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July Basic Materials: Coal Tops By Yield But Cellulose, Carbon, Copper, And Chemicals Are Best By Brokers

Summary

Annual yields of ten Basic Materials leaders averaged 9.74% as equities charged bullishly after June as Dow dogs did too.

Yield from LIFZF, RIO, CINR, NRP, AHGP, CWXZF, ARLP, KRO, UAN, and SXCP ranged from 6.78% to 16.33% as of July 25 closing prices.

Analysts' 1-year targets pegged top ten upsides at 49.87% average with net gains 53.95% for ARLP, BBL, UFS, RIO, CF, NSU, BAK, KRO, DDC, FBR, with CWXZF and DRD losers.

Thirty Basic Materials firms averaged 15.8% upsides and 21.6% net gains. Top ten gain predictions ranged from 15.5% to 262.16%.

Top ten Basic Materials sector stocks by yield are forecast by analysts to gain 1.92% LESS from $5k invested in the lowest priced five than from $5k in all ten.

July Basic Materials SML Dogs

Yield (dividend/price) results from here verified by Yahoo Finance were calculated as of July 25, 2016 for Small, Mid, & Large cap Basic Materials sector stocks. Small cap firms were valued at $200M(illion) to $2B(illion); Mid cap firms were worth $2B to $10B; Large caps were valued above $10B. Those yield results led to the actionable conclusions discussed below.

Dividend Dogs Rule

The "dog" moniker was earned in three steps: (1) any stock paying a reliable, repeating dividend (2) whose price fell to a point where its yield (dividend/price) (3) grew higher than its peers (such as this Industrials collection), is so tagged. Thus, the highest yielding stocks in any collection became known as "dogs."

Fifty Money Dogs

Since late 2011, this report series has applied dog dividend methodology to uncover possible buy opportunities in each of eight major market sectors listed by Yahoo Finance: basic materials (BasMats), consumer goods (ConGo), financials (Fins), healthcare (Heal), industrial goods (IndiGo), services (Svcs), technology (Tec), and utilities (Utes). In the past two years, the series expanded to report (1) dividend yield; (2) price upside; (3) net gain results based on analyst 1-year target projections.

The series was recently revised to report on 11 sectors as defined by Morningstar and tracked here: Basic Materials, Communication Services, Consumer Cyclical, Consumer Defensive, Energy, Financial Services, Healthcare, Industrials, Real Estate, Technology, and Utilities.

This article intended to reveal bargain stocks to buy and hold up to one year. See Dow 30 article for 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, as desired.

Dog Metrics Followed Basic Materials Stocks by Yield

Actionable Conclusion (1): Coal Boasts Top Yields As Agricultural Inputs, Specialty Chemicals, Building Materials, & Industrial Metal Dogs Trail

Coal, steel, industrial metals, & chemical industry firms sourced nine of the top ten basic materials sector stocks showing the biggest dividend yields for July, while a building material dog joined the chase.

Top yield dog was the coke coal stalwart, SunCoke Energy Partners (NYSE:SXCP) [1]. Three more coal firms placed fourth, sixth, and seventh: Alliance Resource (NASDAQ:ARLP) [4], Alliance Holdings (NASDAQ:AHGP) [6], and Natural Resource Partners (NYSE:NRP) [7].

Second place went to CVR Partners (NYSE:UAN) [2] mining agricultural inputs. Third place was occupied by Kronos Worldwide (NYSE:KRO) [3], the specialty chemicals firm listed as leader in May. A building materials supplier was fifth, CanWel Building Materials (OTC:CWXZF) [5].

Two industrial metals firms cracked the top ten this month in eight and ninth places, Ciner Resources (NYSE:CINR) [8], and Rio Tinto (NYSE:RIO) [9].

A steel making outfit placed tenth, Labrador Iron Ore Royalty (OTCPK:LIFZF) [10],to complete the top ten Basic Materials sector dogs by yield list as of July 25.

Basic Materials Top Ten Price vs. Dividend Results Matched Those Of The Dow Dogs

Relative strengths of the top ten Basic Materials sector dogs graphed below by yield were plotted as of market close 7/25/2016 and compared to those of the Dow. Projected annual dividend history from $10,000 invested as $1k in each of the ten highest yielding stocks and the total single share prices of those ten stocks created the data points shown in green for price and blue for dividend.

Actionable Conclusions: (2) Basic Materials Top Ten Charged Bullishly, (3) Dow Dogs Too

Dividend from $10k invested as $1k in each of the basic materials top ten dogs fell after June, while the aggregate single share price of the top ten grew. Dividend dropped at a rate of 8.5% while total single share price jumped up 29%.

Dow dogs also charged bullishly after June. Projected annual dividend from $10k invested as $1K in each of the top ten dropped 1.73%. At the same time, aggregate single share price increased 3.2% to power that charge.

The Dow dogs overbought condition (in which aggregate single share price of the ten exceeded projected annual dividend again after June.

Actionable Conclusion (4): Dow Dogs Expanded Their Overbought Status

The gap was $343 or 89% for August 2015. September brought some sanity back to the runaway Dow when the gap stood at $279 or 67%. October increases pushed the gap to $334 or 85%. November price over dividend gap went to $303 or 78%. As of December 4, the gap stood at $302 or 78%.

Come January 2016, prices of the ten Dow top dogs fell, and dividends rose, as Boeing (NYSE:BA) replaced General Electric (NYSE:GE) in the top ten to push the overbought gap down to $215 or 53%. February market moves put the gap at $208 or 48%.

March put the chasm at $293 or 73%. April saw the top ten to widen the gap to $394 or 102%. A May retreat was triggered by...


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