Monthly pay (MoPay) dividend dog stock lists reviewed in June and July prompted reader suggestions to expand the stocks list to include funds, trusts and partnerships. A list of MoPay equities to buy and hold in October resulted from reader additions supplemented with a high yield collection from here. Thereafter the docile, sleeping dogs list was supplemented by an upside potential article in October and a upside vs. buy and hold in November. Factoring in December reader comments, another list, and January reader input, this article compared and contrasted February stocks (looking for their upside potential) against high yield (and higher risk) buy and hold fund, trust and partnership candidates.
Monthly Pay Dividend Advantages
Quarterly and annual pay dividend stock owners anxiously await announcements from a firm, fund or analyst to learn if their next dividend will be higher, lower, or paid at all. Monthly pay stocks, funds, trusts, and partnerships inform the holder every four and one third weeks by check or statement. If the equity reduces or suspends a payment, the holder can sell out of the investment immediately to cut future losses.
In January reader TennisBoy88 wrote:
One other advantage of monthly paying stocks is the way they are slightly protected against traders that buy just before the ex-date and sell after the record date. The brokerage commissions they have to pay for a measly monthly dividend helps keep them away and the stock price doesn't fluctuate so wildly.
Dogs of the Index Metrics Extracted Bargains
For this article, twenty-seven dividend equities plus thirty funds and trusts were culled from over 400 entities paying monthly returns. These were ranked as of February 8, 2013 using the two key dog performance metrics: (1) stock price; (2) annual dividend. Dividing the annual dividend by the price declared the percentage yield by which each dividend dog stock was ranked.
Historically dividend dog investors utilized this ranking system to select portfolios of five or ten stocks in any one index, sector, survey, or list to trade. They awaited the results from their investments in the lowest priced, highest yielding stocks and prayed that the price of every stock they now owned climbed higher (having locked in a high yield percentage at purchase).
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) can be sold off once each year to sweep gains to reinvest the seed money into higher yielding stocks in the same index. Prior to the publication of the O'Higgins book, Dow dogs were known by some market watchers as "fallen angels."
Monthly Pay Dividend Stocks
The ten monthly dividend equities showing the best yields In February represented three of nine market sectors. The top dog stock revealed by Yahoo Finance data was one of two utilities on the top ten MoPay stock list, Just Energy Group Inc. (NYSE:JE), The other utility was Atlantic Power Corporation (NYSE:AT), in eighth place. Seven financial firms dominated the list. Five of them placed second through sixth in February: Javelin Mortgage Investment Corp. (NYSE:JMI); Armour Residential REIT (NYSE:ARR); Full Circle Capital Corp. (FULL); Prospect Capital Corporation (NASDAQ:PSEC); Fifth Street Finance (NYSE:FSC). Ninth and tenth positions also went to financial firms, Gladstone Capital Corporation (NASDAQ:GLAD) and Horizon Technology Finance Corp. (NASDAQ:HRZN). The remaining seventh slot in the top ten was filled by the lone basic materials concern Pengrowth Energy (NYSE:PGH).
Dividend vs. Price Results for MoPay Divi Stocks
Relative strengths for the top ten MoPay dividend dog stocks by yield was graphed below as of February 8, 2013. Ten periods of historic projected annual dividend history from $1000 invested in the ten highest yielding stocks and the total single share price of those ten stocks created the data points for each period shown in blue for dividend and green for price.
Actionable Conclusion One: Mo Pay DiviDog Stocks Remain Bearish to Mixed
Charts displayed MoPay dividend dog stocks in a mixed bear market pattern. Since March 2012 dividend from 1k invested in each of the top ten stocks increased 17% while aggregate single share price of the ten declined 9%. Most recently dividend inclined 1% as price dropped .57% from January to February.
Actionable Conclusion Two: Analysts Forecast 2014 Mo Pay DiviDog Stock Net Gains over 22%
Top ten dogs on the MoPay stock list were graphed below to show relative strengths by dividend and price as of February 8, 2013 and those projected by analyst mean price target estimates to the same date in 2014.
Historic prices and actual dividends paid from $1000 invested in the ten highest yielding stocks and the aggregate single share prices of those ten stocks created the data points for 2013. Projections based on estimated increases in dividend amounts from $1000 invested in the ten highest yielding stocks and aggregate one year analyst mean target prices as reported by Yahoo Finance created the 2014 data points in blue for dividend and green for price. Note: one year target estimated prices below current price were not included.
Charting Mo Pay DiviDog Stock February Upsides
Ten equities paying out top monthly dividend yields were ranked using the two key dog performance metrics: (1) stock price; (2) annual dividend. Dividing the annual dividend by the price declared the percentage yield by which each dividend dog stock was primarily ranked. (3) One year mean target price estimates by analysts flagged five equities showing higher prices for 2014.
A hypothetical $1000 investment in each equity was divided by the current share price to find a number of shares purchased. The number of shares was multiplied by projected annual per share dividend amounts to find a dividend return amount. Thereafter one year mean target prices multiplied by the number of shares supplemented the dividend amount minus a flat $20 broker fee to determine a net gain amount for the top five stocks showing upside price gains into 2014.
For the coming year Yahoo Finance projected a 7% lower dividend from $1k invested in each stock within this MoPay group while aggregate single share price for the ten was projected by analysts to increase by 7%.
The number of analysts contributing to the mean target price estimate for each stock is noted in the far right column on the charts. Three to nine analysts was considered optimal for a valid projection estimate.
Net gains from five probable profit generating trades were revealed by Yahoo Finance for February 2014:
Armour Residential REIT netted $208.69 (20.7%), based on mean target price estimates from eight analysts.
Fifth Street Finance Corporation netted $118.43 (11.8%), based on estimates from ten analysts.
Pengrowth Energy netted $877.83 (87.8%), based on estimates from four analysts.
Atlantic Power Corporation netted $230.00 (23%), based on estimates from four analysts.
Horizon Technology Finance Corp. netted $151.57 (15.2%) to 2014, based on estimates from three analysts.
The total 2014 net gain in dividend and price for all ten MoPay top dog stocks was projected as 22% from $10k invested.
Monthly Pay Dividend Funds and Trusts
The thirty top monthly dividend paying (MoPay) funds and trusts listed above were culled from over 400 candidates then ranked by yields calculated as of February 8 to determine the Top Ten.
Ten monthly dividend funds and trusts showing the biggest yields for February featured nine funds and one trust. The top three dog funds as revealed by Yahoo Finance data were by Cornerstone: Cornerstone Total Return Fund Inc. (NYSEMKT:CRF); Cornerstone Progressive Return Fund (NYSEMKT:CFP); Cornerstone Strategic Value Fund (NYSEMKT:CLM). Two Alpine funds were in fourth and fifth positions by yield, Alpine Total Dynamic Dividend Fund (NYSE:AOD), and Alpine Global Dynamic Dividend Fund (NYSE:AGD). Two AGIC funds placed sixth and eighth: AGIC Convertible and Income Fund II (NYSE:NCZ); AGIC Convertible & Income Fund (NYSE:NCV). A PIMCO funds placed seventh in the yield rankings, PIMCO High Income Fund (NYSE:PHK). The balance of the top ten funds and trusts were: ING Global Equity Dividend & Premium Opportunity fund (NYSE:IGD) in ninth, and Gamco Global Gold Natural Resources & Income Trust (NYSEMKT:GGN) in the tenth slot.
Fund & Trust Dividend & Price Results vs. Dow
Below relative strengths for the top ten MoPay Dividend F&T Dogs by yield was graphed as of February 8, 2013 and compared to those of the Dow. Ten periods of historic projected annual dividend history from $1000 invested in the ten highest yielding equities and the total single share prices of those ten equities created the data points for each period shown in blue for dividends and green for price.
Actionable Conclusion Three: MoPay Top Ten DiviDog Funds and Trusts Back to Bearish; Dow Dogs Get Overbought
Charts showed MoPay dividend dog funds and trusts in a mixed bear market pattern. Since March, projected dividend from 1k invested in each of the top ten funds, and trusts jumped 44.5%, while aggregate single share price of the ten over the same period declined 31%.
Over the past month, dividend declined .4% while price slid 4%. The gap between aggregate single share price sinking beneath rising projected dividend from $1k invested in those ten equities went from 1597% in January to 1661% in February.
Since March, the top ten Dow dogs projected dividend from $1k invested in each pup decreased 1.1%, while aggregate single share price rose 9.1%. Since the data source for Dow dividend, indexArb.com, anticipates future increases, Dow dog dividends kept a more level pace than price. The most recent gap for the Dow shows aggregate single share price again topping dividend from $1k invested in each of the top ten dogs by 12.5%, extending an overbought condition that returned in January
As of February 8 the top MoPay fund and trust Dogs showed $1024.24 or 262% more dividend (with equally bigger risk) at a $358.66 or 81.6% lower aggregate single share price than the Dow top ten.
Actionable Conclusion Four: Buy and Hold Monthly Dividend Paying Funds & Trusts, If You Dare
Stock analysts don't hazard guesses as to when or how fund prices will rise. They are paid to gauge individual stocks, and a few funds and partnerships. Hence this monthly pay F&T dog diligence only revealed a list of funds and trusts to buy and hold if you dare. But the risk is dropping.
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.
Disclosure: I am long ARR, AT, FSC, HRZN, PGH, DD, GE, INTC, JNJ, MCD, MSFT, PFE, T, VZ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.