Dividend Dog Tales Of The Russell 1000 In March

by: Fredrik Arnold

A once per year trading system triggered by yield, called the Dogs of the Index can be used to determine the best-of-the-best dividend stocks. The dogs system empowers investors with all the wisdom and knowledge of the well-paid wizards of investment and publishing for free, as those investors select the highest yielding and lowest priced constituents from a collection of equities built by experts.

The charts below for the Russell 1000 Index reveal high yielding stocks whose prices increased (or whose dividends decreased) as candidates to be sold off once each year in order to sweep gains and reinvest the seed money into higher yielding stocks in the same index.

Two key metrics determined the yields to rank the Russell 1000 dog stocks: (1) stock price; and (2) annual dividend. Dividing the annual dividend by the price of the stock declared the percentage yield by which each dog stock was ranked. Thus the investor was able to follow, trade, and await results from an investment in the lowest priced, highest yielding five or ten stocks in the index.

Investment empowerment from the Russell 1000

Listed below are the top thirty Russell 1000 stocks by yield as of 3/13/12 as per Yahoo Finance data. Russell Investments says that "the Russell 1000 Index offers investors access to the extensive large-cap segment of the U.S. equity universe, representing approximately 90% of the U.S. market."

As of March 13, eight of the top ten stocks in this index paying the big dividends were financial sector firms. Of the top thirty Russell 1000 dividend payers, just six were non-financial companies. Two consumer goods, two services, one technology, and one industrial were the non-financial sectors represented. This index is updated annually and the next revision will be in June.

Vertical moves by Russell 1000 Index dividend payers

Since October 2011, one firm has held the top rank yellow tint of the Russell list, American Capital Agency (NASDAQ:AGNC), despite its 12% January divided reduction from $5.60 to $5.00 annually.

Color code shows: (Yellow) firms listed in first position at least once between November 2011 and March 2012; (Cyan Blue) firms listed in tenth position at least once between November 2011 and March 2012; (Magenta) firms listed in twentieth position at least once between November 2011 and March 2012; (Green) firms listed in thirtieth position at least once between November 2011 and March 2012. Duplicates are depicted in color for highest ranking attained.

Click on charts below to enlarge:

Bullish vertical moves since February 10 were made by eight of the top ten Russell 1000 dogs: Capstead Mortgage (NYSE:CMO) share price increased 2.04%; Anworth Mortgage Asset (NYSE:ANH) saw shares pop 2.31%; Hatteras Financial (NYSE:HTS) saw a 4.38% price bump; Apollo Investment (NASDAQ:AINV) shares climbed 1.99%; Blackrock Kelso Capital Corporation (NASDAQ:BKCC) shares jumped up 10.92%; Teekay Tanker (NYSE:TNK) shares swelled 10.34%; Vector Group (NYSE:VGR) prices curled up 3.94%; New York Community Bank (NYB) share price inflated 6.25%.

Bearish moves for the same period were confined to the top and bottom stocks of the top ten: Top stock American Capital Agency price may have dropped 1.125% due to its January dividend cut; Piedmont Office Realty (NYSE:PDM) saw its dividend yield jump enough to propel it into tenth position from twelfth as its stock price plunged 2.05%.

Dividend vs. Price results for Russell 1000 Index Top 10

Below is a graph of the relative strengths of the top ten Russell 1000 index stocks by yield as of March 13, 2012. Projected annual dividend history from $1,000 invested in the ten highest yielding stocks each month and the total single share prices of those ten stocks created the data points for each of the past five months shown in green for price and blue for dividends.

Russell 1000 components showed projected dividend totals for $1,000 invested in the top ten Russell stocks dropping dramatically toward their aggregate total single share prices. The bulls did hold sway again since November and Russell dividend yields dropped as stock prices increased. Since October, dividends from $1k invested in each of the top ten stocks declined 26.36%, while single share prices for those stocks rose 13.84%.

Will the Russell 1000 price gains continue a rampage into April? Stay tuned.

Disclaimer: This article is for informational and educational purposes only and shall 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 are listed without consideration of fees, commissions, taxes, penalties, or interest payable due to purchasing, holding, or selling same.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.