Monthly pay (MoPay) dividend dog stock lists reviewed since 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 those 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 & hold in November. Factoring December reader comment, another list, plus January, February and March reader input, this article compared and contrasted April MoPay stocks (looking at their upside potential) against high yield (and higher risk) buy and hold fund, trust and partnership constituents.
Monthly Pay Dividend Pros and Cons
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. This advantage has been countered when companies suddenly cut monthly dividends to save cash and trigger a price crash.
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."
Many readers are offended by the term "dividend" applied to REITs, MLPs and hybrid financial institutions. For example, arbtrdr wrote,
"The only problem with this analysis is you are comparing companies of VERY different varieties. REITs pay no taxes and their distributions are classified as ordinary income and thus not subject to the 15% or 20% tax rate.\ MLPs also pay little no taxes at the corporate level, but instead have "distributions"... Comparing REITs, MLPs and regular corporations thus requires a financial analysis...not include[d]."
Dogs of the Index Metrics Extracted Bargains
For this article twenty-eight dividend equities plus thirty funds and trusts were culled from over 400 entities paying monthly returns. These were ranked as of April 22, 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.
The online investors tutorial, Investor Glossary, recently offered this brief description of dividend dog methodology: "...[I]nvented to find the 10 stocks of the 30-stock Dow Jones Industrial Average with the highest yield (dividend / price) and invest equally in each, [t]he Dow dividend theory also requires that you repeat this process once a year.
April Monthly Pay Dividend Stocks
The ten monthly dividend equities showing the best yields In April represented four of the nine Yahoo market sectors. The top dog stock revealed by Yahoo Finance data was Javelin Mortgage Investment Corp. (NYSE:JMI) one of seven financial firms that dominated the list. The remaining six financial mopay dogs placed third through sixth plus eighth and ninth: Armour Residential REIT (NYSE:ARR); Prospect Capital Corporation (NASDAQ:PSEC); Full Circle Capital Corp. (FULL); Fifth Street Finance (NYSE:FSC); Horizon Technology Finance Corp. (NASDAQ:HRZN); Gladstone Capital Corporation (NASDAQ:GLAD).
The second slot in the top ten was filled by the lone utility on the list, Just Energy Group Inc. (NYSE:JE). One basic materials concern, Pengrowth Energy (NYSE:PGH), was seventh and a service firm, Student Transportation, Inc. (NASDAQ:STB) rounded out the list in tenth place.
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 April 22, 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 Take a Bearish Turn
Charts displayed MoPay dividend dog stocks in a bearish trend since March. Dividend from 1k invested in each of the top ten stocks increased 2% while aggregate single share price of the ten dropped 20.4% in the past month.
Actionable Conclusion Two: Analysts See 2014 Top Mo Pay DiviDog Stock Net Gains over 16.7%
Top ten dogs on the MoPay stock list were graphed below to show relative strengths by dividend and price as of April 22, 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 also included.
Actionable Conclusion Three: Analysts Forecast 2014 NEXT10 Mo Pay DiviDog Stock Net Gains over 26.9%
The ten monthly dividend equities showing the next best yields in April represented just three of the nine Yahoo market sectors. The eleventh dog stock revealed by Yahoo Finance data was Atlantic Power Corporation (NYSE:AT) the lone utility firm in the next 10 mopay dog list. Four basic materials firms placed twelfth, fourteenth, sixteenth, and eighteenth: Vanguard Natural Resources (NYSE:VNR); Enerplus Corp. (NYSE:ERF); Gold Resource Corporation (NYSEMKT:GORO); Baytex Energy Corp. (NYSE:BTE).
The remaining five next ten mopay dogs were financial firms in thirteenth, fifteenth, seventeenth, nineteenth and twentieth places: Gladstone Investment (NASDAQ:GAIN); Gladstone Commercial REIT (NASDAQ:GOOD); Whitestone REIT (NYSEMKT:WSR); Main Street Capital Corp. (NYSE:MAIN); America Realty Capital Properties (ARCP).
Charting Mo Pay DiviDog Stock April 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 four of the top ten mopay equities showing higher prices for 2014 and (4) one year mean target price estimates by analysts also flagged six of the next ten mopay 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 5.1% lower dividend from $1k invested in each stock within the top ten MoPay group while aggregate single share price for the ten was projected by analysts to increase by 5.1%. The next ten dogs showed a 15% lower dividend from $1k invested in each stock while share price for the ten was projected by analysts to increase by 18%. The number of analysts contributing to the mean target price estimate for each stock is noted in the far right column on the charts above and nest to the name of the stock on the source list below. Three to nine analysts was considered optimal for a valid projection estimate.
Actionable Conclusion Four: Analysts Forecast Ten MoPay Dogs to Net 14.8% to 89.6% By April 2014
Ten probable profit generating trades revealed by Yahoo Finance for 2014 were:
- Gold Resource Corporation netted $896.07 based on dividends plus mean target price estimate from two analysts less broker fees;
- Baytex Energy Corp. netted $457.60, based on dividends plus a mean target price estimate by ten analysts less broker fees;
- Pengrowth Energy netted $445.52 based on dividends plus mean target price estimate from six analysts less broker fees;
- Enerplus Corp. netted $389.06 based on a mean target price estimate from seven analysts combined with projected annual dividend less broker fees;
- Atlantic Power Corporation netted $382.17, based on dividend plus mean target price estimates from three analysts less broker fees;
- Armour Residential REIT netted $204.14 based on estimates from nine analysts plus dividends less broker fees;
- Horizon Technology Finance Corporation netted $186.92 based on dividends plus the mean of annual price estimates from five analysts less broker fees;
- Prospect Capital Corporation netted $165.81 based on estimates from four analysts plus dividends less broker fees;
- Gladstone Investment netted $156.47 based on dividends plus mean target price estimate from two analysts less broker fees;
- Vanguard Natural Resources netted $148.14 based on a mean target price estimate from eleven analysts combined with projected annual dividend less broker fees.
The average net gain in dividend and price was over 34.3% on $1k invested in each of these ten dogs.
The stocks listed above were suggested only as decent starting points for your mopay dividend dog stock purchase research process. These were not recommendations.
The above net gain estimates did not factor-in any tax problems resulting from distributions (not dividends and K-1s) from MLPs and any possible re-capture tax problems/rates that could suck projected gains out of some of these estimates at the regular tax bracket rate and not capital gain rates. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.
Monthly Pay Dividend Funds and Trusts For April
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 March 14 to determine the Top Ten.
Ten monthly dividend funds and trusts showing the biggest yields for March featured eight funds and two trusts. The top two dog funds as revealed by Yahoo Finance data were by Cornerstone: Cornerstone Progressive Return Fund (NYSEMKT:CFP); Cornerstone Strategic Value Fund (NYSEMKT:CLM). Gamco Global Gold Natural Resources & Income Trust (NYSEMKT:GGN) placed third. Two AGIC funds placed fourth and sixth: AGIC Convertible and Income Fund II (NYSE:NCZ); AGIC Convertible & Income Fund (NYSE:NCV). Two PIMCO funds placed fifth and seventh in the yield rankings, PIMCO High Income Fund (NYSE:PHK), and PIMCO Global StocksPLUS & Income (NYSE:PGP). The balance of the top ten funds and trusts were: Pioneer High Income Trust (NYSE:PHT) in eighth; MFS Special Value Trust (NYSE:MFV) in ninth; ING International High Dividend Equity Fund (NYSE:IID) in the tenth slot.
Fund & Trust Dividend & Price Results vs. MoPay Top Ten Stocks
Below relative strengths for the top ten MoPay Dividend F&T Dogs by yield was graphed as of April 22, 2013 and compared to those of the top ten stocks. 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 Five: MoPay Top Ten DiviDog Funds and Trusts Get Bearish Like Stocks
Charts showed MoPay dividend dog funds and trusts turning bearish in the past month after showing a bull market pattern between February and March. Projected dividend from 1k invested in each of the top ten funds and trusts inclined 1.5% since March while aggregate single share price of the ten over the same period declined 1.9%.
A gap between aggregate single share price of top ten mopay funds and trusts and their projected dividend from $1k invested in those ten equities widened from 968% in May 2012 to 1011% in April 2013.
Since May 2012 the top ten mopay stocks projected dividend from $1k invested in each pup increased 3.3% while aggregate single share price dropped 6.2%. The gap for the mopay stocks shows a similar widening for the year. In May 2012 it measured 968% in April 2013 it stood at 1076%.
As of April 22 the top MoPay fund and trust Dogs showed $97.64 or 8.6% more dividend (with equally bigger risk) at a $14.38 or 15% higher aggregate single share price than the MoPay stocks top ten.
Actionable Conclusion Six: Buy and Hold Monthly Dividend Paying Funds & Trusts, If You Dare
Stock analysts don't hazard guesses as to when or how fund and trust 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 has dropped since the first of the year.
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, ERF, FSC, HRZN, PGH. 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.