gamble's $75 price and $2.80 dividend, the gap of Dow price over dividend grew to $265 or 65%. But P&G reclaimed slot ten in March to join big dogs IBM and Boeing to put the gap to $406 or 106%. Aprils expansion, fueled by JPM making the top ten Dow, went to $414 or 107%.

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. The Dow top ten average price per dollar of annual dividend was $26.18.

Compared to the DOW, the Champion ten have sporadically retreated in a pattern where aggregate dividend value of $1k investments in each remained above the aggregate single share price. In slight contrast to the Dow, Champion Dog top ten average price per dollar of annual dividend was $21.32 as of April 8.

Should Dow prices somehow move to a level 30-35% lower, they could again become attractive dividend buys! As it stands, the Dow has become an index of growth stocks as their dividends have been progressively discounted by their market price.

Actionable Conclusions: (5) Ten Champion Dogs Chased 5.38% Average Upside into April 2017 While (6) Ten Other Champs Fell To A 12.57% Average Downside.

The O'Higgins dividend/price metrics system works to find bargains in any collection of dividend paying stocks. Utilizing analyst price upside estimates has expanded the stock universe to include popular growth equities, if desired. This picture of stronger downsides overpowering upsides is rare and was first spotted in March.

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 Estimated (7) -1.6% Average Downside & (8) +0.74% Average Net Gain from Top 30 Dividend Champions By April 2017

Thirty dogs from David Fish's Dividend Champions index were graphed below as of April 8, 2016 compared to analyst mean price target estimates for 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 shares number was then multiplied by projected annual per share dividend amounts to find the 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 2017.

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 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 green for price and blue for dividend.

Analyst data reported by Yahoo finance projected a 2.4% higher dividend from $30K invested as $1k in each stock in this group while aggregate single share price was projected to decrease 1.4% in the coming year.

Notice that the chart showed price exceeded dividend. So, analysts predicted the an overbought Champions index returning by 2017. 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 have had a better track record for accurate estimates.

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 price movement opposite of market direction.

Actionable Conclusion (9): Analysts Augured Ten Dividend Champion Dogs Showing 3.3% to 13.8% Gains By April 2017

Only three of the ten top dividend yielding Champion dogs were among the 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 again just 30% accurate.

Ten probable profit generating trades were revealed by Thomson/First Call in Yahoo Finance into 2017:

Old Republic International (NYSE:ORI) was projected to net $137.92 based on a median target price estimate from one analyst combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 37% more than the market as a whole.

Universal Corp. was projected to net $124.78 based on dividends plus a median target price estimate from one analyst less broker fees. The Beta number showed this estimate subject to volatility 44% more than the market as a whole.

Community Trust Banc (NASDAQ:CTBI) was projected to net $105.37 based on dividends plus a median target price estimate from three analysts less broker fees. The Beta number showed this estimate subject to volatility 37% less than the market as a whole.

AT&T Inc. was projected to net $68.83 based on dividends plus a median target price estimate from twenty-eight analysts less broker fees. The Beta number showed volatility 67% less than the market as a whole.

Erie Indemnity Company (NASDAQ:ERIE) was projected to net $62.63 based a median target price estimate from one analyst combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 52% less than the market as a whole.

Nucor Corp. (NYSE:NUE) was projected to net $47.88 based on dividends plus a median target price estimate from seventeen analysts less broker fees. The Beta number showed this estimate subject to volatility 48% more than the market as a whole.

Altria Group Inc. (NYSE:MO) was projected to net $42.07 based on dividends plus median target price estimate from eight analysts less broker fees. The Beta number showed this estimate subject to volatility 31% less than the market as a whole.

T. Rowe Price Group (NASDAQ:TROW) was projected to net $40.72 based on a median target price estimate from sixteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 17% more than the market as a whole.

National Fuel Gas (NYSE:NFG) was projected to net $34.64 based on dividends plus a median target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 14% less than the market as a whole.

Procter & Gamble Co. (NYSE:PG) was projected to net $33.49 based on dividends plus a median target price estimate from twenty analysts less broker fees. The Beta number showed this estimate subject to volatility 35% less than the market as a whole.

The average net gain in dividend and price was predicted to be 6.98% on $10k invested as $1k in each of these 9% less than the market as a whole.

Actionable Conclusion (10): (Bear Alerts) Analysts Augured Ten Champion Dogs To Show Net Losses Averaging 11.78% By 2017

Probable losing trades revealed by Thomson/First Call in Yahoo Finance in 2017 were:

Helmerich & Payne Inc. was projected to lose $28.39 based on dividend and a median target price estimate from twenty-seven analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 31% more than the market as a whole.

Brady Corp (NYSE:BRC) was projected to lose $39.38 based on dividend and a median target price estimate from four analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 12% more than the market as a whole.

Eaton Vance Corp. (NYSE:EV) was projected to lose $41.95 based on dividend and a median target price estimate from ten analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 62% more than the market as a whole.

Vectren Corp. (NYSE:VVC) was projected to lose $60.49 based on dividend and a median target price estimate from four analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 12% less than the market as a whole.

HCP Inc. (HCPI) was projected to lose $73.39 based on dividend and a median target price estimate from fourteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 78% less than the market as a whole.

Emerson Electric (NYSE:EMR) was projected to lose $93.18 based on dividend and a median target price estimate from twenty-two analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 16% more than the market as a whole.

Consolidated Edison (NYSE:ED) was projected to lose $103.64 based on dividend and a median target price estimate from thirteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 91% less than the market as a whole.

Northwest Natural Gas (NYSE:NWN) was projected to lose $105.11 based on dividend and a median target price estimate from two analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 39% less than the market as a whole.

Mercury General Corp. was projected to lose $130.48 based on dividend and a median target price estimate from two analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 45% less than the market as a whole.

Raven Industries (NASDAQ:RAVN) was projected to lose $148.30 based on dividend and a median target price estimate from one analyst including $20 of broker fees. The Beta number showed this estimate subject to volatility 1% more than the market as a whole.

The average net loss in price plus broker fees including annual dividends was predicted to be 8.24% on $10k invested as $1k in each of these ten dogs. This loss estimate was subject to average volatility 14% less than the market as a whole.

Dog Metrics Extracted Bargains

As noted above, ten Champion dividend dogs showing the biggest dividend yields as of April 8 represented six of nine business sectors: four financials; one technology; one services; two basic materials; one utility; one consumer goods. Listed as of market close, April 8, Champion dividend dogs ranged in yield as follows:

Actionable Conclusions: Analysts Assert (8) 5 Lowest Priced of Top Ten Highest Yield Champions Deliver 3.79% VS. (9) 2.44% Net Gains from All Ten As Of April 8, 2017

$5000 invested as $1k in each of the five Lowest priced stocks in the top ten Champion kennel by yield promised 55.33% more net gain than $5,000 invested as $500 in each of all ten. The second lowest priced Champion dog, Old Republic International , was projected to deliver the best net gain of 13.79%.

Lowest priced five Champion dogs as of April 8 were: Bowl America Class A ; Old Republic International ; MDU Resources ; HCP Inc. ; AT&T Inc. , whose prices ranged from $14.12 to $38.50.

Higher priced five Champion dogs as of April 8 were: Mercury General Corp. ; Universal Corp. ; Universal Health Realty Trust (NYSE:UHT); Helmerich & Payne Inc. ; Chevron Corp. , whose prices ranged from $52.99 to $96.33.

This distinction between five low priced dividend dogs and the general field of ten reflects the "basic method" Michael B. O'Higgins employed for beating the Dow. It also works well for testing bargain Champion dogs, as you see.

The added scale of projected gains based on analyst targets contributed 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. Its also the work analysts got paid big bucks to do.

A caution is advised, however, as analysts are historically 20% to 80% accurate on the direction of change and about 0% to 20% accurate on the degree of the change.

See my instablog for specific instructions about how to best apply the dividend dog data featured in this article. - Fredrik Arnold

The net gain and 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.

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Stocks listed above were suggested only as possible starting points for your index dog dividend stock purchase or sale research process. These were not recommendations.

Graphs and charts were compiled by Rydlun & Co., LLC from data derived from indexarb.com, dripinvesting.org, and finance.yahoo.com; analyst mean target prices by Thomson/First Call on Yahoo Finance.

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, PFE, VZ, T. 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.