Seeking Alpha
Dividend investing, growth, momentum
Profile| Send Message|
( followers)  

Summary

  • 10 top monthly pay (MoPay) SML dividend dogs showed substantive 1 yr. analyst mean target price upsides averaging over 21% as of May 2.
  • MoPaySML dogs chased bulls as & Dow dogs dithered down since mid-April.
  • Analysts project average 28.4% 1 yr. net gains for NDRO, LNCO, ARCP, PGH, HLSS, LINE, SCM, ROYT, PSEC, & STB.
  • Consider these as starting points for your MoPaySML dog dividend stock purchase research.

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 May 2 were supplemented with analyst 1-yr target projections to produce four actionable conclusions discussed below.

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 reveal 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 Dividend Dogs Pursued 10% to 39% Upsides

Thirty For the Money

This article revealed bargain stocks to buy and hold for at least one year. 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 expanded the stock universe to include popular growth equities, if desired.

Dog Metrics Extracted Bargains

Thirty small, mid, and large cap monthly return stocks were culled from over 650 equities of all types for this article. Funds, partnerships and preferred shares were excluded but Real Estate Investment Trusts made the list along with common shares.

Ten monthly pay SML Cap dividend equities showing top yields, represented the usual trio from the nine Yahoo market sectors: financials, basic materials, & utilities. Top dog Armour Residential REIT (NYSE:ARR) was one of four financial sector firms listed. Others were Prospect Capital Corporation (NASDAQ:PSEC) second, Fifth Street Finance (NASDAQ:FSC) fifth, and Stellus Capital Investment Corporation (NYSE:SCM), ninth.

Four basic materials concerns placed third, and sixth through eighth: Pacific Coast Oil Trust (NYSE:ROYT); LinnCo LLC (NASDAQ:LNCO); QR Energy LP (NYSE:QRE); Linn Energy LLC (NASDAQ:LINE). Finally, two utilities, Atlantic Power Corp (NYSE:AT), and Just Energy Group, Inc. (Canada) (NYSE:JE) placed fourth and tenth by yield to complete the May 2 MoPaySML top dog list.

Actionable Conclusion (2): MoPaySML Dogs Ran With Bulls & Dow Dogs Dithered Down

(click to enlarge)

MoPaySML top ten dogs dropped in dividend 1% since April 17 while total single share price of the top ten increased 0.25% for the period to confirm the bull signal.

Dow dogs dithered down as projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs dropped 1% since April 17, while aggregate single share price fell 2%. 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) shrunk a touch. The overhang of $128 or 33% March 5, widened to $150 or 40% March 24, shrank to $75 or 19% by April 8, gapped to $180 or 49% as of April 16, then inched down to $173 or 47% May 2. Some of the recent move was attributable to Coca-Cola Co. replacing Merck & Co. Inc. in the top ten Dow dog list since April 16.

Actionable Conclusion (3): Wall Street Wizards Wrestled 18.9% 1 yr. Net Gain from Top 20 MoPaySML Dogs By May 2, 2015

Top 20 dogs on the MoPay stock list were graphed below to show relative strengths by dividend and price as of May 2, 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 number of shares were then multiplied by projected annual 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 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.

(click to enlarge)

Yahoo numbers showed 9% 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 over 11% 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 MoPaySML DiviDog Net Gains of 19.7% to 43.9% by May 2, 2015

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 this time 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 into 2015:

Enduro Royalty Trust (NYSE:NDRO) netted $439.13 based on dividends plus mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 70% less than the market as a whole.

Linn Co., LLC netted $351.26, based on dividend plus mean target price estimates from ten analysts less broker fees. The Beta number showed this estimate subject to volatility 88% less than the market as a whole.

American Realty Capital (NASDAQ:ARCP) netted $342.23 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 13% opposite the market as a whole.

Pengrowth Energy Corp (NYSE:PGH) netted $300.67, based on dividend plus mean target price estimates from nine analysts less broker fees. The Beta number showed this estimate subject to volatility 65% greater than the market as a whole.

Home Loan Servicing Solutions Ltd. (NASDAQ:HLSS) netted $240.05 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 24% less than the market as a whole.

Linn Energy LLC netted $258.96 based on a mean target price estimate from fourteen 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.

Stellus Capital Investment netted $252.70 based on estimates from six analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 97% less than the market as a whole.

Pacific Coast Oil Trust netted $232.86 based on dividends plus a mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 88% less than the market as a whole.

Prospect Capital Corp netted $207.06 based on estimates from eleven analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 15% less than the market as a whole.

Student Transportation Inc (NASDAQ:STB) netted $197.39 based on dividends plus the mean of annual price estimates from three analysts less broker fees. The Beta number showed this estimate subject to volatility 22% less than the market as a whole.

The average net gain in dividend and price was 28.4% on $10k invested as $1k in each of these ten MoPay dogs. This gain estimate was subject to average volatility 49% 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 early May, 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.

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

Source: 7 Early May MoPay Dogs Mark 17% To 39% Upsides