7 Monthly Pay Valentine Dogs Stalk 17% To 32% Upsides

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 |  Includes: ARR, AT, BBD, FSC, HLSS, JE, LINEQ, LNCOQ, MRK, MSFT, NDRO, PSEC, ROYT, STB, VER
by: Fredrik Arnold

Executive summary:

  • 10 top monthly pay (MoPay) small, mid, & large cap dividend dogs show healthy 1 yr. upsides.
  • Both dividend and price dropped in the past 10 days for top ten MoPay and Dow dogs.
  • Analysts see average 17% 1 yr. upside for AT, HLSS, NDRO, BBD, ROYT, LNCO, ARCP, ARR, STB, & FSC.
  • Consider these as starting points for your MoPay dog dividend stock purchase research.

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This post revealed bargain stocks to buy and hold for at least one year. It was one installment in an ongoing 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, named Dogs of the Dow. O'Higgins system works to find bargains in any collection of dividend paying stocks. Utilizing analyst price upside estimates has expanded the universe to include popular growth equities when desired.

This 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 on Valentine's Day, February 14 and compared those results with analyst 1 yr target projections. Four actionable conclusions were drawn.

Wall Street Wizard Weights

One year mean target price set by brokerage analysts multiplied by the number of shares in a $1k investment were used to compare ten stocks showing the highest upside price potential into 2015 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 was considered optimal for a valid mean target price estimate.

Actionable Conclusion (1) Ten MoPaySML Valentine Dividend Dogs Chased 8% to 32% Upsides

Dogs of the Index Metrics Extracted Bargains

For this article thirty small, mid, and large cap monthly return equities were culled from over 650 entities.

Ten monthly pay S/M/L Cap dividend equities showing the best yields as of February 14 represented the usual three of nine Yahoo market sectors: utilities, financials, & basic materials. The top dog stock revealed by Yahoo Finance data was one of two utilities, Atlantic Power Corp (NYSE:AT); the other utility, Just Energy Group Inc. (NYSE:JE) placed seventh.

Four financial sector firms were led by Armour Residential REIT (NYSE:ARR) and Prospect Capital Corporation (NASDAQ:PSEC) in second and third places. The remaining two financial MoPaySML dogs placed fifth, and eighth: Fifth Street Finance (NASDAQ:FSC); Banco Bradesco S.A (NYSE:BBD).

Four basic Materials concerns placed fourth, sixth, ninth, and tenth: Pacific Coast Oil Trust (NYSE:ROYT); Enduro Royalty Trust (NYSE:NDRO); Linn Energy LLC; (LINE); LinnCo LLC (LNCO) to complete the Valentine MoPaySML top dog list.

Actionable Conclusion (2): MoPaySML Valentine and Dow Dogs Dither Down

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MoPaySML Valentine dividend dogs dropped in price after February 3. Total single share price of the top ten fell 4.9% for the period. Aggregate dividend from $10k invested as $1k in each of the top ten dogs fell at a rate of 1% since then to confirm the downward dog.

The Dow dogs, meanwhile, also dithered down as projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs fell 0.4% since February 3, while aggregate single share price declined nearly 1.9%. The Dow dogs overbought condition in which aggregate single share price of the ten exceeded projected annual dividend from $10k invested in those ten (@$1k each) held steady. The overhang was $125 or 33.5% January 2; shrank to $111 or 29% January 10; swelled to $134 or 35% as of February 3; now dropped to $126 or 33% on Valentine's Day. Much of the recent move was perhaps triggered by Microsoft (NASDAQ:MSFT) replacing Merck (NYSE:MRK) at the tail of the top ten Dow dogs in mid-February.

Actionable Conclusion (3): Wall Street Wizard Wisdom Weighed Well Over 17% 1 yr. Net Gain from Top 20 MoPay SML Valentine Dogs

Top 20 dogs on the MoPay stock list were graphed below to show relative strengths by dividend and price as of February 14, 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 2015.

Historic prices and actual dividends paid from $1000 invested in each of 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.

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Yahoo projected over 9.7% 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 10% 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 (4): Wall St. Analysts Forecast 2015 MoPaySML Valentine DiviDog Net Gains of 16% to 40%

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 week the dog strategy for this collection as graded by Wall St. wizards was again 70% accurate.

Ten probable profit generating trades were revealed by Thompson/First Call in Yahoo Finance into 2015:

Atlantic Power Corp netted $405.29 based on estimates from five analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 61% less than the market as a whole. This massive jump in upside was triggered by a recent crash in stock price as management recently announced a new line of credit with provisions that could cut dividends. The gap was recently tapered by analysts as they decreased the mean target price estimate.

Home Loan Servicing Solutions Ltd. (NASDAQ:HLSS) netted $386.89 based on a mean target price estimate from eight analysts combined with projected annual dividend less broker fees. A Beta number was not available for HLSS.

Enduro Royalty Trust netted $372.16 based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 56% less than the market as a whole.

Banco Bradesco S.A netted $334.05 based on a mean target price estimate from seven analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 61% greater than the market as a whole.

Pacific Coast Oil Trust netted $283.85 based on dividends plus a mean target price estimate from three analysts less broker fees. A Beta number was also not available for ROYT.

Linn Co., LLC netted $242.13, based on dividend plus mean target price estimates from nine analysts less broker fees. The Beta number showed this estimate subject to volatility 9% greater than the market as a whole.

American Realty Capital (ARCP) netted $223.67 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 23% opposite the market as a whole.

Armour Residential REIT netted $207.38 based on estimates from nine analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 72% less than the market as a whole.

Student Transportation Inc (NASDAQ:STB) netted $160.78 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 16% less than the market as a whole.

Fifth Street Finance Corporation netted $160.50, based on dividend plus mean target price estimates from eleven analysts less broker fees. The Beta number showed this estimate subject to volatility 13% less than the market as a whole.

The average net gain in dividend and price was 27.8% on $10k invested as $1k in each of these ten MoPay dogs. This gain estimate was subject to average volatility 34% less than the market as a whole.

The stocks listed above were suggested only as decent starting points for a MoPay dog dividend stock purchase research process in February, 2014. These were not recommendations.

Gains as reported do not factor-in any tax problems resulting from dividend, profit, or return of capital distributions. Consult your tax advisor regarding the source and consequences 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.

Disclosure: I am long AT, ARR, FSC, CSCO, GE, CVX, 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.