Seeking Alpha

64 S&P 500 Dividend Dogs Hunt In November

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Includes: CTL, F, GPS, HP, IRM, M, MAC, MO, NLSN, OXY, SLB, WMB
by: Fredrik Arnold
Fredrik Arnold
Dividend investing, Growth, momentum, research analyst
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." - according to us.spindices.com.

64 S&P 500 dogs showed top November net-gains ranging 23.58-407.38% topped by Nielsen Holdings as of 10/31/19. MO, F, GPS, M, WMB, HP, OXY, SLB, MAC, and NLSN averaged 32.1% projected net gains.

The top 64 S&P 500 index dogs ranged 3.59-10.91% in estimated annual yield. Top 10, WMB, NLSN, F, IRM, MO, HP, CTL, OXY, M, and MAC averaged 7.97%.

S&P 500 top return ten firms by November broker target-price upsides, SPG, F, GPS, M, HP, WMB, OXY, MAC, SLB, and NLSN averaged 25.57%.

$5k invested in the lowest-priced five October top-return S&P 500 top yield dividend dogs showed 26.91% more net-gain than from $5k invested in all ten. Little, low-price S&P 500 top returns dogs ruled the pack for October.

Foreword

The many ways to evaluate the S&P 500 list include pitfalls and perils. A straight listing by yield, for example, includes as many top dogs poised to fall amid a few rising stars. This list narrowed the field to 64 stocks with (mostly) positive returns over the past year, and yields greater than 3.5%, assuming their good fortune holds. Nevertheless, past results are never a guarantee of future fates.

Actionable Conclusions (1-10): Analysts Forecast 23.6% To 40.37% Top Ten Net Gains To November 2020

Eight of the ten top S&P 500 dividend dogs by yield were among these top ten gainers for the coming year based on analyst one-year target prices (they are tinted gray in the chart below). Thus, this yield-based forecast for S&P 500 dogs was graded by Wall St. Wizards as 80% accurate.

These projections were based on estimated dividends from $1,000 invested in each of the highest yielding stocks and the median of aggregate one-year analyst target prices, as reported by YCharts. Note: one-year target prices by lone analysts were not applied. Ten probable profit-generating trades projected to October 31, 2020, were:

Source: YCharts.com

Nielsen Holdings PLC (NLSN) was projected to net $403.65 based on median target price estimates from fifteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to risk 8% less than the market as a whole.

Macerich Co (MAC) was projected to net $397.28 based on dividends plus mean target price estimate from twenty analysts less broker fees. The Beta number showed this estimate subject to risk 27% less the market as a whole.

Schlumberger Ltd (SLB) was projected to net $360.47 based on dividends plus median target price estimates from thirty-two analysts less broker fees. The Beta number showed this estimate subject to risk 50% less than the market as a whole.

Occidental Petroleum (OXY) netted $359.36 based on a median estimate from twenty-six analysts plus dividends. The Beta number showed this estimate subject to risk 59% more than the market as a whole.

Helmerich & Payne Inc. (HP) was projected to net $332.37 based on median target price estimates from twenty-six analysts plus annual dividend less broker fees. The Beta number showed this estimate subject to risk 59% more than the market as a whole.

Williams Companies (WMB) was projected to net $326.59 based on median target price estimates from twenty-four analysts plus annual dividend less broker fees. The Beta number showed this estimate subject to risk 54% more than the market as a whole.

Macy's Inc. (M) was projected to net $296.72 based on dividends plus median target price estimates from sixteen analysts less broker fees. The Beta number showed this estimate subject to risk 37% less than the market as a whole.

Gap Inc. (GPS) was projected to net $250.19 based on median target estimates from twenty-four analysts plus dividends less broker fees. The Beta number showed this estimate subject to risk 29% less than the market as a whole.

Ford Motor Co. (F) was projected to net $247.23 based on dividends plus median target price estimates from twenty analysts less broker fees. The Beta number showed this estimate subject to risk 10% more than the market as a whole.

Altria Group Inc. (MO) was projected to net $216.13 based on median target price estimates from seventeen analysts plus the estimated annual dividend less broker fees. The Beta number showed this estimate subject to risk 59% less than the market as a whole.

The average net gain in dividend and price was estimated at 32.1% on $10k invested as $1k in each of these ten stocks. These averaged risk equal to the market as a whole.

Source: camilyan.wordpress.com

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".

64 S&P 500 Top Return Dividend Dogs By Broker Target Gains

Source: us.spindices/YCharts

64 S&P 500 Top Return Dividend Dogs By Yield

Source: us.spindices/YCharts

Actionable Conclusions (12-21): 10 Top Return S&P 500 Dividend Dogs By Yield

Top ten S&P 500 top return stocks selected as of 10/31/19 by yield represented five of eleven Morningstar sectors. First place was claimed by one of two real estate sector representatives, Macerich Co (MAC) [1]. The other real estate sector stock placed seventh, Iron Mountain Inc. (IRM) [7].

Two consumer cyclical sector representatives placed second and eighth, Macy's Inc. (M) [2] and Ford Motor Co, (F) [8]. Three energy leaders placed third, fifth, and tenth, Occidental Petroleum Corp. (OXY) [3], Helmerich & Payne Inc. (HP) [5], and Williams Companies Inc. (WMB) [10].

A single representative from the consumer defensive sector placed sixth, Altria Group Inc. (MO) [6]. Finally, one industrials representative placed ninth, Nielsen Holdings plc (NLSN) [9], to complete the S&P 500 top returns ten dogs by yield for November.

Actionable Conclusions: (22-31) Top Ten S&P 500 Stocks Showed 18.33% To 34.42% Upsides To November 2020; (32) No Downsiders Were Found

Source: YCharts.com

To quantify top dog rankings, analyst median 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 4.06% Disadvantage For 5 Highest Yield, Lowest Priced S&P 500 Dividend Dogs To November 2020

Ten top S&P 500 dividend dogs were culled by yield for this monthly update. Yield (dividend/price) results verified by YCharts did the ranking.

Source: YCharts.com

As noted above, top ten S&P 500 dividend dogs selected 10/31/19 showing the highest dividend yields represented five of eleven in the Morningstar sector scheme.

Actionable Conclusions: Analysts Forecast 5 Lowest-Priced Of the Top Ten Highest-Yield S&P 500 Top Returns Dogs (32) Delivering 27.08% Vs. (33) 28.22% Net Gains by All Ten Come November 2020

Source: YCharts.com

$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 1-year targets to deliver 4.06% less gain than $5,000 invested as $.5k in all ten. The fourth lowest-priced selection, Nielsen Holdings PLC (NLSN), was projected to deliver the best net gain of 40.46%.

Source: YCharts.com

The five lowest-priced top-yield S&P 500 top returns dividend dogs as of November 31 were: Ford Motor Co. (F), CenturyLink Inc. (CTL); Macy's Inc. (M); Nielsen Holdings PLC (NLSN); Williams Companies Inc. (WMB), with prices ranging from $8.59 to $22.31.

Five higher-priced S&P 500 top returns dividend dogs as of October 31 were: Macerich Co. (MAC); Iron Mountain Inc. (IRM); Helmerich & Payne Inc (HP); Occidental Petroleum Corp (OXY); Altria Group Inc (MO), whose prices ranged from $27.50 to $44.79.

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.

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&P500 top returns dividend dog purchase or sale research process. These were not recommendations.

Disclosure: I am/we are long PFE. 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.

Additional disclosure: 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: camilyan.wordpress.com