Actionable Conclusions (1-10): Analysts Estimated 25.85% To 46% Net Gains For Ten S&P 500 Dogs To December 2019
Three of the ten top S&P 500 dividend stocks by yield were among the top ten gainers for the coming year based on analyst one-year target prices. (They are tinted gray in the chart above). Thus, this yield-based forecast for S&P 500 dogs was graded by Wall St. Wizards as 30% accurate.
Projections were based on estimated dividends from $1,000 invested in each of the highest yielding stocks and their aggregate one-year analyst median target prices, as reported by YCharts. Note: one-year target prices by lone analysts were not applied. Ten probable profit-generating trades projected to December 5, 2019, were:
Western Digital Corporation (WDC) was projected to net $460.02 based on a median target price estimate from thirty analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 15% more than the market as a whole.
Coty Inc. (COTY) was projected to net $392.36 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 60% less than the market as a whole.
Williams Companies (WMB) netted $351.66 based on a median estimate from twenty-two analysts plus dividends. The Beta number showed this estimate subject to volatility 59% more than the market as a whole.
Invesco Ltd. (IVZ) was projected to net $347.13 based on dividends plus a mean target price estimate from seventeen analysts less broker fees. The Beta number showed this estimate subject to volatility 50% more than the market as a whole.
Weyerhaeuser Co. (WY) was projected to net $331.91 based on dividends plus median target price estimates from eleven analysts less broker fees. The Beta number showed this estimate subject to volatility 50% more than the market as a whole.
Kinder Morgan (KMI) was projected to net $328.92 based on a median target estimate from twenty-two analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 32% less than the market as a whole.
Principal Financial Group (PFG) was projected to net $315.51 based on the median target price estimate from thirteen analysts plus annual dividend less broker fees. The Beta number showed this estimate subject to volatility 53% more than the market as a whole.
International Business Machines Corp. (IBM) was projected to net $307.96 based on dividends plus a mean target price estimate from twenty analysts less broker fees. The Beta number showed this estimate subject to volatility 20% more than the market as a whole.
Occidental Petroleum (OXY) was projected to net $287.88 based on dividends plus the median target price estimate from twenty-four analysts less broker fees. The Beta number showed this estimate subject to volatility 18% less than the market as a whole.
The Kraft Heinz Co. (KHC) was projected to net $258.51 based on dividends plus a median target estimate from twenty-three brokers less transaction fees. The Beta number showed this estimate subject to volatility 43% less than the market as a whole.
The average net gain in dividend and price was estimated at 41.88% on $10k invested as $1k in each of these ten stocks. These gain estimates were subject to average volatility 15% more 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 Stocks By Yield
Actionable Conclusions (11-20): 10 Top S&P 500 Dividend Stocks By Yield
Top ten S&P 500 stocks selected 12/5/18 by yield represented eight of eleven Morningstar sectors. First place was claimed by a lone industrial sector representative, Iron Mountain Inc. (IRM) . One from the consumer cyclical sector placed second, Ford Motor Co. (F) .
Then, a representative from financial services placed fifth, Invesco Ltd. , followed by a lone technology pup claiming sixth place, Seagate Technology PLC (STX) .
The lone real estate sector representative placed seventh, Macerich Co. (MAC) . That one was followed by two energy representatives, in ninth and tenth places, ONEOK Inc. (OKE)  and Williams Companies Inc. , to complete the S&P 500 top ten by yield for December.
Actionable Conclusions: (21-30) Top Ten S&P 500 Dogs Showed 22.85% To 33.4% Upsides To December 2019; (31) Four Lowly Downsiders Ranged -1.14% To -5.16%.
To quantify top dog rankings, analyst mean price target estimates provide a "market sentiment" gauge of upside potential. Added to the simple high-yield metrics, analyst mean price target estimates became another tool to dig out bargains.
Analysts Forecast A 15.55% Advantage For 5 Highest Yield, Lowest Priced S&P 500 Dividend Stocks To December 2019
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 -15%.
As noted above, top ten S&P 500 dividend dogs selected 12/5/18 showing the highest dividend yields represented eight of eleven in the Morningstar sector scheme.
Actionable Conclusions: Analysts Predicted 5 Lowest-Priced of the Top Ten Highest-Yield S&P 500 Dogs (32) Delivering 28.55% Vs. (33) 24.7% Net Gains
$5,000 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 one-year targets to deliver 15.55% more gain than $5,000 invested as $.5k in all ten. The very lowest priced selection, Coty Inc., was projected to deliver the best net gain of 39.24%.
The five lowest-priced top-yield S&P 500 dividend dogs for December 5 were: Coty Inc., Ford Motor, Invesco Ltd, Williams Companies Inc., and AT&T, Inc., with prices ranging from $7.93 to $30.73.
Five higher-priced S&P 500 dividend dogs for December 5 were: Iron Mountain, Seagate Technology PLC, Macerich Co., Altria Group Inc., and ONEOK Inc., whose prices ranged from $33.92 to $60.60.
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, this glossary instablog to interpret my abbreviated headings, 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.
Stocks listed above were suggested only as possible reference points for your S&P 500 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: dogsome.net
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Disclosure: I am/we are long 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.