Three buy and hold lists featured below provided seven actionable conclusions. To draw these conclusions, June 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 preferred 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
"If one buys just before the ex date and sells after the record date, the drop in price cancels out the dividend. So, I do not understand the wisdom of this strategy as submitted by a reader." --tstreet
"[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
"[Y]ou list a few issues here whose distributions are rife with RETURN OF CAPTAL (ROC) at its most destructive form, funds that pay you back your own money each and every month in their distributions with no regard to what they truly earn...- these should not be included in any list containing the word "dividend". --NYer1
"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
"Dividend dog investing really works well for income in my experience. I have been seriously invested in dogs the more unloved the better." --Urbannek
"...Nice to see another contrarian strategy. This one seems to take a lot of attention in comparison [to Dow dogs], but I like the monthly rebalance." --colodude
"Why do the analysts seem to hate this group of stocks ??. I know they are not buy & hold but I have made huge $ off of all of them." --drking
Dogs of the Index Metrics Found Bargains
For this article fifty-five dividend equities plus sixty funds, trusts, and preferreds were culled from nearly 700 entities listed here paying monthly returns. All were ranked as of June 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 in June represented just two of the nine Yahoo market sectors: financials (Fins), and basic materials (BasMat). The top five dogs revealed by Yahoo Finance data were five of seven in the financial sector: Orchid Island Capital Inc (NYSE:ORC); Armour Residential REIT (NYSE:ARR); Five Oaks Investment Corp. (NYSE:OAKS); Javelin Mortgage Investment Corp. (NYSE:JMI); Prospect Capital Corporation (NASDAQ:PSEC). The remaining two financial MoPay dogs placed seventh, and tenth: Full Circle Capital Corporation (NASDAQ:FULL); Fifth Street Finance (NASDAQ:FSC).
The sixth, eighth and ninth slots in the top ten were filled by basic materials concerns: Hugoton Royalty Trust (NYSE:HGT); Pacific Coast Oil Trust (NYSE:ROYT); QR Energy LP (NYSE:QRE) to complete the June MoPay top dog list by yield.
Footnote: June marked the passing of Just Energy (NYSE:JE) as a MoPay dog to the QPay zone. Besides changing frequency of dividends, the company chose to sell assets and cut its dividend to save its financial life.
List Two: Monthly Pay Dividend Stocks by Price Upside & Downside
Results from Yahoo Finance for monthly paying (MoPay) dividend stocks as of market closing prices June 27 were compared with analyst mean target prices one year hence. Ten stocks for June boasted 2.96% to 13.64% price upsides for the coming year
Three stocks on the price upside list were not on the top ten list by yield. Two basic materials firms placed second and seventh on the upside list, LinnCo, LLC (NASDAQ:LNCO) and Linn Energy LLC (LINE). One financial firm placed ninth: Stellus Capital Investment Corporation (NYSE:SCM). Price upside, of course, is defined as the discrepancy between the current price and analyst one year mean target price for each stock. The solitary down dog, Atlantic Power Corp. (NYSE:AT) was also not one of the top ten.
Ten 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, Trusts & Preferreds by Yield
Sixty top monthly dividend paying (MoPay) funds, trusts and preferred issues listed below were culled from nearly 700 candidates by yields calculated as of May 30 to determine the Top Ten.
Ten monthly dividend funds, trusts and preferreds showing the biggest yields for June as revealed by dividends.com and verified using Yahoo Finance data featured six closed-end funds (CEFs), three exchange traded notes (ETNs), and one exchange traded fund (ETF).
Top dogs were three of the six CEFs: Cornerstone Progressive Return Fund (NYSEMKT:CFP), Cornerstone Strategic Value Fund, Inc. (NYSEMKT:CLM) and Cornerstone Total Return Fund, Inc. (NYSEMKT:CRF) . The other three CEFs placed eighth through tenth: Pimco High Income Fund Com Shs (NYSE:PHK); Western Asset High Income Fund II Inc (NYSE:HIX); Claymore/Guggenheim Strategic Opportunities Fund (NYSE:GOF).
Tops of the three ETNs, ETRACS Monthly Pay 2X Leveraged Mortgage REIT ETN (NYSEARCA:MORL), placed fourth. The other ETNs placed fifth & sixth: UBS E-TRACS 2X ClosedEnd ETN (NYSEARCA:CEFL), & Credit Suisse AG - Credit Suisse Silver Shares Covered Call (SILVO). The lone ETF in the top ten, Recon Capital NASDAQ-100 Covered Call ETF (NASDAQ:QYLD) placed seventh to round out this list.
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 readers contributed mightily. Reader suggestions have continued this year following the January, February, March, April, and May 2014 articles. All these articles compared and contrasted MoPay stock upside potential against high yield (and higher risk) buy and hold fund, trust and preferred share constituents.
MoPay Stock Dividend vs. Price Compared to Dow
Ten top MoPay dividend dog stocks by yield were graphed below as of June 27, 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.
Actionable Conclusion (1): MoPay Dogs Were Mixed Lower As Dow Dogs Got Bullish In June
The ten top MoPay dogs sagged in both dividend and price in June thus becoming "mixed lower". Aggregate dividend from $10k invested as $1k in each of the top ten stocks fell 1.4% while total single share price of those ten dropped 12.7% since May.
Meanwhile, Dow dogs romped bullishly by showing lower annual dividend from $10k invested as $1K in each of the top ten Dow dogs, dropping 2% since May, while aggregate single share price increased 1.7%. As a result, the Dow dogs overbought condition (in which aggregate single share price of the ten exceeded projected annual dividend from $10k invested as $1k each in those ten) expanded to a new high. The overhang was $145 or 38% for January; retreated to $125 or 33% in February; swelled to $149 or 40% in March; expanded to $173 or 47% in April; shrank to $170 or 46% come May; swelled to $192 or 53% for June. Recent frolic by the Dow was triggered by general price rises most notably by INTC, & CSCO.
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 provided another tool to dig out bargains.
Actionable Conclusion (2): Wall St. Wizards Wished A Near 12% 1 yr. Net Gain from Top 10 June MoPay Dogs
Top dogs on the MoPay stock list were graphed below to show relative strengths by dividend and price as of June 27, 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).
Yahoo projected an 4.5% lower dividend from $10K invested as $1k in the top ten June MoPay dogs while aggregate single share price was projected to increase by nearly 5.2% in the coming year.
Actionable Conclusion (3): Analysts Forecast NEXT10 MoPay DiviDog Net Gains of 7.8% to June 2015
Ten monthly dividend equities that showed the next best yields June 27 represented three of the nine Yahoo market sectors: financials, basic materials, and utilities.
The NEXT ten dogs showed 0.5% more dividend from $10k invested as 1k in each stock while aggregate single share price for the next ten was projected by analysts to increase 24% 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 charts. 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 12% to 22.9% Gains Through June 2015
Seven 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 June 27 by Wall St. wizards was 70% accurate.
Ten probable profit generating trades revealed by Yahoo Finance come June 2015 were:
Pacific Coast Oil Trust netted $229.61 based on dividends plus a mean target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 45% opposite the market as a whole.
LinnCo, LLC netted $209.43 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.
Prospect Capital Corp. netted $202.43 based on dividends plus the mean of annual price estimates from ten analysts less broker fees. The Beta number showed this estimate subject to volatility 17% less than the market as a whole.
Orchid Island Capital Inc netted $199.16 based on estimates from two analysts plus dividends less broker fees. A Beta number was not available for ORC.
Five Oaks Investment Corp. netted $196.19 based on estimates from three analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 135% greater than the market as a whole.
Fifth Street Finance netted $142.24 based on estimates from fourteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 32% less than the market as a whole.
Linn Energy LLC. netted $130.52 based on dividends plus mean target price estimate from fourteen analysts less broker fees. The Beta number showed this estimate subject to volatility 34% less than the market as a whole.
Full Circle Capital netted $128.01 based on a mean target price estimate from two analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 64% less than the market as a whole.
Stellus Capital Investment netted $125.89, based on dividend plus mean target price estimates from five analysts less broker fees. The Beta number showed this estimate subject to volatility 97% less than the market as a whole.
QR Energy LP netted $120.79, based on dividend plus mean target price estimates from eleven analysts less broker fees. The Beta number showed this estimate subject to volatility 35% less than the market as a whole.
The average net gain in dividend and price was 16.8% on $1k invested in each of these ten MoPay dog stocks. This gain estimate was subject to average volatility 42% less than the market as a whole.
Actionable Conclusion (5): (Bear Alert) Analysts Forecast AT to Post Net Loss of 14.2% By June 2015
The probable losing trade revealed by analysts reported by Thompson/First Call in Yahoo Finance for 2015 was:
Atlantic Power Corp was projected to lose $142.45 based on dividend and a mean target price estimate from four analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 38% more than the market as a whole.
Top Ten Fund, Trust & Preferred Dividend & Price Results vs. MoPay Stocks
Below relative strengths for the top ten MoPay FTP Dogs by yield was graphed as of June 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 (6): MoPay Top Ten DiviDog Funds, Trusts & Preferreds Got Bullish As Stocks Mixed Lower Into June
Charts above show MoPay funds, trusts & preferreds sank in dividend but climbed in price to run with bulls after May. Projected dividend from 10k invested as $1k in each of the top ten funds and trusts dropped 8.4% while aggregate single share price of the top ten over the same period rose 5.1%.
The gap between aggregate single share price of top ten MoPay funds and trusts and their projected dividend from $1k invested in those ten equities has varied markedly over the past year. The gap increased from 1,148% in November, to 1,458% for December, retreated to 1,221% in January, shrank to 934% in February, widened to 998% through March, retreated to 992% in April, retreated again to 961% for May, and pulled back again to 825% for June.
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, widened to 1170% through March, retreated to 1022% in April, dropped to 883% in May, but widened to 1010% for June.
As of June 27 the top MoPay fund, trust and preferred dogs showed $184 or 15% more dividend at a $42 or 38% higher aggregate single share price than the MoPay stock top ten.
Actionable Conclusion (7): Buy and Hold Monthly Dividend Paying Stocks, Funds, Trusts, & Preferreds 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 FT&P dog diligence only revealed a list of funds and trusts to buy and hold if you dare.
Net gain and loss 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 or sale 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: The author is long ARR, AT, FSC, ERF, PGH, CSCO, CVX, GE, INTC, MCD, MSFT, PFE, T, VZ. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.