Russell 1000 Analysts Vote HollyFrontier Top Dog In June/July

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Includes: AGNC, APAM, CIM, CLNS, CXP, FTR, GE, GME, HFC, LVS, MFA, MIC, NLY, OHI, SNH, SRC, STWD, TRGP, TWO, WMB, XOM
by: Fredrik Arnold

Summary

It's been a year since I reported Russell 1000 Index dogs. Now the results are in from the June 2015 top ten: 4 up; 3 down; 1 poor; 1 neutral.

June/July 2016 Russell yields ranged 8.53% to 13.96% for TRGP, APAM, STWD, TWO, NLY, MFA, AGNC, CIM, WMB, & NRF. Ten charged bullishly as did Dow dogs after May.

Top 30 Russell dividend payer upsides averaged 7.7% with gains of 14% as of July 5. Russell average cost per $1 annual dividend was $9.57. The Dow ten averaged $27.08.

Average upside of 23.65% and net gains of 29.63% were calculated for the top Russell 1000 ten. HFC at 48.58% & 52% led. Lowest Russell dog, SNH, fell 13.59%.

Top ten gainers were OHI, CXP, APAM, LVS, FTR, MIC, WMB, GME, NRF, & HFC. Losses were by SRC, HCP, & SNH.

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 it's peers (by industry, sector, index or portfolio). Thus, the highest yielding stocks in any collection become known as "dogs."

Russell 1000 Top Dogs For June/July

Russell 1000 index members paying dividends were tallied as of market closing prices July 5. Yield (dividend/price) results from YCharts verified by Yahoo!Finance for 30 top yielding Russell 1000 stocks stacked against analyst one-year target projections led to the actionable conclusions delineated below. Since 2015.

Actionable Conclusion (1): 50 Russell 1000 Dogs Showed 4.67% to 13.96% Yields as of July 5

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; Russell 1000; Russell 2000; Russell Combined; Champions; Contenders; Challengers; CCC Combined; and Global. Bonus reports cover Bad Boy AllStars, and Sector Leaders.

50 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 an explanation of the term "dogs" for stocks reported based on Michael B. O'Higgins's book "Beating The Dow" (HarperCollins, 1991), now named Dogs of the Dow. O'Higgins's 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 Ordered Russell 1000 Stocks by Yield

Russell 1000 index members paying dividends were tallied as of market closing prices July 5. Yield (dividend/price) results from Yahoo Finance for 30 top yielding Russell 2000 stocks stacked against analyst one-year target projections led to the actionable conclusions delineated below.

Actionable Conclusion (1): 50 Russell 1000 Dogs Showed 4.5% to 13.17% Yields as of July 5

Seeking Alpha reader requests prompted this series of index-specific articles for dividend yield results for these indices: Dow 30, S&P 500, S&P Aristocrats, Russell 1000, Russell 2000, Russell Combined, NASDAQ 100, Champions, Contenders, Challengers, CCC Combined, and Global. Bonus reports cover Bad Boy AllStars, and Sector Leaders.

50 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 an explanation of the term "dogs" for stocks reported based on Michael B. O'Higgins's book "Beating The Dow" (HarperCollins, 1991), now named Dogs of the Dow. O'Higgins's 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 Sorted Russell 1000 Stocks by Yield

FTSE Russell states:

"The Russell Indexes are a family of global equity indices that allow investors to track the performance of distinct market segments worldwide."

"Using a rules-based and transparent process, Russell forms its indexes by listing all companies in descending order by market capitalization adjusted for float, which is the actual number of shares available for trading. In the United States, the top 3,000 stocks (those of the 3,000 largest companies) make up the broad-market Russell 3000 Index. The top 1,000 of those companies make up the large-cap Russell 1000 Index, and the bottom 2,000 (the smallest companies) make up the small-cap Russell 2000 Index."

10 stocks in this index promising the top yields in June/July represented just three of eleven Morningstar (YChart) sectors: real estate, energy, financial services.

Seven real estate firms placed first, then third through eighth: Northstar Realty Finance (NYSE:NRF) [1], Chimera Investment Corp. (NYSE:CIM) [3], American Capital Agency (NASDAQ:AGNC) [4], MFA Financial Inc. (NYSE:MFA) [5], Annaly Capital Management Inc. (NYSE:NLY) [6], Two Harbors Investment (NYSE:TWO) [7], and Starwood Property Trust Inc. (NYSE:STWD) [8].

Two energy representatives placed second, and tenth, Williams Companies (NYSE:WMB) [2], and Targa Resources (NYSE:TRGP) [10]. The lone financial services firm placed ninth, Artisan Partners Asset (NYSE:APAM) [9]. These completed the Russell 1000 top 10 June/July dogs by yield.

Russell Dividend vs. Price Results Compared to Dow Dogs

Relative strengths of the top 10 Russell 1000 dogs by yield as of market close 7/5/2016 stacked against those of the Dow were charted below. Projected annual dividend history from $10,000 invested as $1k in each of the 10 highest yielding stocks and the total single share prices of those 10 stocks created the data points shown in green for price and blue for dividend.

Actionable Conclusions: (2) Russell 1000 Dogs Charged Bullishly, As (3) Dow Dogs Mimicked the Russells After May

Russell 1000 top ten dividend payers moved further toward overbought as they fell in dividend but arose in price after May. Aggregate single share price ascended 4%, while aggregate dividend from $10k invested, declined 4% to make the bullish move.

Dow dogs also charged bullishly and expanded their overbought condition by 42.4%. Aggregate single share price for the ten soared 14.7% between May 23 and July 1, while annual dividend from $10k invested as $1K in each of the top ten dropped 5.5% according to IndexArb.

As mentioned, 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) expanded over 1/3 after May. Say "goodbye" to any long overdue retreat!

Actionable Conclusion (4): Dow Dogs Get More Overbought

Historically, to begin August, 2105, IBMs high price and dividend entrance pushed the Dow overbought gap to $343 or 89%. As September dawned, nearly all ten dogs dropped in price to temporarily shrink the gap to $273 or 67%. October saw prices rise and dividend fall to move the price over dividend chasm to $305 or 76%. November 6 price action and top dog shuffle put the gap at $305 or 79%. As of December 4 the gap stood at $302 or 78%.

Come January 8, 2016, prices of the ten Dow top dogs fell, and dividends rose, to push the overbought gap down to $224 or 56%. In February the gap grew to $246 or 59%. The March charge put the gap up to $293 or 73%. April set a 2016 record expanding to $400 or 104%, May's price retreat brought the price over dividend gap down to $350 or 91% and June put the gap down to $342 or 90%. The July surge was led by heavyweight ExxonMobil (NYSE:XOM) muscling little General Electric (NYSE:GE) out on the tenth slot by yield. The resulting gap between aggregate single share price of ten dogs above dividends projected from $10K invested as $1K per each of the ten was $401 or 109%.

The Dow Dogs remain overbought and overpriced. Meaning, these are low risk and low opportunity Dow dogs. The Dow top ten average price per dollar of annual dividend was $27.08.

Unlike the DOW the Russell 1000 ten, remained far away from overbought territory. Despite their inclination that way,they are over $900 away from parity or 494% removed.

The Russell 1000 dog chart showed how a normal state of dividends over price looks. The Russell 1000 top ten average price 9.575 as of July 1.

Russell Dog Upsides

Results from YCharts.com tallied for the 50 top Russell 1000 dividend yielders as of market closing prices July 5, 2016 were stacked against analyst mean target price projections one year out. The results led to the actionable conclusions continuing below.

Actionable Conclusions: (5) 10 Top Russell 1000 Dogs Put Up 23.65% Average Upsides Per Analyst Targets For May 2017. (6) Nine Russell 1000 Dogs Averaged A 5% Downside

Actionable Conclusion (7): Wall St. Wizards Calculated A 7.68% Average 1 yr. Upside & (8) A 14.11% Average Net Gain for Top 30 Russell 1000 Dogs To July, 2017

Top 30 dogs on the Russell 1000 index stock list graphed below showed relative strengths by dividend and price as of July 5, 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.

Yahoo reported Thomson/First Call analyst survey numbers predicted a 5.7% 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 7.7% in the coming year. Notice that the 2016-17 graph shows price well below dividend. However analysts see the Russell 1000 top dogs cutting the gap to the Dow-like overbought condition nearly in half come 2017.

Actionable Conclusion (8): Analysts Alleged 10 Russell 1000 Dogs Would Net 15.12% to 52% By July 2017

Three of the top ten dividend yielding Russell 1000 dogs were 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) was 30% accurate.

HollyFrontier (NYSE:HFC) was projected to net $520.24 based on a mean target price estimate from an thirteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 10% greater than the market as a whole.

Northstar Realty Finance was projected to net $428.52 based on dividends plus the mean of annual price estimates from three analysts less broker fees. The Beta number showed this estimate subject to volatility 56% more than the market as a whole.

GameStop (NYSE:GME) was projected to net $365.07 based on dividends plus median target price estimate from eleven analysts less broker fees. The Beta number showed this estimate subject to volatility 42% greater than the market as a whole.

Williams Companies was projected to net $320.47 based on dividends plus median target price estimates from eight analysts less broker fees. The Beta number showed this estimate subject to volatility 46% more than the market as a whole.

Macquarie Infrastructure (NYSE:MIC) was projected to net $283.40 based on dividends plus a median target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 6% more than the market as a whole.

Frontier Communications (NYSE:FTR) was projected to net $274.35 based on dividends plus a mean target price estimate from eleven analysts less broker fees. The Beta number showed this estimate subject to volatility 32% less than the market as a whole.

Las Vegas Sands (NYSE:LVS) was projected to net $235.55 based on dividends plus a mean target price estimate from fifteen analysts less broker fees. The Beta number showed this estimate subject to volatility 76% more than the market as a whole.

Artisan Partners Asset Management Inc. was projected to net $221..88 based on a median target price estimate from seven analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 74% more than the market as a whole.

Columbia Property Trust (NYSE:CXP) was projected to net $162.62 based on a mean target price estimate from six analysts combined with projected annual dividend less broker fees. A Beta number was not available for CXP.

Omega Healthcare (NYSE:OHI) was projected to net $151.18 based on a mean target price estimate from eight analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 56% less than the market as a whole.

The average net gain in dividend and price was 29.63% on $10k invested as $1k in each of these dogs. This gain estimate was subject to average volatility 24% more than the market as a whole.

Actionable Conclusion (9): (Bear Alert) Analysts Predicted Three Russell 1000 Dogs With Net Losses Averaging 5.35% By July, 2017

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

Spirit Realty Capital (NYSE:SRC) was projected to lose $30.90 based on dividend and a median target price estimate from thirteen analysts including $20 of broker fees. The Beta number showed this less than the market as a whole.

HCP, Inc. was projected to lose $48.88 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 81% less than the market as a whole.

Senior Housing Properties (NYSE:SNH) was projected to lose $80.97 based on a mean target price estimate from five analysts 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.

The average net loss in dividend and price was 5.36% on $3k invested as $1k in each of these three dogs. This loss estimate was subject to average volatility 61% less than the market as a whole.

"If Everyone Told The Truth, The Market Would Not Move:" HCP vs. SNH Price History

Year to date price performance of Senior Housing Properties, the NASDAQ 100 Index "loser" red-lined by analysts, showed a mighty upside in contrast to the marked downside annual price history for analyst tagged upside leader, HollyFrontier.

Momentum was on the side of the underdog in this analyst forecast.

Dog Metrics Projected A Loss From Five Lowest Priced Russell 1000 Highest Yielding Dogs

Yield (dividend / price) results from Yahoo.com for Russell 1000 index July 5 did the ranking.

Actionable Conclusions: (1) 5 Lowest Priced of Top Ten Highest Yield Russell 1000 Dogs Promised 15.03% VS. (2) 16.455% Net Gains by All Ten by July 5, 2017

$5000 invested as $1k in each of the five Lowest priced stocks in the top ten Russell 1000 dividend kennel by yield were alleged by analyst 1 year targets to deliver 8.59% LESS net gain than the same amount invested in all ten. The fourth lowest priced Russell 1000 dividend dog, NorthStar Realty, was projected to deliver the best net gain of 42.85%.

Lowest priced five Russell 1000 dogs for July 5 were: MFA Financial; Two Harbors Investment; Annaly Capital Management; NorthStar Realty Finance; Chimera Investment, whose prices ranged from $7.27 to $15.70.

Higher priced five Russell 1000 dogs for July 5 were: American Capital Agency; Williams Companie; Starwood Property Trust; Artisan Partners , whose prices ranged from $19.73 to $42.66.

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.

Annual Analyst Accuracy

You see below the one year result of ten analyst target estimates for Dow stocks per Yahoo from this article in 2015. These were applied to the "basic method" Michael B. O'Higgins employed for beating the Dow. The key shows: losses in a reddish tint; poor results tinted yellow; gains tinted green; no tint means no difference.

The "basic method" top ten annual analyst accuracy score for early June 2015 was three losses, one poor performance, and two neutral outcomes against four gains.

The stocks listed above were suggested only as reference points for a Russell 1000 dividend dog investigation in early-July, 2016. These were not recommendations.

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

One of these Russell 1000 pups qualifies as a valuable catch! It is listed with the now 46 Dogs Of The Week (DOTW) found on The Dividend Dog Catcher premium site. Click here to subscribe or get more information.

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 & Q3 August picks, send your e-mail address, ticker symbol for your favorite dividend stock, and name of your favorite team of any sport or activity to: fredrika120@gmail.com. Remember: E-mail, ticker, team!

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.

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

Disclosure: I am/we are long GE, INTC, 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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