30 S&P 500 Dogs Break Par: 16 Up, 14 Down In June

Summary

• Analyst one-year S&P 500 price targets are split up vs. down for June. Top ten upsides averaged a higher high of 25.7% vs. the low ten's -7% score June 30.
• Yields of 50 top S&P 500 stocks ranged from 3.82% to 11.84%. Top ten S&P dividend dogs and Dow dogs both charged bullishly through June.
• Upsides averaged 25.72% by WMB, SPLS, WY, LYB, FTR, GM, CF, VLO, IVZ, and PBI. Downside CNP, PBCT, MOS, T, MUR, SO, HCN, HCP SE & GPS averaged 6.86%.
• Ten top S&P 500 stocks by yield showed 40.8% more gain from $5k invested in the lowest-priced five than from $5k invested in all ten per analyst one-year targets.
• As you consider these stocks reference points for your late-May 2016 S&P 500 dividend investment investigations, double-check analyst estimates.

S&P 500 Dogs After June

S&P 500 Index prices were tallied as of market close June 30. Yield (dividend/price) results from yahoo.com/finance for 30 top yielding S&P 500 stocks stacked against analyst 1-yr targets led to the actionable conclusions discussed below.

Actionable Conclusion (1) 50 S&P 500 Dogs Showed 3.7% to 11.84% Yields

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.

What is a dividend dog?

The "dog" moniker is earned in three steps: (1) any stock paying a reliable, repeating dividend (2) whose price has fallen to a point where it's yield (dividend/price) (3) has grown higher than its peers (here in the M/H SDI collection) is tagged as dividend dog. Thus, the highest yielding stocks in any collection become known as "dogs."

50 On 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 Carded S&P 500 Stocks by Yield

SP500Y[1] 50LIST MAY16

McGraw Hill Finance, publisher of the Dow Jones S&P 500 Index states:

"The S&P 500® is widely regarded as the best single gauge of large cap U.S. equities. There is over USD 5.58 trillion benchmarked to the index, with index assets comprising approximately USD 1.3 trillion of this total. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization."

Seven of eleven sectors placed dogs in the top ten by yield for June: energy; technology; communication services; real estate; consumer cyclical; industrials; basic materials.

First place went to the lone energy dog, Williams Companies Inc (NYSE:WMB) [1]. Second dog, Seagate Technology (NASDAQ:STX) [2] was the lone technology sector representative.

Two communication service firms captured slots three, and four, Frontier Communications Corp (FTR) [3], and CenturyLink Inc, (NYSE:CTL) [4]. One Real estate company placed fifth, HCP, Inc. (HCP) [5].

Three consumer cyclical firms took the sixth through eighth places. In the old Yahoo nine number sector scheme two would simply be classified as "services," Staples (SPLS) [6], and Kohl's (KSS) [8]. General Moters (GM) [7], however, would have been in the "consumer goods" sector.

The ninth place went to the lone industrial firm, Iron Mountain Inc. (NYSE:IRM) [9]. Finally, in tenth place, the basic materials representative, CF Industries Holdings (CF) [10] completed this S&P 500 May top ten dog list by yield.

S&P 500 Dividend vs. Price Results Complemented The Dow Dogs

Relative strengths of the top ten S&P 500 dogs by yield as of market close 6/30/2016 were comparable those of the Dow as shown in the graphs and charts below. Projected annual dividend history from $10,000 invested as $1k in each of the ten highest yielding stocks, and the total single share prices of those ten stocks, created the data points shown in green for price and blue for dividend.

Actionable Conclusions: (2) S&P 500 Dogs And (3) Dow Dogs Both Charged Bullishly

The S&P 500 collection turned bullish as dividends continued to fall while single share prices of the ten increased after May. Dividends from $1k invested in each of the top ten S&P 500 stocks fell 4.7% for the period as their aggregate single share price climbed 9.1% to mark the bullish charge.

The Dow dog charge featured aggregate single share price for those ten soaring nearly 15% between May 20 and June 30, while annual dividends from $10k invested as $1K in each of the top ten decreased over 6%, according to IndexArb, to put the dogs back on the bull path.

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) shrank slightly. The price gain and dividend decrease for the top ten was largely due to big dog ExxonMobil (XOM) replacing small dog General Electric (GE) in the tenth slot of the top ten.

Actionable Conclusion (4): Dow Dogs Continue Ever Overbought; (5) S&P 500 Dogs Show Preferable Dividend Above Price Performance

The Dow dog overbought July/August 2015 market gap hit $328 or 84%. A September retreat narrowed the chasm to $261 or 62%. October action, however, put the gap at $299, or 77%. December brought a reduction to $266, or 68%.

January 2016 went slightly wider at $295, or 72%. February widened the gap to $327 or 81%. March showed $399 or 104% set the 2016 record high. In April Intel's (INTC) price swoon narrowed the mighty Dow overbought chasm to $374 or 100%. Then May's small dog migration into the top ten shank the gap to $276 or 71%. Now the return of XOM and exit of GE has returned the gap to $399 or 109%, the new 2016 record.

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 $27.06.

Compared to the Dow dogs, the S&P 500 ten, while volatile, are not overbought, and somewhat narrowing their "normal" pattern of dividends above price.

In contrast to the Dow, S&P 500 top ten average price per dollar of annual dividend came in at $14.81 as of June 30. That's only $1.28 above one-half the price of an annual dollar of Dow dividend.

S&P Advancing & Falling April Dogs

S&P 500 Index prices were collected as of market close June 30. Yield (dividend / price) results from yahoo.com/finance for 30 top yielding S&P 500 stocks, weighed against analyst 1-yr target projections, led to the additional actionable conclusions described below.

Actionable Conclusions (5) 10 Top S&P 500 Dogs Showed 15.58% to 40.45% Upsides, While (6) 10 Falling S&P500 Dogs Dropped 4.17% To 10.46% Per Analyst Price Targets For June, 2017

The number of analysts providing price estimates was noted after the name for each stock on the chart below. Three to nine analysts have proven most accurate in target price estimating.

Actionable Conclusions: Wall St. Wizards Wished (7) A 7.66% Average 1 yr. Upside & (8) A 11.01% Average Net Gain For 30 S&P Dogs By June, 2017

Top 30 dogs on the S&P 500 index stock list graphed below show relative strengths in dividend and price as of June 30, 2016 and those projected by analyst mean 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.

Yahoo reported analyst survey numbers predicted an 5.8% lower dividend from $10K invested as $1k in the average ten of this group, while aggregate single share price of those ten was expected to increase 6% 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 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 stocks movement opposed to market direction.

Actionable Conclusion (9): Analysts Allege Top 10 S&P 500 Dogs Could Net 19.6% to 42.7% By June, 2017

Five of ten top yielding S&P 500 dogs were tagged as top gainers for the coming year by analyst 1 year target prices. So, by that reckoning the dog strategy as graded by wall street wizards was 50% accurate this month.

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

Pitney Bowes (PBI) was projected to net $426.63 based on a median target price estimate from six analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 2% more than the market as a whole.

Invesco (IVZ) was projected to net $394.25 based on a median target price estimate from thirty-seven analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 62% more than the market as a whole.

Valero Energy (VLO) was projected to net $350.59 based on a median target price estimate from fourteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 12% greater than the market as a whole.

CF Industries Holdings (CF) was projected to net $316.10 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 1% less than the market as a whole.

General Motors was projected to net $305.80 based on estimates from sixteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 59% more than the market as a whole.

Frontier Communications was projected to net $279.60 based on a median target price estimate from eleven analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 33% less than the market as a whole.

Williams Companies (WMB) was projected to net $254.16 based on a median target price estimate from eight analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 48% more than the market as a whole.

LyondellBasell Industries (LYB) was projected to net 235.04 based on estimates from eighteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 2% less than the market as a whole.

Weyerhaeuser (WY) was projected to net $197.334 based on estimates from eleven analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 40% more than the market as a whole.

Staples was projected to net $195.78 based on a median target price estimate from eleven analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 47% more than the market as a whole.

The average net gain in dividend and price was 36.94% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 23% more than the market as a whole.

Actionable Conclusion (10): (Bear Alert) Analysts Figured Six S&P500 Dogs Net Loss Would Average 5.66% By 2017

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

Murphy Oil Corp (MUR) was projected to lose $31.02 based on dividend and a median target price estimate from seventeen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 142% more than the market as a whole.

Southern (SO) was projected to lose $45.92 based on dividend and a median target price estimate from fifteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 89% less than the market as a whole.

HCP Inc. was projected to lose $50.53 based on dividend and a median target price estimate from twelve analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 77% less than the market as a whole.

Welltower (HCN) was projected to lose $55.84 based on dividend and a median target price estimate from sixteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 81% less than the market as a whole.

Spectra Energy (SE) was projected to lose $74.87 based on dividend and a median target price estimate from fifteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 35% less than the market as a whole.

The Gap (GPS) was projected to lose $81.26 based on dividend and a median target price estimate from twenty-nine analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 6% less than the market as a whole.

The average net loss in dividend and price with broker fees included was 5.66% on $6k invested as $1k in each of these six dogs. The beta number showed this estimate subject to volatility 36% less than the market as a whole.

Price Histories of Two Stocks Reveal Broker Contrarian Projections

The most recent month's positive historic price performance of The Gap (GAP), the designated S&P500 "loser" red lined by analysts, is in mighty contrast to the marked negative past month price history displayed by analyst tagged upside leader, Pitney Bowes .

Momentum suggests shorting the analyst forecast winner or buying GAP which is tracking nicely upward despite analyst doubts.

Analysts Divined Big Gains From Five Lowest Priced S&P500 Top Yielders

Remember, seven of eleven Morningstar sectors placed dogs in the top ten by yield for June: energy; technology; communication services; real estate; consumer cyclical; industrials; basic materials. In the old Yahoo 9-sector system they would make five of nine, basic materials; technology, consumer goods, financial, and services.

Actionable Conclusions: (11) 5 Lowest Priced of Top Ten Highest Yield S&P 500 Dogs Projected 22.29% VS. (12) 15.83% Net Gains for All Ten by June, 2017

$5000 invested as $1k in each of the five Lowest priced stocks in the top ten S&P 500® dividend kennel by yield were alleged by analyst 1 year targets to deliver 40.8% more net gain than the same amount invested in all ten. The fourth lowest priced CF Industries Holdings , was projected to deliver the best net gain of 31.61%.

Lowest priced five S&P 500® dogs for June 30 were: Frontier Communications Corp; Staples; Williams Companies; CF Industries Holdings; Seagate Technology, with prices ranging from $4.94 to $24.36.

Higher priced five S&P 500® dogs for June 30 were: General Motors; CenturyLink Inc; HCP Inc. ; Kohl's ; Iron Mountain Inc., whose prices ranged from $28.30 to $39.83.

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.

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.

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.

The stocks listed above were suggested only as reference points for an S&P 500 Dividend investment research process in July, 2016. These were not recommendations.

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

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.

At least three of these S&P500 dividend pups are part of the now 45 Dogs of the Week (AKA "valuable catches") found on The Dividend Dog Catcher premium site. Click here to learn more or subscribe.

A top performing DOTW dog for the first quarter has been named. A second quarterly winner was discovered May 13. For a free copy of both quarterly reports and analysis of the winning Arnold Q1 & Q2 picks, plus a surprise bonus bottom dog report, send your e-mail address, ticker symbol for your favorite dividend stock, and name of your favorite team of any type to: [e-mail]. Remember: E-mail, ticker, team!

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 dividend.com; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance.

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