S&P 500 Dogs Look To Macy's For Top July Net Gains

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Includes: CTL, F, FE, GPS, HP, IRM, KIM, KSS, M, OXY, SPG, STX, T, TGT, VZ
by: Fredrik Arnold

Summary

"The S&P 500 is widely regarded as the best single gauge of large-cap U.S. equities. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization."

Broker target-estimated July top ten net gains ranged 17%-34.7% topped by M 7/10/17. The master list was pre-screened to only include firms with net returns greater than -10%.

50 Top S&P 500 index stocks ranged in estimated annual-yield from 3.83% to 9.2%. Top ten, HP, F, T, VZ, KIM, KSS, STX, IRM, M, & CTL averaged 6.27% yield.

S&P 500 index top ten firms by broker target price upsides, GM, OXY, FE, TGT, STX, AES, GPS, SPG, KIM, & M averaged 19.33% estimated gains.

$5k invested in the lowest-priced five July top-yield S&P 500 dividend dog stocks showed 17.64% more net-gain than from $5k invested in all ten.  Little low-price Dogs ruled July's S&P 500 top ten.

Actionable Conclusions (1-10): Broker Analysts Predicted 17% To 34.67% Net Gains For Ten S&P 500 Dogs For July 2018

Five of ten top S&P 500 dividend dogs by yield were verified as being among the top ten of thirty gainers for the coming year based on analyst 1-year target prices. (They are tinted gray in the chart above). So, this yield-based forecast for S&P 500 dogs was graded by Wall St. Wizards as 50% accurate.

Ten probable profit-generating trades were revealed in YCharts for July 2018:

Macy's (M) was projected to net $346.70, based on target price estimates from twenty-three analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 16% less than the market as a whole.

Kimco Realty (KIM) was projected to net $333.81, based on dividends, plus median target price estimates from twenty analysts, less broker fees. The Beta number showed this estimate subject to volatility 26% less than the market as a whole.

Simon Property Group (SPG) was projected to net $260.24, based on a median target price estimate from twenty-one analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 43% less than the market as a whole.

Gap (GPS) was projected to net $225.84, based on dividends, plus a mean target price estimate from twenty-nine analysts, less broker fees. The Beta number showed this estimate subject to volatility 14% less than the market as a whole.

Seagate Technology (STX) was projected to net $223.03, based on a median target estimates from twenty-nine analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 73% more than the market as a whole.

Helmerich & Payne (HP) was projected to net $209.64, based on a median target price estimate from seventeen analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 12% less than the market as a whole.

Target (TGT) was projected to net $201.20, based on dividends, plus a mean target price estimate from twenty-six analysts, less broker fees. The Beta number showed this estimate subject to volatility 40% less than the market as a whole.

Occidental Petroleum (OXY) was projected to net $180.27, based on dividends, plus a mean target price estimate from twenty-five analysts, less broker fees. The Beta number showed this estimate subject to volatility 36% less than the market as a whole.

FirstEnergy (FE) was projected to net $178.91 based on dividends, plus a median target estimate from nineteen brokers, less broker fees. The Beta number showed this estimate subject to volatility 73% less than the market as a whole.

Verizon Communications (VZ) netted $170.05 based on a median target price estimate from thirnty-one analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 46% less than the market as a whole.

The average net gain in dividend and price was estimated at 29.12% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 24% less than the market as a whole.

The Dividend Dogs Rule

Stocks earned the "dog" moniker by exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where (3) yield (dividend/price) grew higher than their peers. Thus, the highest yielding stocks in any collection became known as "dogs." More precisely, these are, in fact, best called, "underdogs".

50 Top S&P 500 Dividend Dogs By Yield

Actionable Conclusion (11-20) 10 Top S&P 500 Dividend Stocks By Yield

Top ten S&P 500 stocks selected 7/10/17 by yield represented six of eleven Morningstar sectors. Top yielding stock, CenturyLink (CTL) [1] was the one of three communications services sector representatives in the top ten. The other two placed seventh, and eighth, Verizon Communications (VZ) [7] and, AT&T, Inc. (T) [8].

In second place by yield, Macy's (M) [2] was tops of three consumer cyclical representative firms. The others placed fifth, and ninth, Kohl's (KSS) [5], and Ford Motor (F) [9].

One industrials sector firm placed third, Iron Mountain (IRM) [3]. A single technology representative placed fourth, Seagate Technology (STX) [4]. The real estate sector was represented in sixth place by Kimco Realty (KIM) [6].

Finally, an energy sector representative placed tenth, Helmerich & Payne (HP) [10], to complete the S&P 500 top ten for July.

Actionable Conclusions: (21-30) Top Ten S&P 500 Dogs Showed 13.95% To 29.51% Upsides To July, 2018; (31) Worst Downside From One of Two Was -1.88%.

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. Brokers Calculated (32) A 12.16% Median Target Price Upside and (33) 12.66% Net Gain From 30 S&P 500 Upside Dogs Come July 2018

Aristocrats top thirty stocks were graphed below to show relative strengths by dividend and price as of July 30, 2017, and those projected by analyst mean price target estimates to the same date in 2018.

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 2018.

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 2017. Projections based on estimated dividend amounts from $1,000 invested in the ten stocks and aggregate 1-year analyst target share prices from Yahoo Finance created the 2018 data points green for price and blue for dividend.

YChart analysts' median 1-year targets projected a 10.8% 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 11.74% in the coming year. Notice, price moving higher than dividend in the coming year forecasts a transition to a Dow-like overbought condition for S&P 500 top yield dogs in 2018.

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 optimal for a valid projection estimate. Estimates provided by one analyst were generally 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.

Analysts Forecast A 17.64% Advantage For 5 Highest Yield, Lowest Priced S&P 500 Dividend Stocks To July 2018

Ten top S&P 500 dividend dogs were culled by yield for their monthly update. Yield (dividend / price) results verified by YCharts did the ranking. The master list was prescreened to only include firms with net returns greater than -2%.

As noted above, top ten S&P 500 dividend dogs selected 5/30/17 showing the highest dividend yields represented six of eleven in the Morningstar sector scheme.

Actionable Conclusions: (34) Analysts Projected 5 Lowest-Priced of the Top Ten Highest-Yield S&P 500 Dogs Delivering 24.25% Vs. (35) 20.61% Net Gains by All Ten by July, 2018

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Dividend S&P 500 kennel by yield were predicted by analyst 1-year targets to deliver 24.52% more gain than $5,000 invested as $.5k in all of those ten. The third lowest priced S&P 500 top yield dog, Macy's (M), was projected to deliver the best net gain of 34.67%.

The five lowest-priced top yield S&P 500 dividend dogs for July 10 were: Ford Motor (F); Kimco Realty (KIM); Macy's (M); CenturyLink (CTL); Iron Mountain (IRM), with prices ranging from $11.34 to $33.46.

Five higher-priced S&P 500 dividend dogs for July 10 were: Kohl's (KSS); AT&T, Inc. (T); Seagate Technology (STX); Verizon Communications (VZ); Helmerich & Payne (HP), whose prices ranged from $36.63 to $53.29.

The distinction between 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 apply the dividend dog data featured in this article and this instablog to aid your safe investing. --Fredrik Arnold

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.

Three of these top S&P 500 pups by yield qualify as valuable catches! Find them among the now 52 Dogs of the Week I found on The Dividend Dog Catcher premium site, or the forty-seven Dogs of the Week II now available. Click here to subscribe or get more information.

Make investing fun

Suggest a favorite stock for my next crowd-sourced follower favorite article in June. Message me with your favorite stock ticker. I will include it in that article. Just send the ticker symbol for your favorite dividend stock (or two) by clicking on the envelope icon next to my name below the headline of this article, or comment in the comments sector below. Leave your top ticker, and remember: Root for the Underdog.

Stocks listed above were suggested only as possible reference points for your S&P500 dog 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; YCharts.com; finance.yahoo.com; analyst mean target price by Thomson/First Call in YahooFinance. Dog photo: nascartalk.nbcsports.com

Disclosure: I am/we are long T, 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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