Look, Alpha, no micro caps! This new weekly report tallied results from here verified by Yahoo Finance for monthly paying small, mid & large cap (MoPaySML) dividend stocks as of market closing prices November 11 against analyst mean target price results one year hence. The comparison found five stocks with 26% to 46% projected price upsides. Baytex Energy Corp. (NYSE:BTE), a Calgary, Canada headquartered independent oil & gas firm at 26.42% showed the lowest upside of those five. American Realty Capital (ARCP), a New York based diversified REIT at 27.35% showed the next to the lowest upside. Atlantic Power Corp. (NYSE:AT), a Boston based Independent Electric Utility at 28.57% showed mid point of the five. Pacific Coast Oil Trust (NYSE:ROYT), the Austin, TX independent oil and gas firm with 30.06% showed the nearly best upside. Finally, Enduro Royalty Trust (NYSE:NDRO), another Austin based independent oil and gas firm exhibited a 46.09% price upside to lead the November 11 MoPaySML dogs.
The chart above used the one-year mean target price set by brokerage analysts matched against November 11 closing price to compare ten MoPaySML 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. This report on small, medium, and large cap only monthly pay stocks was prepared in response to Seeking Alpha editors plus August, September and October reader input. Three 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."
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."
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 thirty small, mid and large cap dividend equities were culled from over 650 entities listed here paying monthly returns. This report presumed yield (dividend / price) dividend dog methodology applied to any dividend stock group and compared that collection side by side with the Dow industrial index leaders. Below, the Arnold MoPaySML selections for November 11 were disclosed step by step.
November 11 Monthly Pay Small, Medium & Large Cap Dividend Stocks
Ten monthly pay S/M/L Cap dividend equities showing the best yields for November 11 represented the usual three of nine Yahoo market sectors. The top dog stock revealed by Yahoo Finance data was Armour Residential REIT (NYSE:ARR). This was one of four financial sector firms that populated the list. The remaining three financial MoPaySML dogs placed fifth, sixth, and eighth: Prospect Capital Corporation (NASDAQ:PSEC); Fifth Street Finance (NASDAQ:FSC); and Brookfield Canada Office Properties (NYSE:BOXC).
The second slot in the top ten was filled by one of two utilities, Just Energy Group Inc. (NYSE:JE). The other utility, Atlantic Power Corp. placed seventh. Four Basic Materials concerns placed third, fourth, ninth, and tenth: Enduro Royalty Trust; Pacific Coast Oil Trust (ROYT; Linn Energy LLC. (NASDAQ:LINE); Linn Co LLC (NASDAQ:LNCO) the final basic material firm, rounded out the MoPaySML top dog list.
MoPaySML Dividend vs. Price Compared to Dow Dogs
Relative strength for the top ten MoPaySML dividend dog stocks by yield was graphed below as of November 11, 2013 compared to those of the Dow. Historic projected annual dividend history from $10,000 invested as $1K 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 dividend.
Actionable Conclusion (1): MoPaySML And Dow Dogs Got Bullish
MoPaySML dividend dogs rallied after October 31. Aggregate dividend from $10k invested as $1k in each of the top ten stocks plunged at a rate of 9% since Halloween while total single share price of those ten surged up nearly 53% for that period. The pop in market price and dividend plunge was likely exaggerated by the author's use of the more exclusive S, M, & L Cap stock screen for price and dividend data vs. the screen including MicroCaps in October.
For the Dow dogs, meanwhile, projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs dropped 2.3% since October 31, while aggregate single share price jumped up nearly 12%. 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 grew some. The overhang was $125 or 33% in August, and expanded to $161 or 43% for September, shrank down to $111 or 30% for October, and expanded again to $171 or 47% as of November 11. Most of this bull rally was triggered by Procter & Gamble (NYSE:PG) replacing Microsoft (NASDAQ:MSFT) in the top ten Dow dogs this past week.
To quantify the top dog rankings, analyst mean price target estimates provided a "market sentiment" gauge of upside potential and so were added to the simple high yield "dog" metric used to sniff out bargains.
Actionable Conclusion (2): Wall Street Wizards Wisdom Wished 20.2% 1 yr. Net Gain from Top 20 MoPaySML Dogs
Top 20 dogs on the MoPaySML stock list were graphed below to show relative strengths by dividend and price as of November 11, 2013 and those projected by analyst mean price target estimates to the same date in 2014.
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 upsides to 2014.
Historic prices and actual dividends paid from $1000 invested in the ten highest yielding stocks and the aggregate single share prices of those twenty stocks divided by 2 created the data points for 2013. Projections based on estimated increases in dividend amounts from $1000 invested in the twenty highest yielding stocks and aggregate one-year analyst target share prices from Yahoo Finance divided by 2 created the 2014 data points green for price and blue for dividends.
Yahoo projected an almost 13% lower dividend from $10K invested as $1k in each of this group of ten while aggregate single share price was projected to increase by nearly 13% 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 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 MoPaySML DiviDog Stock Net Gains of 20% to 56%
Seven of the ten top dividend yielding MoPaySML dogs were verified as being among the ten gainers out of 20 for the coming year based on analyst 1-year target prices. So this month the dog strategy for this collection as graded by Wall St. wizards was 70% accurate.
Ten probable profit generating trades were revealed by Thomson/First Call in Yahoo Finance for 2014:
Enduro Royalty Trust netted $561.89 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.
Pacific Coast Oil Trust netted $401.24 based on dividends plus a mean target price estimate from three analysts less broker fees. The Beta number showed this estimate subject to volatility 66% less than the market as a whole.
Atlantic Power Corp. netted $371.53 based on estimates from five analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 65% less than the market as a whole.
Armour Residential REIT netted $350.56 based on estimates from nine analysts plus dividends less broker fees. A Beta number was not available for ARR.
American Realty Capital netted $324.83 based on dividends plus the mean of annual price estimates from four analysts less broker fees. The Beta number showed this estimate subject to volatility 10% opposite the market as a whole.
Baytex Energy Corp. netted $310.33 based on a mean target price estimate from ten analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 82% greater than the market as a whole.
Linn Energy, LLC netted $238.13 based on dividends plus the mean of annual price estimates from thirteen analysts less broker fees. The Beta number showed this estimate subject to volatility 25% less than the market as a whole.
Linn Co., LLC netted $221.74, based on dividend plus mean target price estimates from nine analysts less broker fees. The Beta number showed this estimate subject to volatility 88% less than the market as a whole.
Fifth Street Finance Corporation netted $207.01, based on dividend plus mean target price estimates from nine analysts less broker fees. The Beta number showed this estimate subject to volatility 18% less than the market as a whole.
Home Loan Servicing Solutions Ltd. (NASDAQ:HLSS) netted $196.49 based on a mean target price estimate from eight analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 34% less than the market as a whole.
The average net gain in dividend and price was 31.8% on $10k invested as $1k in each of these ten MoPaySML 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 MoPaySML dividend stock purchase 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.
Disclosure: I am long ARR, AT, FSC, MSFT, MCD, T, VZ, INTC, PFE. 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.