Monthly Pay Dogs: 3 Buy And Hold Lists For April

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Includes: ARR, AT, CEFL, CHMI, CLM, CRF, DVHL, GECC, GLDI, HGT, JMI, LINEQ, LNCOQ, MORL, OAKS, ORC, PHK, PSEC, ROYT
by: Fredrik Arnold

Summary

This early April snapshot of Monthly paying dividend (MoPay) investments revealed three lists: 1. Stocks by yield 2. Stocks by price upside 3. Funds, Trusts & Partnerships (FTP) by yield.

Six actionable conclusions were drawn: 1. MoPay dogs vs. Dow dogs; 2. Net gain from top ten; 3. Net gain from next ten; 4. Top gains; 5. MoPayFTPs; 6. Risks.

Consider these lists and conclusions as possible starting points for your MoPay dividend dog stocks, funds, trusts & partnerships purchase research.

Three buy and hold lists featured in the article below led to six actionable conclusions. To draw these conclusions, March 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.

Readers say:

"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 nearly 700 entities listed here paying monthly returns. All were ranked as of April 2, 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

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Ten monthly pay dividend equities showing the best yields for March represented just three of the nine Yahoo market sectors, financials (Fins), basic materials (BasMat) and, utilities (Utes). Top four dog stocks revealed by Yahoo Finance data were four of seven in the financial sector: Orchid Island Capital Inc. (NYSE:ORC); Armour Residential REIT (NYSE:ARR); Javelin Mortgage Investment Corp. (NYSE:JMI); Five Oaks Investment Corp. (NYSE:OAKS). The remaining three financial MoPay dogs placed seventh, eighth, and tenth: Prospect Capital Corporation (NASDAQ:PSEC); Full Circle Capital Corporation (FULL); Cherry Hill Mortgage Investment Corp (NYSE:CHMI).

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, Pacific Coast Oil Trust (NYSE:ROYT), placed ninth on the list. The lone utility Atlantic Power Corp. (NYSE:AT) placed sixth to round out the March 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 April 2 were compared with analyst mean target prices one year hence. Ten stocks for March dropped in price but boasted 6% to 26% price upsides for the coming year.

Four stocks on the price upside list were not on the top ten list by yield: LinnCo LLC (LNCO), a favorite from basic materials, projected a 26.05% price upside to lead the field; the sister company, Linn Energy LLC (LINE), showed 17.59% upside; Harvest Capital Credit Corp. from the financial sector had 13.87% upside; Stellus Capital Investment Corporation, a recent finding suggested by readers, showed 11.82% upside. Price upside, of course, is defined as the discrepancy between the current 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 nearly 700 candidates by yields calculated as of April 2 to determine the Top Ten.

Ten monthly dividend funds, trusts and partnerships showing the biggest yields for March featured five exchange traded notes and five closed-end funds. Top dog was one of the five ETNs, ETRACS Monthly Pay 2X Leveraged Mortgage REIT ETN (NYSEARCA:MORL). Other ETNs placed fourth, and seventh through ninth: Credit Suisse AG - Credit Suisse Silver Shares Covered Call (SILVO), UBS E-TRACS 2X ClosedEnd ETN (NYSEARCA:CEFL), Credit Suisse Gold Shrs Cov Call (NASDAQ:GLDI), and UBS E-TRACS Mthly Pay 2x Divs Hi Income ETN (NYSEARCA:DVHL).

Five closed-end funds as revealed by divideds.com and verified using Yahoo Finance data placed second; third; fifth; sixth; tenth: Cornerstone Progressive Return Fund (NYSEMKT:CFP); Cornerstone Strategic Value Fund, Inc. (NYSEMKT:CLM); Cornerstone Total Return Fund, Inc (NYSEMKT:CRF); Nuveen Insured New York Premium Income Municipal Fund, Inc. (NNF); Pimco High Income Fund Com Shs (NYSE:PHK).

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 an 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 the January, and February 2014 articles. 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

Ten top MoPay dividend dog stocks by yield were graphed below as of April 2, 2014 and compared to those of the Dow. Annual dividend history from $1000 invested in each of the ten highest yielding stocks and their aggregate single share price created the data points shown in green for price and blue for dividends.

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Actionable Conclusion (1): MoPay Dogs Retreated While Dow Dogs Chased Bulls After February

The ten top MoPay dividend dogs got bearish since February. Aggregate dividend from $10k invested as $1k in each of the top ten stocks went up 2% while total single share price of those ten fell 10%.

Joy returned to the Dow dogs as projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs fell 2.7% since February. Aggregate single share price swelled 2.7% to confirm the bullish sign. The Dow dogs overbought condition grew as aggregate single share price of the ten exceeded projected annual dividend from $1k invested in each of the ten. The overhang was $145 or 38% for January, then retreated to $125 or 33% in February, then swelled to $149 or 40% in March. Most of this recent joy on the Dow was triggered by across the board price improvement propelling dividends lower 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. Wizards Wished 19.5% 1 yr. Net Gain from Top 10 March MoPay Dogs

Top dogs on the MoPay stock list were graphed below to show relative strengths by dividend and price as of April 4, 2014 compared those projected by analyst mean price target estimates to the same date in 2015.

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 2014. 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 2015 data points in blue for dividend and green for price. Note: one year target prices from one analyst were not applied (n/a).

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Yahoo projected a 7.7% lower dividend from $10K invested as $1k in the top ten March MoPay dogs while aggregate single share price was projected to increase by over 9% in the coming year.

Actionable Conclusion (3): Analysts Forecast NEXT10 MoPay DiviDog Net Gains of 15.7% to March 2015

Ten monthly dividend equities that showed the next best yields as of April 2 represented the same three of the nine Yahoo market sectors as the top dogs: basic materials, financials, and utilities.

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The NEXT ten dogs showed a near 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 9.4% 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 were 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 17.3% to 34.5% Gains by March 2015

Six 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. Thus the dog strategy for this MoPay group as tallied April 2 by Wall St. wizards was 60% accurate.

Ten probable profit generating trades revealed by Yahoo Finance come March 2015 were:

LinnCo, LLC netted $345.25 based on dividends plus the mean of annual 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.

Orchid Island Capital Inc. netted $344.69 based on estimates from two analysts plus dividends less broker fees. A Beta number was not available for ORC.

Pacific Coast Oil Trust netted $260.70 based on dividends plus a mean target price estimate from three analysts less broker fees. The Beta number showed this estimate subject to volatility 88% less than the market as a whole.

Linn Energy LLC. netted $257.28 based on dividends plus mean target price estimate from thirteen analysts less broker fees. The Beta number showed this estimate subject to volatility 33% less than the market as a whole.

Atlantic Power Corp netted $241.32 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 63% less than the market as a whole.

Cherry Hill Mortgage Investment Corp. netted $212.72 based on estimates from five analysts plus dividends less broker fees. A Beta number was not available for CHMI.

Harvest Capital Credit netted $210.46 based on estimates from two analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 61% greater than the market as a whole.

Stellus Capital Investment netted $192.52, based on dividend plus mean target price estimates from six analysts less broker fees. The Beta number showed this estimate subject to volatility 61% less than the market as a whole.

Prospect Capital Corp. netted $187.88 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 15% less than the market as a whole.

Five Oaks Investment Corp netted $172.58, based on dividend plus mean target price estimates from three analysts less broker fees. The Beta number showed this estimate subject to volatility 136% greater than the market as a whole.

The average net gain in dividend and price was 24.25% on $1k invested in each of these ten MoPay dog stocks. This gain estimate was subject to average volatility 29% less than the market as a whole.

Fund & Trust Dividend and Price Results vs. MoPay Top Ten Stocks

Below relative strengths for the top ten MoPay F&T Dogs by yield was graphed as of April 2, 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).

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Actionable Conclusion (5): MoPay Top Ten DiviDog Funds & Trusts Mixed Upward As Stocks Were Bearish in March

Charts show MoPay funds and trusts soared markedly in dividend and also climbed in price since February. Projected dividend from $10k invested as $1k in each of the top ten funds and trusts popped up 20% while aggregate single share price of the top ten over the same period also rose 13%.

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, shrank to 934% in February, then widened to 998% through March.

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, scaled back to 1018% in February, then widened to 1170% through March.

As of April 2 the top MoPay fund and trust dogs showed $355 or 27% more dividend at a $48 or 47% higher aggregate single share price than the MoPay stocks top ten.

Actionable Conclusion (6): Buy and Hold Monthly Dividend Paying Stocks, Funds, Trusts, and 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.

Graphs and charts were compiled by R&R, LLC from data derived from www.dividend.com; finance.yahoo.com; analyst mean target price by Thompson/First Call in Yahoo Finance.

Disclosure: I am long ARR, AT, ERF, FSC, HRZN, PGH, CSCO, CVX, GE, INTC, MCD, 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.