Three buy and hold lists are featured in the article below. These lists are backed by six actionable conclusions. To do so, February monthly pay (MoPay) stock (1) yield and (2) upside potential lists were compared and contrasted against (3) a high yield (and higher risk) MoPay buy and hold fund, trust, and partnership list.
Monthly Pay Dividend Features
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. The segment is volatile.
"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." --TennisBoy88
"[A] 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]." --arbtrdr
"Mopay dividends reinvested will return almost 1% more yearly than quarterly payors as it compounds faster." --drking
"I can enter or exit a position and still reap dividends for at least 2/3s of the quarter. They also smooth the income stream so I have cash at any given time to make a purchase at dips." --Ed Invests
Dogs of the Index Metrics Found Bargains
For this article fifty-two dividend equities plus sixty funds, partnerships, and trusts were culled from over 650 entities listed here paying monthly returns. All were ranked as of February 27, 2014 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.
List One: Monthly Pay Dividend Stocks by Yield
Ten monthly pay dividend equities showing the best yields for February represented just three of the nine Yahoo market sectors, financials (Fins), utilities (Utes), and basic materials (BasMat). Top two dog stocks revealed by Yahoo Finance data were two of six in the financial sector: Orchid Island Capital Inc (NYSE:ORC), & Armour Residential REIT (NYSE:ARR). The remaining four financial MoPay dogs placed fourth, fifth, seventh, and tenth: Five Oaks Investment Corp. (NYSE:OAKS); Javelin Mortgage Investment Corp. (NYSE:JMI); Prospect Capital Corporation (NASDAQ:PSEC); Fifth Street Finance (NASDAQ:FSC).
The third slot in the top ten was filled by the lone utility on the list, Atlantic Power Corp (NYSE:AT). Three basic materials concerns placed sixth, eighth and ninth: Pacific Coast Oil Trust (NYSE:ROYT); Enduro Royalty Trust (NYSE:NDRO); Mesa Royalty Trust Units (NYSE:MTR) to round out the February MoPay top dog list by yield.
List Two: Monthly Pay Dividend Stocks by Price Upside
Results from Yahoo Finance for monthly paying (MoPay) dividend stocks as of market closing prices February 27 were compared with analyst mean target prices for one year hence. The same three stocks as January dropped in price and boasted 25.95% to 43.38% price upsides. Atlantic Power Corp a long falling knife, infamous electric utility, loved by bears and analysts but with a new credit line hoping to attract stockholders, showed the lesser 25.95% upside of those three. In the middle, Pacific Coast Oil Trust an Austin, TX headquartered independent oil & gas firm showed 26.48% At the top, Enduro Royalty Trust another Austin based independent oil and gas firm exhibited a 43.38% upside to lead the February MoPay dogs. Seven more members of the MoPay pack showed 7.59% to 19.16% price upsides.
Five stocks on the price upside list not seen in the top ten list by yield: Banco Bradesco S.A (NYSE:BBD) showed 19.16% upside; LinnCo LLC (LNCO) a favorite from basic materials projected a 17.81% price upside; Breitburn Energy Partners (BBEP), a recent graduate to the MoPay ranks from Q-pay in the basic materials sector, showed 11.42% upside; Stellus Capital Investment Corporation (NYSE:SCM) a new finding suggested by readers showing 11.61% upside; Harvest Capital Credit Corp. (NASDAQ:HCAP), from the financial sector with 9.12% upside. Price upside, of course, is defined as the discrepancy between the February price and analyst one year mean target price estimate for each stock.
MoPay stocks showing the highest upside price potential into 2015 were listed above 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.
List Three: Monthly Pay Dividend Funds and Trusts by Yield
Sixty top monthly dividend paying (MoPay) funds and trusts listed below Were culled from over 700 candidates by yields calculated as of February 27 to determine the Top Ten.
Ten monthly dividend funds, trusts and partnerships showing the biggest yields for February featured one exchange traded note, seven closed-end funds, one trust and a single exchange traded fund. Top dog was the lone ETN, ETRACS Monthly Pay 2X Leveraged Mortgage REIT ETN (NYSEARCA:MORL). The trust, Gabelli Global Gold Natural Resources & Income Trust (NYSEMKT:GGN) was seventh. The ETF, UBS AG LONDON NTS 10/12/43 USD1 (NYSEARCA:CEFL) was eighth.
Seven closed-end funds as revealed by dividends.com and verified using Yahoo Finance data placed second through sixth, ninth and tenth: Cornerstone Strategic Value Fund, Inc. (NYSEMKT:CLM); Cornerstone Progressive Return Fund (NYSEMKT:CFP); Cornerstone Total Return Fund, Inc (NYSEMKT:CRF); Pimco High Income Fund Com Shs (NYSE:PHK); First Trust / Aberdeen Global Opportunity Income Fund Com Shs (NYSE:FAM); Claymore/Guggenheim Strategic Opportunities Fund (NYSE:GOF); ING Global Equity Dividend & Premium Opportunity Fund (NYSE:IGD).
Background and Actionable Conclusions
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 a docile, sleeping dogs list was supplemented by an upside potential article in October and a upside vs. buy & hold in November. One list factored December 2012 reader comments. January, February, March, April, May, June, July, August, September, October, November, and December 2013 reader input all contributed as did those to the January 2014 article. All compared and contrasted MoPay stock upside potential against high yield (and higher risk) buy and hold fund, trust and partnership constituents.
MoPay Stock Dividend vs. Price Compared to Dow Dogs
Relative strength for the top ten MoPay dividend dog stocks by yield was graphed below as of February 27, 2014 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 Dogs Bullish As Dow Dogs Retreated After January
Top ten MoPay dividend dogs got bullish since January. Aggregate dividend from $10k invested as $1k in each of the top ten stocks dropped at a rate of 0.7% while total single share price of those ten increased at a 16% rate for that period.
Gloom returned to the Dow dogs as projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs increased 0.62% since January. Aggregate single share price fell 3.4% to confirm the bearish sign. 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 fell back. The overhang was $140 or 38% in November, closed a bit to $111 or 29% for December, expanded to $145 or 38% for January, then retreated to $125 or 33% in February. Most of this recent gloom on the Dow was triggered by Coca Cola Co. (NYSE:KO) replacing Microsoft (NASDAQ:MSFT) at the tail of the top ten Dow accompanied by a General Electric (NYSE:GE) price drop propelling GE higher by yield.
To quantify top dog rankings, analyst mean price target estimates provide a "market sentiment" gauge of upside potential. Added to the simple high yield "dog" metric, analyst mean price target estimates is another tool used to dig out bargains
Actionable Conclusion (2): Wall St. Wizard Wisdom Wished 23.9% 1 yr. Net Gain from Top 10 February MoPay Dogs
Top dogs on the MoPay stock list were graphed below to show relative strengths by dividend and price as of February 27, 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 11% lower dividend from $10K invested as $1k in the top ten February MoPay dogs while aggregate single share price was projected to increase by over 12% in the coming year.
Actionable Conclusion (3): Analysts Forecast NEXT10 MoPay DiviDog Net Gains of 15.7% to February 2105
Ten monthly dividend equities that showed the next best yields February 27 represented three of the nine Yahoo market sectors: utilities, basic materials, and financials.
The NEXT ten dogs showed a 6.7% 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 10.8% 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 above 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 opposed to market direction.
Actionable Conclusion (4): Analysts Project Ten MoPay Dog Stocks to Net 16% to 53% Gains by February 2015
Five of the ten top dividend yielding MoPay dogs were verified as being among the Top ten gainers for the coming year based on analyst 1 year target prices. So as of February 27 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 $530.08 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.
Atlantic Power Corp netted $376.95 based on a mean target price estimate from five analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 61% less than the market as a whole.
Pacific Coast Oil Trust netted $366.19 based on dividends plus a mean target price estimate from five analysts less broker fees. A Beta number was not available for ROYT.
Orchid Island Capital Inc netted $331.72 based on estimates from two analysts plus dividends less broker fees. A Beta number was not available for ORC.
LinnCo, LLC netted $289.461 based on dividends plus the mean of annual price estimates from nine analysts less broker fees. A Beta number was not available for LNCO.
Banco Bradesco S.A netted $260.17 based on estimates from seven analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 61% greater than the market as a whole.
Breitburn Energy Partners netted $193.29 based on dividends plus the mean of annual price estimates from eighteen analysts less broker fees. The Beta number showed this estimate subject to volatility 30% less than the market as a whole.
Stellus Capital Investment netted $189.20, based on dividend plus mean target price estimates from four analysts less broker fees. A Beta number was not available for SCM.
Prospect Capital Corp. netted $176.53 based on dividends plus the mean of annual 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.
Harvest Capital Credit netted $159.15, based on dividend plus mean target price estimates from two analysts less broker fees. A Beta number was not available for HCAP.
The average net gain in dividend and price was 28.7% on $1k invested in each of these ten MoPay dog stocks. This gain estimate was subject to average volatility 20% less than the market as a whole.
Fund & Trust Dividend & Price Results vs. MoPay Top Ten Stocks
Below relative strengths for the top ten MoPay F&T Dogs by yield was graphed as of February 27, 2014 and compared to those of the top ten stocks. Twelve 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 Mixed Downward As Stocks Went Bullish in January
Charts show MoPay dividend dog funds and trusts decreased markedly in dividend and also dropped in price since January. Projected dividend from 10k invested as $1k in each of the top ten funds and trusts dropped 28.5% while aggregate single share price of the top ten over the same period also fell just 8.6%.
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 1,148% in November, to 1,458% for December, retreated to 1,221% in January, and shrank to 934% in February.
For stocks the gap between aggregate single share price and dividend from $1k invested in each was 1184% in November, surged to 1348% in December, shrank to 1204% for January, and scaled back to 1018% in February.
As of February 27 the top MoPay fund and trust dogs showed $105 or 8% more dividend at a $19 or 17% higher aggregate single share price than the MoPay stocks top ten.
Actionable Conclusion (6): Buy and Hold Monthly Dividend Paying Stocks, Funds, Trusts, & Partnerships 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.
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.
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, CSCO, CVX, GE, 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.