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 13 were supplemented with analyst 1-yr target projections to reveal four actionable conclusions discussed below.
Wall Street Wizard Weightings
One-year mean target price set by brokerage analysts multiplied by the number of shares in a $1k investment revealed 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 have provided the most accurate mean target price estimates.
Actionable Conclusion (1) Ten MoPaySML Dividend Dogs Chased 11% to 43% 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 (NYSE:FSC) sixth, and Stellus Capital Investment Corporation (NYSE:SCM), eighth.
Four basic materials concerns placed third, fifth, seventh, and ninth: QR Energy LP (NYSE:QRE); Pacific Coast Oil Trust (NYSE:ROYT); LinnCo LLC (LNCO); Linn Energy LLC (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 13 MoPaySML top dog list.
Actionable Conclusion (2): MoPaySML Dogs Ran From Bears As Dow Dogs Were Mixed Up
MoPaySML top ten dogs increased in dividend 2.4% since May 2 while total single share price of the top ten fell 1.8% for the period to verify a bearish sign.
Dow dogs showed a mixed up sign as projected annual dividend from $10k invested as $1K in each of the top ten Dow dogs increased 0.75% since May 2, while aggregate single share price rose 1.8%. 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) widened again. 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, inched down to $173 or 47% May 2, then widened to $188 or 51% May 13. Some of the recent move was attributable to Merck & Co. Inc. replacing Coca-Cola Co. in the top ten Dow dog list since May 2.
Actionable Conclusion (3): Wall Street Wizards Wanted 18.8% 1 yr. Net Gain from Top 20 MoPaySML Dogs By May 13, 2015
Top 20 dogs on the MoPay stock list were graphed below to show relative strengths by dividend and price as of May 13, 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.
Yahoo numbers showed 8.9% 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 13.2% 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 20.4% to 48.3% by May 13, 2015
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 time the dog strategy for this collection as graded by Wall St. wizards was 70% accurate.
Ten probable profit generating trades were revealed by Thompson/First Call in Yahoo Finance into 2015:
Enduro Royalty Trust (NYSE:NDRO) netted $483.46 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 $338.25, 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.
Prospect Capital Corp netted $320.12 based on estimates from ten analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 14% less than the market as a whole.
American Realty Capital (ARCP) netted $294.41 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.
Home Loan Servicing Solutions Ltd. (NASDAQ:HLSS) netted $267.35 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 24% less than the market as a whole.
Linn Energy LLC netted $261.97 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 $225.76 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.
Fifth Street Finance (FSC) netted $219.39, based on dividend plus mean target price estimates from eleven analysts less broker fees. The Beta number showed this estimate subject to volatility 32% less than the market as a whole.
Pacific Coast Oil Trust (ROYT) netted $210.13 based on dividends plus a mean target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 46% opposed to the market as a whole.
QR Energy LP netted $204.40 based on dividends plus the mean of annual price estimates from twelve analysts less broker fees. The Beta number showed this estimate subject to volatility 33% less than the market as a whole.
The average net gain in dividend and price was 28.3% on $10k invested as $1k in each of these ten MoPay dogs. This gain estimate was subject to average volatility 65% 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 mid-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.
Disclosure: I am long ARR, AT, FSC, CSCO, CVX, GE, INTC, MCD, PFE, T, VZ, PGH. 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.