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Dow Dogs: 16.27% Higher Returns By 5 Lowest-Priced As Of August 6 Per Yahoo

  • The top ten Dow Industrial dividend stocks by yield showed 16.27% greater net gain from $5k invested in the lowest-priced five than from the same investment in all ten.
  • Annual dividends estimated by Yahoo divided by closing stock prices as August 6 determined the yields. Analyst net target prices were employed to calculate gains one year out.
  • The five lowest-priced Dow stocks per Yahoo are GE, INTC, VZ, DD, and PG.
  • The five higher-priced stocks completing the Dow Yahoo top ten are CAT, XOM, CVX, MCD, and IBM.
  • Consider these stocks as reference points for your August Dow stock investment investigations.

Top Ten for the Money

This article refines and distinguishes an earlier report that revealed Dow 30 bargain stocks to buy and hold for one year. See that article for an explanation of the term "dogs" for stocks reported, based on Michael B. O'Higgins' book "Beating The Dow" (HarperCollins, 1991), now named Dogs of the Dow. O'Higgins' system works to find bargains in any collection of dividend-paying stocks. Utilizing analyst price upside estimates expanded the stock universe to include popular growth equities, if desired.

Dog Metrics Extracted Bargains

Yield (dividend / price) results from Yahoo for 30 Dow industrial stocks as of market closing prices August 6 did the ranking. Yahoo provided this explanation for its calculation of dividends per share:

"The formula for dividends per share, or DPS, is the annual dividends paid divided by the number of shares outstanding.

Per Share


The denominator of the dividends per share formula generally uses the annual weighted average of outstanding shares. The weighted average is also used with the earnings per share formula. However, there are key differences between these two formulas. The numerator for earnings per share is net income, or earnings. The numerator for the dividends per share formula is dividends. Earnings is effectively a continuous process throughout the year whereas dividends are paid at a given moment.


How often a company pays a dividend may warrant consideration for how to calculate the per share portion of the formula when using financial analysis for investments... As with most financial formulas, perspective is important.
"

(click to enlarge)

The top ten Dow dogs by yield from Yahoo Finance as of July/August included just six of nine business sectors by excluding healthcare firm Pfizer (NYSE:PFE) from the top ten, in favor of a basic materials firm, Du Pont (E.I.) (NYSE:DD). The Yahoo list includes basic materials, technology, conglomerates, industrial goods, consumer goods, and services. (Financials were excluded, and the Dow rates Utilities in a separate index.)

Top Ten Highest-Yield Dow Dogs Delivered 14.94% Vs. (2) 12.85% Net Gains by All Ten by August 6, 2016

(click to enlarge)

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Dow dividend kennel by yield were predicted by analyst 1-year targets to deliver 16.27% more net gain than the same amount invested in all ten. The third-highest priced Dow dividend dog, Chevron Corp. (NYSE:CVX), was projected to deliver the best net gain of 25.69%.

The five lowest-priced Dow dividend dogs for August 6 were General Electric (NYSE:GE); Intel Corp. (NASDAQ:INTC); Verizon Communications (NYSE:VZ); Du Pont (E.I.); and Procter & Gamble (NYSE:PG), with prices ranging from $26.03 to $75.74.

The five higher-priced Dow dividend dogs for August 6 were Caterpillar Inc. (NYSE:CAT); Exxon Mobil Corp. (NYSE:XOM); Chevron Corp.; McDonald's Corp. (NYSE:MCD) and International Business Machines (NYSE:IBM), whose prices ranged from $77.46 to $156.32.

This distinction between five low-priced dividend dogs and the general field of ten reflects the "basic method" Michael B. O'Higgins employed for beating the Dow. The added scale of projected gains based on analyst targets contributed 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. It's also the work analysts got paid big bucks to do. A caution is advised, however, as analysts are historically 20-80% accurate on the direction of change and about 0-20% accurate on the degree of the change.

The stocks listed above were suggested only as reference points for a Dow Industrial equities dividend dog stock investment research process in August 2015. These were not recommendations.

The gains/declines as reported do not factor in any tax problems resulting from dividend, profit, or return of capital distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.

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.dividend.com; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance.


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