the Morningstar/YChart (M/Y) utilities sector tallied as of market close June 28 compared with analyst mean target gain results one year hence featured Atlantic Power Company (AT), a Boston-headquartered independent utilities industry firm, showing 40.36% price upside. It was followed by TransAlta Corporation (TAC), a Calgary, Canada, independent utility that displayed 12.24% upside.
The chart above uses one-year mean target prices set by brokerage analysts matched against June 28 closing prices to compare 10 sector stocks, showing the highest upside price potential into 2014 out of 20 selected by yield. The number of analysts providing price estimates was noted after the name for each stock. Three to nine analysts were considered optimal for a valid mean target price estimate. This report series started applying dog dividend methodology in February prompted by Seeking Alpha reader requests. It complemented reports of possible dividend-yield-based buy opportunities from eight major market sectors as listed by Yahoo Finance posted since the fall of 2011.
So, responding to both the Seeking Alpha reader request and Ycharts.com migration to an 11 sector list, this report series provided three actionable conclusions about the highest yield (dividend/price) stocks from the Morningstar/YCharts (M/Y) sectors: basic materials, communication services, consumer cyclical, consumer defensive, energy, financial services, healthcare, industrials, real estate, technology, and utilities.
Below the author compared Dow dividend dog theory picks exhibiting the highest yield (dividend/price) from Yahoo sectors with one-year mean target price estimates reported from broker analysts.
Note the Arnold M/Y Utes selections for May/June:
Dog Metrics Turned Up Brightest M/Y Utilities
The brightest 10 utilities sector stocks showing the biggest dividend yields as of June 28 represented four M/Y industries: gas, diversified, independent, and electric power producers. Top dog Just Energy Group (JE) was one of four diversified utilities firms. The other diversified utilities -- GDF Suez (GDFZY.PK), RWE AG (RWEOY.PK), and PVR Partners (PVR) -- placed fourth, eighth, and tenth, respectively. Second place went to AES Tiete (AESAY.PK), one of four independent power producers. The other independents were slotted in third, seventh, and ninth places, respectively: Atlantic Power Corporation, CESP-Cia Energetica de Sao Paulo (CSQSY.PK), and TransAlta Corporation. The lone electric utility, Centrais Eletricas Brasileiras (EBR), was fifth. The only gas firm Niska Gas Storage Partners (NKA) placed sixth and completed the top 10 brightest yielding M/Y utilities dog list for May/June.
Dividend Vs. Price Results Compared to Dow Dogs
Below is a graph of the relative strengths of the top 10 M/Y utilities dogs by yield as of the market close June 28, 2013, compared to those of the Dow. Historic projected annual dividend history from $1,000 invested in each of the 10 highest-yielding stocks and the total single share prices of those 10 stocks created the data points shown in green for price and blue for dividend.
Actionable Conclusion 1): M/Y Utilities Dogs Ran From Bears as Dow Stayed Bullish
The May/June M/Y utilities collection of dividend payers initiated a bearish price course as aggregate single share price dropped 32.6% since April. Dividends from $1K invested in each of the top 10 M/Y utilities stocks jumped up at a rate of 7.7% last month.
For the Dow dogs, meanwhile, projected annual dividends from $1K invested in each of the top 10 dropped over 2.2% since April, while aggregate single share price popped up over 13.6%. The Dow dogs bull run increased their overbought condition as aggregate single share price of the 10 exceeded projected annual dividends from $1K invested in each of the 10 by over $198, or 53%.
Since sector dogs are not the blue-chip, high-quality equivalents of the Dow list, an additional gauge of upside potential was added to the simple high-yield metric used to flush out initial bargains.
Actionable Conclusion 2): Wall Street Wizard Wisdom Was Weighed to Mark 9.48% Net Gain From Top 20 Dogs Come 2014