This periodic report tallied yield (dividend / price) results from here verified by Yahoo Finance for monthly dividend paying small, mid, & large cap (MoPaySML) stocks as of market closing prices January 2. It is one component in an ongoing monthly paying stock series that has reported (1) dividend yield; (2) price upside; (3) net gain results based on analyst 1 yr target projections.
Stocks reported were termed dogs because they were all selected based on Michael B. O'Higgins book "Beating The Dow" (HarperCollins, 1991), which revealed how high yielding stocks whose prices increased (and whose dividend yields therefore decreased) could be sold off once a year to sweep gains and reinvest the seed money into higher yielding stocks in the same index. Now named Dogs of the Dow, O'Higgins system also works to find bargains in any collection of dividend paying stocks. Utilizing analyst price upside estimates expanded the stock lists to include popular growth equities, if desired.
Arnold top monthly dividend paying small, mid, & large cap (MoPaySML) dog selections for January 10 were disclosed below step by step. Four actionable conclusions were drawn.
Actionable Conclusion (1): MoPaySML Dogs Jan 10 Price Upsides Were Led by Enduro Energy Trust
The comparison of market closing prices January 10 against analyst mean target price results one year hence revealed ten stocks with 10% to 39% projected price upsides. Enduro Royalty Trust (NDRO) an Austin TX based independent oil and gas firm exhibited a 39.34% price upside to lead the January 10 MoPaySML dogs.
The number of analysts providing price estimates for chart above 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 Pros, Cons & More
This exclusive report on small, mid, and large cap monthly pay stocks responded to Seeking Alpha editors plus August, September, October, November, and December reader input. Three additional actionable conclusions were drawn.
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.
Readers have added fuel. TennisBoy88 wrote: "...Monthly paying stocks...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."
Reader drking pointed to another advantage: "Mopay dividends reinvested will return almost 1% more yearly than quarterly payors as it compounds faster."
Many readers were offended by the term "dividend" applied to REITs, MLPs and hybrid financial institutions. To the point, 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 by yield from over 650 entities paying monthly returns.
January 10 Monthly Pay Small. Mid, & Large Cap Dividend Stocks
Ten monthly pay S/M/L Cap dividend equities showing the best yields as of January 10, represented four of nine Yahoo market sectors: financials, basic materials, utilities, and services. The top dog stock revealed by Yahoo Finance data was again Armour Residential REIT (ARR). This was one of five financial sector firms that dominated the list. The remaining four financial MoPaySML dogs placed fifth, seventh, eighth and ninth: Prospect Capital Corporation (PSEC); Hugoton Royalty Trust (HGT); Fifth Street Finance (FSC), and Brookfield Canada Office Properties (BOXC).
The second and third slots in the top ten were filled by two basic materials concerns: Pacific Coast Oil Trust (ROYT), and Enduro Royalty Trust . Two utilities, Atlantic Power Corp (AT), and Just Energy Group Inc. (JE), placed fourth and sixth. Finally, Student Transportation Inc., (STB) the lone service firm in tenth rounded out the January 10 MoPaySML top dog list.
MoPay 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 (2): MoPay Dogs Dithered Down As Dow Dogs Were Bearish
MoPaySML dividend dogs slumped in both dividend and price after January 2. Aggregate dividend from $10k invested as $1k in each of the top ten stocks sank at a rate of 2% since the new year while total single share price of those ten sagged nearly 19% for that period.
For the Dow dogs, meanwhile, projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs inched up 1.7% since January 2, while aggregate single share price fell nearly 1.5% to confirm bearish sentiment. The Dow dogs overbought condition in which aggregate single share price of the ten exceeded projected annual dividend from $10k invested as $1k in each of the ten, remained steady. The overhang was $125 or 33% in August, and expanded to $161 or 43% for September, shrank down to $111 or 30% for October, expanded again to $171 or 47% as of November 11, and has remained between $108 or 29% and $127 or 34% between November 20 and January 10.
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 (3): Wall Street Wizard Wisdom Wished 19.7% 1 yr. Net Gain from Top 20 MoPaySML Dogs
Top 20 dogs on the MoPay stock list were graphed below to show relative strengths by dividend and price as of January 10, 2014 and those projected by analyst mean price target estimates to the same date in 2015.
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 twenty highest yielding stocks and the aggregate single share prices of those twenty stocks divided by 2 created the data points for 2014. 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 2015 data points green for price and blue for dividends.
Yahoo projected nearly 11% lower dividend from $10K invested as $1k in the average ten of this group of while aggregate single share price of those ten was projected to increase by nearly 12% in the next 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 (4): Wall St. Analysts Forecast 2015 MoPaySML DiviDog Stock Net Gains of 19% to 49%
Five 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 the dog strategy for this collection as graded by Wall St. wizards was 50% accurate.
Ten probable profit generating trades were revealed by Thompson/First Call in Yahoo Finance for 2014:
Enduro Royalty Trust netted $493.11 based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 2% less than the market as a whole.
Baytex Energy Corp (BTE) netted $403.77 based on a mean target price estimate from nine analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 81% greater than the market as a whole.
Atlantic Power Corp netted $381.79 based on estimates from five analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 79% less than the market as a whole.
Pacific Coast Oil Trust netted $372.16 based on dividends plus a mean target price estimate from three analysts less broker fees. A Beta number was not available for ROYT.
Armour Residential REIT netted $270.24 based on estimates from nine analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 65% less than the market as a whole.
American Realty Capital (ARCP) netted $267.69 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 11% opposite the market as a whole.
Pengrowth Energy Corp. (PGH) netted $225.07 based on dividends plus the mean of annual price estimates from eight analysts less broker fees. The Beta number showed this estimate subject to volatility 75% greater than the market as a whole.
Linn Co., LLC (LNCO) netted $214.72, based on dividend plus mean target price estimates from nine analysts less broker fees. A Beta number was not available for LNCO.
Home Loan Servicing Solutions Ltd. (HLSS) netted $213.41 based on a mean target price estimate from eight analysts combined with projected annual dividend less broker fees. A Beta number was also not available for HLSS.
Fifth Street Finance Corporation netted $189.30, based on dividend plus mean target price estimates from eleven analysts less broker fees. The Beta number showed this estimate subject to volatility 10% less than the market as a whole.
The average net gain in dividend and price was 30.3% on $10k invested as $1k in each of these ten mopay dogs. This gain estimate was subject to average volatility 26% less than the market as a whole.
The stocks listed above were suggested only as decent starting points for a mopay dividend dog purchase research process. These were not recommendations.
Gains as reported do not factor-in any tax problems resulting from distributions. Consult your tax advisor regarding the source of "dividends" from any investment.
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.