(Editors' Note: This article covers a micro-cap stock. Please be aware of the risks associated with these stocks.)
This new end of month report tallied results from Yahoo Finance for monthly paying (mopay) dividend stocks as of market closing prices October 31 compared with analyst mean target price results one year hence. Four stocks boasted 20% to 34.67% price upsides. Pacific Coast Oil Trust (NYSE:ROYT) an Austin, TX headquartered independent oil & gas firm at 20.0% showed the lowest upside of those four. Orchid Island Capital Inc (NYSE:ORC) a Vero Beach, FL based REIT investing in leveraged residential mortgage-backed securities at 20.74% showed the third best upside. Linn Energy, LLC (LINE) the Houston independent oil and gas firm with 23.4% showed the nearly best upside. Finally, Enduro Royalty Trust (NYSE:NDRO) another Austin based independent oil and gas firm exhibited a 34.67% price upside to lead the October 31 mopay dogs.
The chart above used the one year mean target price set by brokerage analysts matched against October 31 closing price to compare ten mopay 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.
Monthly pay dividend dog stock lists reviewed since June 2012 prompted reader suggestions to include funds, trusts, and partnerships. A list of mopay equities to buy and hold in September 2012 resulted from those reader suggestions 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. Another list factored December reader comments. January, February, March, April, May, June, July, August, September and October reader input all contributed to this article which compared and contrasted October 31 MoPay stock upside potential against high yield (and higher risk) buy and hold fund, trust and partnership constituents. Six actionable conclusions were drawn.
Monthly Pay Dividend Pros and Cons
Quarterly, Semi-Annual and Annual dividend stockholders 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 and/or statement. If the entity 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. So the segment is volatile.
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].
An August comment from drking reflected another advantage of receiving 12 vs. 4 dividends per year: "Mopay dividends reinvested will return almost 1% more yearly than quarterly payors as it compounds faster."
Dogs of the Index Metrics Extracted Bargains
For this article fifty three dividend equities plus sixty funds, partnerships, and trusts were culled from over 650 entities listed here paying monthly returns. These were ranked as of October 30-31, 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.
October 31 Monthly Pay Dividend Stocks
Ten monthly pay dividend equities showing the best yields for October 31 represented just three of the nine Yahoo market sectors. Top two dog stocks revealed by Yahoo Finance data were Javelin Mortgage Investment Corp. (NYSE:JMI), and Armour Residential REIT (NYSE:ARR). These were two of seven financial sector firms that dominated the list. The remaining five financial mopay dogs placed third, fourth, seventh, eighth, and ninth: Orchid Island Capital Inc ; Five Oaks Investment Corp. (NYSE:OAKS); Prospect Capital Corporation (NASDAQ:PSEC); Full Circle Capital Corp. (FULL); Fifth Street Finance (NYSE:FSC).
The fifth slot in the top ten was filled by one of two basic materials concerns, Hugoton Royalty Trust (NYSE:HGT), the other basic material firm, Enduro Royalty Trust paced tenth. The lone utility on the list, Just Energy Group Inc. (NYSE:JE). rounded out the mopay top dog list in sixth place.
MoPay Dividend vs. Price Compared to Dow Dogs
Relative strength for the top ten mopay dividend dog stocks by yield was graphed below as of October 31, 2013 compared to those of the Dow. Historic projected annual dividend history from $1000 invested in each of the ten highest yielding stocks and the total single share prices of those ten stocks created the data points shown in green for price and blue for dividends.
Actionable Conclusion (1): MoPay And Dow Dogs Muddled
MoPay dividend dogs muddled after September. Aggregate dividend from $10k invested as $1k in each of the top ten stocks plunged at a rate of 3% since then while total single share price of those ten tumbled over 28% for that period.
For the Dow dogs, meanwhile, projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs dropped just 0.6% since September, while aggregate single share price swooned 11%, ending a brief bullish track. The Dow dogs overbought condition in which aggregate single share price of the ten exceeded projected annual dividend from $1k invested in each of the ten shrank. The overhang was $198 or 53% in June, then shrunk to $153 or 41% in July, compressed to $125 or 33% in August then expanded to $161 or 43% for September, then shrank down to $111 or 30% for October.
Actionable Conclusion Two (2): Wall Street Wizards Wisdom Wished 21.5% 1 yr. Net Gain from Top 10 MoPay Dogs
Top dogs on the mopay stock list were graphed below to show relative strengths by dividend and price as of October 31, 2013 and those projected by analyst mean price target estimates to the same date in 2014.
Historic prices and actual dividends paid from $10,000 invested as $1K in each of 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 from one analyst were not included (n/a).
Yahoo projected a nearly 9% lower dividend from $10K invested as $1k in the top ten mopay dogs while aggregate single share price was projected to increase by over 11% 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 analyst rated stock was provided in the far right column on 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 stock price movement opposite of market direction.
Actionable Conclusion (3): Analysts Forecast 2014 NEXT10 Oct. 31 Mo Pay DiviDog Stock Net Gains near 18%
Ten monthly dividend equities that showed the next best yields October 31 represented four of the nine Yahoo market sectors. The eleventh dog stock revealed by Yahoo Finance data was Pacific Coast Oil Trust the best of four basic materials sector stocks that dominated this list. Three remaining basic materials firms placed thirteenth, sixteenth, and nineteenth: Linn Energy, LLC ; LinnCo LLC (LNCO); Vanguard Natural Resources (NYSE:VNR). In second place, Horizon Technology Finance Corp. (NASDAQ:HRZN), was the best of four financial firms . The other financials were Brookfield Canada Office Properties (NYSE:BOXC) in fourteenth place; Wheeler Real Estate Investment Trust Inc (NASDAQ:WHLR), fifteenth; Harvest Capital Credit Corporation (NASDAQ:HCAP) in twentieth place. Atlantic Power Corporation (NYSE:AT) the lone utility was the seventeenth mopay dog. Student Transportation, Inc. (NASDAQ:STB), the lone services stock on the list in eighteenth place, completed the NEXT ten October 31 mopay dividog list.
The NEXT ten dogs showed an 10.5% lower dividend from $10k invested as 1k in each stock while aggregate single share price for the next ten was projected by analysts to increase by over 13.6% in the coming year.
The number of analysts contributing to the mean target price estimate for each stock is noted in the next to the last column on the above charts. Three to nine analysts was considered optimal for a valid projection estimate.
A beta (risk) ranking for each analyst rated stock was provided in the far right column on that 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 stock price movement opposite of market direction.
Actionable Conclusion (4): Analysts Project Ten MoPay Dogs to Net 19% to 44% Gains by October 31, 2014
Five of the ten top dividend yielding mopay dogs were verified as being among the ten gainers for the coming year based on analyst 1 year target prices. So as of October 31 the dog strategy for this mopay group as graded by Wall St. wizards was 50% accurate.
Ten probable profit generating trades revealed by Yahoo Finance for 2014 were:
Enduro Royalty Trust netted $438.27 based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 8% less than the market as a whole.
Orchid Island Capital Inc netted $323.41 based on estimates from two analysts plus dividends less broker fees. A Beta number was not available for ORC.
Armour Residential REIT netted $317.44 based on estimates from nine analysts plus dividends less broker fees. A Beta number was not available for ARR.
Linn Energy, LLC netted $317.14 based on dividends plus the mean of annual price estimates from twelve analysts less broker fees. The Beta number showed this estimate subject to volatility 24% less than the market as a whole.
Pacific Coast Oil Trust netted $291.33 based on dividends plus a mean target price estimate from three analysts less broker fees. A Beta number was not available for ROYT.
Horizon Technology Finance Corporation netted $263.55 based on dividends plus the mean of annual price estimates from five analysts less broker fees. The Beta number showed this estimate subject to volatility 58% less than the market as a whole.
Linn Co., LLC netted $263.19, based on dividend plus mean target price estimates from nine analysts less broker fees. The Beta number showed this estimate subject to volatility .002% opposite the market as a whole.
Full Circle Capital Corp netted $228.42 based on a mean target price estimate from two analysts combined with projected annual dividend less broker fees. A Beta number was not available for FULL.
Fifth Street Finance Corporation netted $202.22, based on dividend plus mean target price estimates from nine analysts less broker fees. The Beta number showed this estimate subject to volatility 13% less than the market as a whole.
Student Transportation, Inc. netted $191.11 based on a mean target price estimate from four analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 8% less than the market as a whole.
The average net gain in dividend and price was 28.36% on $1k invested in each of these ten mopay dogs. This gain estimate was subject to average volatility 35% less than the market as a whole.
Net gain 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.
The stocks listed above were suggested only as decent starting points for your mopay dividend stock purchase research process. These were not recommendations.
Monthly Pay Dividend Funds and Trusts For October 31
The sixty top monthly dividend paying funds and trusts listed above were culled from over 600 candidates then ranked by yields calculated as of October 31 to determine the Top Ten.
Ten monthly dividend funds, trusts and partnerships showing the biggest yields for October featured six closed-end funds, two exchange traded funds, and two exchange traded notes. Top three closed-end funds as revealed by Yahoo Finance data were Cornerstone Progressive Return Fund (NYSEMKT:CFP) which returned to the list as of July 8 after it suspended its rights offering June 24, Cornerstone Strategic Value Fund (NYSEMKT:CLM), and Cornerstone Total Return Fund, Inc (NYSEMKT:CRF). Top ETF, Gabelli Global Gold Natural Resources & Income Trust (NYSEMKT:GGN) placed fourth. The second ETF, Exchange Traded Concepts Trust (NYSEARCA:YYY) placed eighth. The two exchange traded notes placed fifth and seventh in the yield rankings, Credit Suisse Silver Shares (NASDAQ:SLVO); Credit Suisse Gold Shrs (NASDAQ:GLDI). The balance of the top ten were three more closed-end funds: Pimco High Income Fund Com Shs (NYSE:PHK) in sixth; Western Asset High Income Fund II Inc (NYSE:HIX) in ninth; Eaton Vance Tax-Managed Buy-Write Opportunities Fund (NYSE:ETV) in tenth completed the list.
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 October 31, 2013 and compared to those of the top ten stocks. Eleven periods of projected annual dividend history from $10,000 invested as $1k in each of 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 dividend and green for price.
Actionable Conclusion (5): MoPay Top Ten DiviDog Funds & Trusts Dither Up; Stocks Dither Down
Charts showed mopay dividend dog funds and trusts increasing in both dividend and price since September. Projected dividend from 10k invested as $1k in each of the top ten funds and trusts inclined 12% while aggregate single share price of the top ten over the same period popped up 6.7%.
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 increased from 854% in June to 1114% in September 2013, then rocketed to 1173% in October
MoPay dividend stock dogs muddled after September. Aggregate dividend from $10k invested as $1k in each of the top ten stocks plunged at a rate of 3% since then while total single share price of those ten swooned 28% for that period.
The gap between aggregate single share price and dividend from $1k invested in each for the ten mopay stocks widened. In July that gap was 790%. In August it expanded to 970%. In September the gap narrowed to 864%. In October the gap was 1205%
As of October 31 the top mop fund and trust dogs showed $170 or 13% more dividend at a $16 or 16% higher aggregate single share price than the mopay stocks top ten.
Actionable Conclusion (6): Buy and Hold Monthly Dividend Paying Funds & Trusts, If You Dare
Stock analysts don't hazard guesses as to when or how much fund and trust prices will rise or fall. 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.
However, the risk for an investment in mopay dividend funds and trusts has dropped since the first of the year when it was 30% greater than stocks. Meanwhile the risk for an investment in mopay stocks has increased to the point where funds and trusts are now only 13% more risky.
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, GE, INTC, 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.