- "The S&P 500 High Dividend Index is a benchmark for income seeking equity investors. It measures performance of 80 high-yield S&P 500 companies and is equally weighted."
- 80 S&P 500 high dividend yield index dogs showed top-ten March net gains ranging 38.29%-68.63% topped by Valero 3/4/20. HP, F, NWL, COTY, XOM, WMB, CCL, OXY, SLB, and VLO averaged 49.18% broker-projected net gains.
- High dividend yield index dogs ranged 2.93%-11.93% in estimated annual yield. Top 10, IRM, MO, KSS, CTL, HP, WMB, F, CVX, IVZ, OXY, and M, averaged 8.57%.
- S&P 500 ten top high yield index firms by March broker target-price upsides, XOM, WRK, WMB, UNM, CCL, GM, OXY, PSX, SLB, and VLO, averaged 47.65%.
- $5k invested in the lowest-priced five March high-yield S&P 500 index dividend dogs showed 3.04% more net gain than from $5k invested. Little, low cost dividend dogs came back to rule this pack for March.
- This idea was discussed in more depth with members of my private investing community, The Dividend Dog Catcher. Get started today »
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 high dividend yield index list narrows the field to 80 stocks with (mostly) positive returns over the past year and yields greater than 2.93%, assuming their good fortune holds. Nevertheless, past pleasantries are never a guarantee of future fates.
"The S&P 500 High Dividend Index serves as a benchmark for income seeking equity investors. The index is designed to measure the performance of 80 high yield companies within the S&P 500 and is equally weighted to best represent the performance of this group, regardless of constituent size." - us.spindices.com
Actionable Conclusions (1-10): Analysts Forecast 38.29% To 68.63% Top Ten S&P Top-Return Net Gains To March 2021
Four of ten top S&P 500 high dividend yield index dogs by yield were among these top ten gainers for the coming year based on analyst 1-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. brokers as 40% 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 March 4, 2021 were:
Valero Energy Corp. (VLO) was projected to net $686.33, based on dividends, plus a mean target price estimate from twenty-two analysts, less broker fees. The Beta number showed this estimate subject to risk 56% over the market as a whole.
Schlumberger Ltd. (SLB) netted $644.40 based on the median of estimates from twenty-two analysts, plus dividends. The Beta number showed this estimate subject to risk 69% greater than the market as a whole.
Occidental Petroleum (OXY) was projected to net $583.12, based on dividends, plus the median of target price estimates from twenty-five analysts, less broker fees. The Beta number showed this estimate subject to risk 6% greater than the market as a whole.
Carnival Corp. (CCL) was projected to net $518.02, based on the median of target price estimates from twenty-one analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk 66% less than the market as a whole.
Williams Companies (WMB) was projected to net $457.57, based on dividends, plus the median of target price estimates from twenty-six analysts, less broker fees. The Beta number showed this estimate subject to risk 58% greater than the market as a whole.
Exxon Mobil Corp. (XOM) was projected to net $422.29, based on dividends, plus the median of target price estimates from twenty-four analysts, less broker fees. The Beta number showed this estimate subject to risk 10% more than the market as a whole.
Coty Inc. (COTY) was projected to net $413.87, based on the median of target price estimates from sixteen analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk 38% less than the market as a whole.
Newell Brands Inc. (NWL) was projected to net $406.82, based on a median of target price estimates from thirteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 14% more than the market as a whole.
Ford Motor Co. (F) was projected to net $402.38, based on a median of target price estimates from nineteen analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk 18% more than the market as a whole.
Helmerich & Payne Inc. (HP) was projected to net $382.87, based on a median target estimates from twenty-six analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 54% more than the market as a whole.
The average net gain in dividend and price was estimated at 49.18% on $10k invested as $1k in each of these ten stocks. Their beta averaged risk was 17% over 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 S&P 500 High Dividend Yield Index Dogs By Broker Target Gains
50 S&P 500 High Dividend Yield Index Dogs By Yield
Actionable Conclusions (11-20): 10 High Dividend Yield S&P 500 Dividend Dogs By Yield
Top ten S&P 500 top return stocks selected 3/4/20 by yield represented six of eleven Morningstar sectors. First place was claimed by one of three consumer cyclical representatives, Macy's Inc. (M) . The others placed fourth and eighth, Ford Motor Co. , and Kohl's Corp. (KSS) .
Three energy representatives placed second, fifth, and sixth, Occidental Petroleum Corp. , Williams Companies Inc. , and Helmerich & Payne Inc. . Then a lone financial services representative placed third, Invesco Ltd. .
Then one communication services sector company placed seventh, CenturyLink Inc. (CTL) , while ninth place was occupied by the consumer defensive sector representative, Altria Group Inc. (MO) . Finally A lone real estate sector representative placed tenth, Iron Mountain Inc. (IRM), to complete the S&P 500 high dividend yield index top ten dogs by yield for March 20-21.
Actionable Conclusions: (21-30) Top Ten S&P 500 High Dividend Index Stocks Showed 32.77% To 63.52% Upsides To March 2021; (31) No Downsiders Were Found
To quantify top dog rankings, analyst median price target estimates provided 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 3.04% Advantage For 5 Highest Yield, Lowest Priced S&P 500 High Dividend Yield Index Dogs To March 2021
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.
As noted above, ten top S&P 500 high dividend yield index dogs selected 3/4/20 showing the highest dividend yields represented six of eleven in the Morningstar sector scheme.
Actionable Conclusions: Analysts Forecast 5 Lowest-Priced Of the Top Ten Highest-Yield S&P 500 High Dividend Yield Index Dogs (32) Delivering 35.13% Vs. (33) 34.10% Net Gains by All Ten Come March 2021
$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 3.04% more gain than $5,000 invested as $.5k in all ten. The seventh lowest-priced selection, Occidental Petroleum Corp., was projected to deliver the best net gain of 58.31%.
The five lowest-priced S&P 500 high dividend yield index dogs as of March 4 were: Ford Motor Co.; CenturyLink Inc.; Macy's Inc.; Invesco Ltd.; Williams Companies Inc., with prices ranging from $7.08 to $19.42.
Five higher-priced S&P 500 high dividend yield index dogs as of March 4 were: Iron Mountain Inc.; Occidental Petroleum Corp.; Helmerich & Payne Inc.; Kohl's Corp.; Altria Group Inc., whose prices ranged from $32.71 to $43.93.
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&P 500 high dividend yield index dog 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: dogproductpicker.com
Get The Entire S&P500 'Safer' Dividend Dog Story
Click here to subscribe to The Dividend Dogcatcher. Get more information, the follow-up to this article, and a free two week trial.
Catch A Dog On Facebook At 8:45 AM every NYSE trade day on Facebook/Dividend Dog Catcher, A Fredrik Arnold live video highlights a portfolio candidate in the Underdog Daily Dividend Show!
Root for the Underdog. Comment below on any stock ticker to make it eligible for my next FA follower report.
This article was written by
Fredrik Arnold is a retired quality service analyst sharing investment ideas with a primary focus on dividend yields by utilizing free cash flow and one-year total returns as trading indicators.He is the leader of the investing group The Dividend Dog Catcher, where he shares a minimum of one new dividend stock idea per week with focus on yield or extraordinary financial circumstances. All ideas are archived and available after weekly announcement. Learn more.
Analyst’s Disclosure: I am/we are long T, TJX. 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.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.