This article reports results for the S&P 500 Aristocrats as of April 18, using a once per year trading system triggered by yield-- called the "Dogs of the Index"-- to determine the best of the best dividend stocks.
Previous articles in this series reported April results from 3x9 and 1X9+1 Sector indices, the Russell 1000, S&P 500, NYSE International 100, NASDAQ 100, and Dow 30 indices. Upcoming articles this week report dog metrics applied to one additional index: JPMorgan New Sovereigns.
Dogs of the Index Metrics
Two key numbers determined the yields that ranked stocks in each index: (1) stock price; (2) annual dividend. Dividing the annual dividend by the price of the stock declared the percentage yield by which each dog stock was ranked. Investors selected portfolios of five or ten stocks in any one index or sector by yield to trade. They awaited the results from their investments in the lowest priced, highest yielding stocks selected, and prayed that the price of every stock they now owned climbed higher (having locked in a high yield percentage at purchase).
This Dogs of the Index strategy, popularized by Michael B. O'Higgins in the book "Beating The Dow" (HarperCollins, 1991), revealed how high yielding stocks whose prices increase (and whose dividend yields therefore decrease) could be sold off once each year to sweep gains and reinvest seed money into higher yielding stocks in the same index.
Investor Empowerment from the S&P 500 Aristocrats
Listed below are thirty S&P 500 Aristocrats stocks by yield as of 4/18/12 per Yahoo Finance data. McGraw Hill, publisher of this index, states, "The S&P 500® Dividend Aristocrats index measures the performance of large cap, blue chip companies within the S&P 500 that have followed a policy of increasing dividends every year for at least 25 consecutive years."
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Consumer goods firms constituted four of the top ten stocks paying the biggest dividends on the S&P 500 Aristocrats as of April 18. The leading consumer goods firm, Pitney Bowes (PBI) took over the top spot after Century Link (CTL) left the list in January, when CTL failed to increase its dividend in 2011 and broke the 25 year requirement to be listed.
For these thirty S&P Aristocrat dividend payers, one technology company, ten consumer goods, three financial, five services, four basic materials, two industrials, three health care, one utility, and one conglomerate represent the market sectors.
Up and Down Moves for S&P 500 Aristocrats index Dogs
As mentioned above, Pitney Bowes wears the yellow tint of the top dog in this index.
Color code shows: (Yellow) firms listed in first position at least once between December 30, 2011 and April 2012; (Cyan Blue) firms listed in tenth position at least once between December 30, 2011 and April 2012; (Magenta) firms listed in twentieth position at least once between December 30, 2011 and April 2012; (Green) firms listed in thirtieth position at least once between December 30, 2011 and April 2012. Duplicates are depicted in color for highest ranking attained.
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Bullish upward price moves since March 13 were made by just four present and former top ten Aristocrat index dogs: Leggett & Platt (LEG) posted a 1.09% gain; Kimberly Clark (KMB) put up a 3.91% price improvement; Clorox Co. (CLX) price rose 2.89%; just one step out of the top ten, Abbott Laboratories (ABT) posted a 2.49% price gain.
Bearish downward price moves for the same period hit the rest of the dogs of the S&P 500 Aristocrats. Top dog Pitney Bowes showed a 6.98% price drop; AT&T Inc (T) showed a 2.23% price slump; HCP Inc. (HCP) marked a 3.25% decline; Cincinnati Financial Co. (CINF) charted a 3.29% drop; Consolidated Edison (ED) sparked a .989x% decline; Sysco Corp (SYY) delivered a 1.72% loss; Johnson & Johnson (JNJ) stock price ticked down 2.8%.
Dividend Vs. Price Results for S&P 500 Aristocrat Dogs
Relative strengths of the top ten S&P 500 Aristocrats Index stocks by yield was graphed as of April 18, 2012. Projected annual dividend history from $1000 invested in each of the ten highest yielding stocks each month and the total single share prices of those ten stocks created the data points for the past six months shown in green for price and blue for dividends.
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S&P 500 Aristocrats Index constituents reflected bear market symptoms as projected dividend totals for $1000 invested in the top ten increased .343% as their aggregate total single share prices decreased 14.84% over the six months graphed.
The above graph turned especially bearish between March 13 and April 18, as S&P 500 Aristocrats top ten dividends from $1k invested in each of the dogs increased 2.64%, while single share prices for those stocks decreased 6.87% for the month.
Will S&P 500 Aristocrats Index bullish price gains emerge in May? Stay tuned. Meanwhile, a monthly summary will soon compare results in yield and price for all nine indices reported in this series: 3x9 and 1X9+1 Sector indices; Russell 1000; S&P 500; NYSE International 100; NASDAQ 100; Dow 30; S&P 500 Aristocrats; JPMorgan Sovereigns.
Disclosure: I am long T, JNJ.
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.
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