- Top 5 Healthcare dividend stock 1 yr. upsides ranged from 11% to 20% per analyst median targets March 30.
- 10 top Healthcare dividend stocks 1 yr. upsides averaged 12% per analyst mean targets. Two others stumbled 6% & 15%.
- Top ten Healthcare dogs mixed down through March; Dow dogs charged up.
- Analysts predicted 10% to 21.7% 1 yr. net gains for ABBV, MSA, SNN, BAX, PDLI, KND, MRK, STJ, SNY, & MDT. DGX, & PETS fell 6%, & 13.5%.
- Consider these stocks as possible starting points for your April Healthcare dividend dog investment research.
Here Is How Healthcare March Holdings Emerged
Results from here. verified using Yahoo Finance data for small, mid, & large cap healthcare sector stocks, as of market closing prices March 30, were compared with analyst mean target price results one year down the road. The results showed seven healthcare dogs with upside price expectations above 10%. AbbVie Inc. (NYSE:ABBV ) a drug manufacturer-major firm led these with a 21.7% analyst upside estimate.
Analyst 1-yr target projections led to six actionable conclusions discussed below. S mall cap firms were valued at $200M(illion) to $2B(illion); M id cap firms were worth $2B to $10B; L arge caps were valued over $10B.
Actionable Conclusions: (1) Ten March Healthcare Dividend Dogs Did 11.96% Average Upsides; (2) Two Slumped an Average 10.82%
The charts above used one year mean target price set by brokerage analysts matched against March 30 closing price to compare ten sector stocks, showing the highest upside price potential into 2016 out of 30 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.
Fifty For the Money
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 yr. target projections.
This article was 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 Marked Health Stocks by Yield
Top ten healthcare sector dogs showing the biggest dividend yields by this screen as of March 30 represented four industries: (1) biotechnology; (2) drug manufacturers - major; (3) diagnostic substances; (4) drug delivery.
Top two healthcare sector stocks by yield were biotechnology firms, PDL BioPharma, Inc. (NASDAQ:PDLI )  and, Theravance Inc. (NASDAQ:THRX ) .
The best of six drug manufacturers - major placed third, GlaxoSmithKline PLC (NYSE:GSK ) . The other drug manufacturers arranged themselves in sixth, through tenth places: AstraZeneca (NYSE:AZN ) ; AbbVie Inc. ; Sanofi SA (NYSE:SNY ) ; Pfizer (NYSE:PFE ) ; Merck (NYSE:MRK ) .
A lone diagnostic substances firm placed firm took fourth, Meridian Bioscience, Inc. (NASDAQ:VIVO ) (4). The only drug delivery firm placed fifth, PetMed Express (NASDAQ:PETS ) , and completed the top ten March healthcare dogs list by yield.
Healthcare Dividend vs. Price Results Compared to Dow Dogs
Graphs below compared relative strengths of the top ten healthcare sector dogs by yield as of market close 3/30/2015 with those of the Dow industrials index. Annual dividend history from $10,000 invested as $1k in each of the ten highest yielding stocks along with the total single share price of those ten stocks made the data points shown in green for price and blue for dividends.
Actionable Conclusion (3): Healthcare Dogs Mixed Down As Dow Dogs Charged
The Healthcare collection of dividend payers sagged in both dividend and price after February as aggregate dividend from $10k invested as $1k in each of the top ten healthcare dogs flopped 0.9% while their single share price sagged 0.43%, to send a muddled down, mixed down, or dithered down signal.
Meanwhile, Dow dogs charged. They dropped 3.5% in annual dividend from $10k invested as $1K in each of the top ten, while aggregate single share price increased 0.89% after February.
As a result, the Dow dogs overbought condition (in which aggregate single share price of the ten exceeded projected annual dividend from $10k invested as $1k each in those ten) moved back toward its record January high. The overhang was $173 or 47% in April; shrank to $170 or 46% come May; swelled to $215 or 59% for July; fell back to $197 or 53% in August; widened to $239 or 65% in September; widened again to $257 or 70% into November; narrowed to $198 or 50% December 15; gapped wider to a new record $311 or 81% in January; narrowed as of February 20 to $264 or 69%; widened to $283 or 77% for March.
To quantify top dog rankings, analyst mean price target estimates provide a "market sentiment" gauge of upside potential. Added to the simple high yield "dog" metrics, analyst mean price target estimates provided another tool to dig out bargains.
Actionable Conclusion (4): Wall St. Wizards Worked 5.4% Average Net Gains from Top 30 Healthcare Dogs For March 2016
Top thirty dogs from the Healthcare sector were graphed below to show relative strengths by dividend and price as of March 30, 2015 and those projected by analyst mean price target estimates to the same date in 2016.
A hypothetical $1000 investment in each equity was divided by the current share price to find the number of shares purchased. The shares number was then multiplied by projected annual per share dividend amounts to find the dividend return. Thereafter the analyst mean target price was used to gauge the stock price upsides and net gains including dividends less broker fees as of 2016.
Historic prices and actual dividends paid from $30,000 invested as $1k in each of the highest yielding stocks and the aggregate single share prices of those thirty stocks divided by 3 created data points for 2015. Projections based on estimated dividend amounts from $1000 invested in the thirty highest yielding stocks and aggregate one year analyst target share prices from Yahoo Finance divided by 3 created the 2016 data points green for price and blue for dividend.
Analysts targets reported in Yahoo! Finance forecast 13% lower dividend from $10K invested as $1k in ten dogs in this group while aggregate single share price for those ten was projected to increase by over 6%
in the coming year.
The number of analysts contributing to the mean target price estimate for each stock was noted in the next to the last column on the charts. Three to nine analysts was considered optimal for a valid projection estimate. Estimates provided by one analyst were not applied (n/a).
A beta (risk) ranking for each stock was provided in the far right column of the above chart. A beta of 1 meant the stock's price would move with the market. Less than 1 showed lower than market movement. Higher than 1 showed greater than market movement. A negative beta number indicated the degree of a stocks movement opposite of market direction.
Actionable Conclusion (5): Analysts Asserted 10.5% to 21.7% Net Gains for Ten Healthcare Dividend Dogs Through March 2016.
Four of the ten top dividend yielding healthcare dogs were verified as being among the ten gainers for the coming year based on analyst 1 year target prices. So this month the dog strategy for the healthcare sector as graded by Wall St. wizards was 40% accurate.
Ten probable profit generating trades were revealed by Thompson/First Call in Yahoo Finance for 2016:
AbbVie Inc. netted $216.95 based on dividends plus median target price estimate from twelve analysts less broker fees. The Beta number showed this estimate subject to volatility 65% more than the market as a whole.
Mine Safety Applications (NYSE:MSA ) netted $166.26 based on estimates from four analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 68% more than the market as a whole.
Smith & Nephew PLC (NYSE:SNN ) netted $152.03 based on dividend plus a median target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 7% more than the market as a whole.
Baxter International (NYSE:BAX ) netted $115.54 based on eleven analysts less broker fees. The Beta number showed this estimate subject to volatility 32% less than the market as a whole.
PDL BioPharma, Inc. netted $114.45 based on mean target price estimates from two analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 37% less than the market as a whole.
Kindred Healthcare, Inc. (NYSE:KND ) netted $110.22 based on estimates from eight analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 51% more than the market as a whole.
Merck netted $107.87 based on dividends plus the mean of annual price estimates from seventeen analysts less broker fees. The Beta number showed this estimate subject to volatility 57% less than the market as a whole.
St. Jude Medical (NYSE:STJ ) netted $107.34 based on dividends plus the median of annual price estimates from twenty-two analysts less broker fees. The Beta number showed this estimate subject to volatility 40% greater than the market as a whole.
Sanofi SA netted $106.99 based on dividends plus a mean target price estimate from three analysts less broker fees. The Beta number showed this estimate subject to volatility 15% more than the market as a whole.
Medtronic, Inc. (NYSE:MDT ) netted $104.97 based on a mean target price estimate from sixteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 32% more than the market as a whole.
Average net gain in dividend and price was 13% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 15% more than the market as a whole.
A note about Trinity Biotech plc (NASDAQ:TRIB ):
June's upside leader got there by mistake. The author mistook the Trinity Biotech $.22 June annual dividend for a quarterly payment and erroneously ascribed a 3.82% yield instead of 0.95% to TRIB. That error put the firm in the top ten by yield. The past eight months, however, with the corrected dividend, TRIB couldn't make the top 30 by yield. And this month TRIB placed thirty-ninth.
However, analysts are still convinced that TRIB has significant upside potential to net $372.39 based on a median $27.50 target price from 4 analysts (with a Beta number showing this estimate subject to volatility 49% less than the market as a whole.) So, despite a paltry dividend yield of 1.15%, TRIB would still sit in first place on both the upside and net gain tables this month, despite not qualifying for the field based on yield.
It should be further noted that in the last seven out of nine months, analyst enthusiasm has been a negative indicator for TRIB. This echoes the sentiment of Michael O'Higgins, who's noted above as author of the "Beating the Dow" resource book. Higgins recommended taking a position opposite any business media stock recommendations.
Actionable Conclusion (6): (Bear Alert) Analysts Forecast 2 Dividend dogs to Produce 6.08% & 13.5% Losses As Of March 2016
The probable losing trades revealed by analysts reported by Thompson/First Call in Yahoo Finance for 2015 were:
Quest Diagnostics (NYSE:DGX ) was projected to lose $60.80 based on dividend and a median target price estimate from nineteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 76% less than the market as a whole.
PetMed Express Inc. was projected to lose $135.13 based on dividend and a median target price estimate from three analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 59% greater than the market as a whole.
Average net loss in dividend and price was 9.8% on $2k invested as $1k in each of these two dogs. This loss estimate was subject to average volatility 8% less than the market as a whole.
Net gain and loss estimates above did not factor-in any foreign or domestic tax problems resulting from distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.
Stocks listed above were suggested only as possible starting points for your Healthcare dog dividend stock purchase/sale research process. These were not recommendations.
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.indexarb.com ; www.dividend.com ; finance.yahoo.com ; analyst mean target price by Thomson/First Call in Yahoo Finance.
Disclosure: The author is long PFE, GE, VZ. (More. ) The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.