AT&T Voted 'Follower Favorite' Dividend Dog For January

|
Includes: BDCL, CLM, CORR, CQP, CVRR, EVOL, MEMP, MORL, NAT, NMM, NS, NYMT, ORC, PNNT, PSEC, RCII
by: Fredrik Arnold

Summary

Arnold followers' responses after December added 21 to the previous 48 "follower favorite" (FFave) stocks, funds, and notes. The 69 yields ranged from 0.12% to 46.36% as of January 28.

10 FFave leaders by yield averaged 24.38%, which continued to retreat sharply into the winter quarter, while Dow dogs mixed up.

The top yields were cast by NMM, CORR, ORC, NYMT, PNNT, CVRR, BDCL, CLM, MORL, and MEMP.

30 FFave equities showed upsides averaging 31.03% and net gains averaging 37.92%. Upside gainers added NS, PSEC, CQP, EVOL, and RCII to the FFave topper lists.

$5k invested in the lowest-priced five top yield FFaves showed 35.67% more net gain than from$5k invested in all ten. Use these lists as guides to your February favorite dog.

How Followers Voted

Around noon on Wednesday, December 9, I sent a group message to 5,600 registered "followers" of Fredrik Arnold through the Seeking Alpha messaging system. I repeated a September 21 invitation to "participate in an informal follower survey and tell me [their] favorite dividend stock."

In exchange, I offered to e-mail a pdf of my top-performing of the (then) seventeen "dog of the week" (DOTW) articles to any respondent furnishing their e-address. My DOTW selections are published every Sunday exclusively on my Seeking Alpha premium page. The DOTW list is now up to twenty-three.

As responses came in, some listed more than one ticker symbol. Only the first was accepted. Also, many duplicate favorites were tagged. Verizon (NYSE:VZ), AT&T (NYSE:T), Southern Company (NYSE:SO), Starbucks (NASDAQ:SBUX), Prospect Capital Corporation (NASDAQ:PSEC), Philip Morris (NYSE:PM), Orchid Island Capital (NYSE:ORC), Realty Income (NYSE:O), Northern Tier Energy (NYSE:NTI), the ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN (NYSEARCA:MORL), Altria (NYSE:MO), Procter & Gamble (NYSE:PG), Johnson & Johnson (NYSE:JNJ), Dow Chemical (NYSE:DOW), Cornerstone Strategic Value Fund (NYSEMKT:CLM), and the ETRACS 2xLeveraged Long Wells Fargo Business Development Company ETN (NYSEARCA:BDCL) had multiple nominations. A list of forty-eight emerged and was published on December 21.

After mid-December, responses continued to show up in my SA messaging inbox. Only those that included an e-address got the report, and only stocks from those e-mails including followers were added to the list.

So, if you sent in a stock name and it's not among the sixty-nine below, you may have forgotten to include your e-address or (in four or five cases) forgotten to include the stock name. Try again to e-mail me your favorite dividend stock at fredrika120@gmail.com.

I'll be sending another follower e-blast soon. I'll be announcing the top money dividend dog of the week for Q1. Yes, the current list is up to 69, and two stocks eclipsed O, the most mentioned follower favorite. T was mentioned ten times, MO was listed by 9 fans, and O with 8 fell to third place in the popularity department.

But it's tangible financial results we're after, So here goes...

Sixty-nine for the Money

Yield (dividend / price) results from here verified by Yahoo Finance for "follower favorite" stocks as of market closing prices on 1/28/16 revealed the actionable conclusions discussed below. See the Dow 30 article for an explanation of the term "dogs" for stocks reported, based on Michael B. O'Higgins' book "Beating The Dow" (HarperCollins, 1991), now 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, as desired.

Dog Metrics Parsed "Follower Favorite" Stocks by Yield

Click to enlarge

Sixty-nine companies listed above were sorted by actual 2015 gains plus projected analyst 1-year target gains to January 28, 2017. A little more than half the stocks, led by Nordic American Tankers Limited (NYSE:NAT), were estimated as gainers. Thirty-three showed negative results.

Actionable Conclusion: (1): MEMP Continued to Lead FFaves By Yield

Forty-eight companies listed above were first sorted by yield as of December 11 to reveal the previous top ten "follower favorite" dogs that promised top yields. Twenty-one were since added to that list, and the whole kit and kaboodle of 69 was sorted as of January 28 to reveal the top firms from three of nine possible business sectors plus one fund and two exchange-traded notes as the top perch-seeking cat birds.

Top FFave stock by yield, Memorial Production Partners LP (NASDAQ:MEMP) [1], was tops of two basic materials firms. The other basic firm placed fifth: CVR Refining, LP (NYSE:CVRR) [5].

Two exchange-traded notes placed second and fourth respectively: UBS ETRACS Monthly Pay 2x Leveraged Mortgage REIT ETN [2] and UBS ETRACS 2x Leveraged Long Wells Fargo Business Development Company ETN [4].

One closed-end fund placed third: Cornerstone Strategic Value Fund, Inc. [3].

Four financial firms placed sixth through ninth - three real estate investment trusts [REITs] were led by a business development company (BDC): PennantPark Investment Corporation (NASDAQ:PNNT) [6] was the BDC, and New York Mortgage Trust Inc. (NASDAQ:NYMT) [7], Orchid Island Capital, Inc. [8], and CorEnergy Infrastructure Trust, Inc. (NYSE:CORR) [9] were the real estate investment trusts. Finally, a service sector firm, Navios Maritime Partners L.P. (NYSE:NMM), cracked the top echelon to complete the representation of market sectors in the "follower favorite" top ten by yield.

FFave Dividend vs. Price Results Compared to Dow Dogs

Periodic strength of ten top "follower favorite" dogs by yield was graphed below as of market closing prices through 1/28/2016 and compared to those of the Dow. The projected annual dividend history from $10,000 invested as $1k in each of the ten highest-yielding stocks and the total single-share price history of those ten stocks created the data points shown in green for price and blue for dividend.

Click to enlarge

Actionable Conclusions: (2) FFave Dogs Retreated, While (3) Dow Dogs Mixed Up Into January

The "follower favorite" top ten dividend payers slacked off a bit from their nearly vertical dividend increase in December, while their aggregate single-share price continued to sag more. The annual dividend from $10k invested as $1k in each stock flew up 8.25%, while the aggregate single-share price of the ten dropped 28.6%. The result continued a very bearish retreat.

Dow dogs mixed up this time as both the aggregate single-share price and dividend decreased. The total single-share price for the ten increased 9.4% between December 11 and January 28, while the annual dividend from $10k invested as $1K in each of the top ten Dow dogs declined 6.7% for the period.

As a result, the Dow dogs' overbought condition (in which the aggregate single-share price of the ten exceeded the projected annual dividend from $10k invested as $1k each in those ten) widened their gap somewhat.

[I invite you to sign on to my premium site, The Dividend Dog Catcher, to share my discussion about how the Dow (short of tossing out IBM Corp. (NYSE:IBM)) could return to a normal balance, where dividends from 10 $1k investments can again exceed the aggregate single-share price of those top ten stocks.]

Click to enlarge

Actionable Conclusion (4): Dow Dogs Remain Overbought

Historically, the overhang of price over dividend was a record $311 or 81% in January; went to $299 or new record 82% in March; and widened the gap further to a new 2015 record $318 or 89% in May. As of August 21, the gulf between price over dividend dropped to a low $258 or 62%. September 30 saw the Dow overprice indicator widen to a spread of $264 or 63%. December's gap shrank to the lowest for the year at $233 or 58%. January brought the gap back up to $275 or 65%. Compared to the follower favorites, Dow dividends are highly overpriced.

This gap between high share price and low dividend per $1k invested shows an overbought condition. Meaning, no matter which chart you read, these are low-risk and low-opportunity Dow dogs.

Conversely, the "follower favorite" chart shows those dogs to be made of volatile, high-risk, and potentially highly profitable pups.

Actionable Conclusion (5) FFave Top Ten Dogs Cast 45.79% to 159.74% Analyst Target Price Upsides To January 2017

Click to enlarge

To quantify the top dog rankings, analyst mean price target estimates provided a "market sentiment" gauge of upside potential. Added to the simple high-yield "dog" metrics, analyst mean price target estimates were another tool used to dig out bargains.

Actionable Conclusions: Wall St. Wizards Declared (6) A 31.03% Average Upside and (7) 37.92% Net Gain for the Top 30 FFave Dogs As Of January 28, 2016

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 was then multiplied by projected annual per share dividend amounts to find the dividend return. Thereafter, the analyst mean target price was used to gauge the stock price upsides and net gains including dividends less broker fees as of 2017.

The historical prices and actual dividends paid from $30,000 invested as $1k in each of the highest-yielding stocks and the aggregate single-share prices of those thirty stocks divided by 3 created the data points for 2016. Projections based on estimated increases in dividend amounts from $1000 invested in the twenty highest-yielding "follower favorite" stocks and aggregate one-year analyst target share prices from Yahoo Finance divided by 2 created the data points for 2017 shown in green for price and blue for dividend.

Click to enlarge

Analysts as quoted by Yahoo Finance forecast a 21.1% lower dividend from $30K invested as $1k in each stock in this group of 30, while the aggregate single-share price was projected to increase 22.94% 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 were considered more accurate for valid mean target price estimates.

A beta (risk) ranking for each analyst-rated 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's price movement opposite of market direction.

Actionable Conclusion (8): Analysts Alleged FFave Top Ten Dogs Would Net 64.08% to 176.1% By January 28, 2017

Five of the ten top dividend yielding "follower favorite" dogs were verified as being among the ten net gainers for the coming year, based on analyst 1-year target prices. So in this period, the dividend dog strategy as graded by Wall St. wizards was 50% accurate for the "follower favorite" top ten.

Ten probable profit-generating trades revealed by Yahoo Finance for 2017 were:

Click to enlarge

Navios Maritime Partners L.P. was projected to net $1,760.95, based on the median target price estimate from ten analysts, combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 39% more than the market as a whole.

Memorial Production Partners LP was projected to net $1,180.77, based on dividends plus the lowest target price estimate from nine analysts less broker fees. The Beta number showed this estimate subject to volatility 69% more than the market as a whole.

Rent-A-Center, Inc. (NASDAQ:RCII) was projected to net $916.12, based on a median target price estimate from six analysts, combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 84% less than the market as a whole.

Evolving Systems Inc. (NASDAQ:EVOL) was projected to net $795.38, based on the median target price estimate from three analysts, combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 71% less than the market as a whole.

CorEnergy Infrastructure Trust, Inc. was projected to net $782.10, based on the median target price estimate from four analysts, combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 46% more than the market as a whole.

Prospect Capital Corporation was projected to net $715.54, based on a median target price estimate from nine analysts, combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 73% less than the market as a whole.

PennantPark Investment Corporation was projected to net $697.51, based on a median target price estimate from ten analysts, combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 22% more than the market as a whole.

NuStar Energy L.P. (NYSE:NS) was projected to net $662.38, based on dividends plus the median target price estimate from seven analysts less broker fees. The Beta number showed this estimate subject to volatility 26% greater than the market as a whole.

New York Mortgage Trust Inc. was projected to net $645.23, based on dividends plus a median target price estimate from seven analysts less broker fees. The Beta number showed this estimate subject to volatility 12% greater than the market as a whole.

Cheniere Energy Partners LP. (NYSEMKT:CQP) was projected to net $640.79, based on a median target price estimate from eleven analysts, combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 7% less than the market as a whole.

The average net gain in dividend and price was calculated to be 87.97% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 2% less than the market as a whole.

Ten FFave Dogs Get 35.67% More Gain From 5 Highest-Yield, Lowest-Priced Stocks

Ten top FFave dividend paying stocks as of market closing January 28 were culled by yield (dividend / price) results verified by Yahoo Finance.

Click to enlarge

These top FFave dogs included firms, as noted above, represented three of nine Yahoo Finance market sectors. (Two basic materials, four financials and one service were listed along with two notes and a fund.)

Actionable Conclusion: (1) Analysts Alleged 5 Lowest-Priced of the Top Ten High Yield FFave Dogs Will Deliver 96.41% vs. (2) 71.07% Net Gains for All Ten by January 28, 2017

Click to enlarge

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten "follower favorite" kennel by yield were predicted by analyst 1-year targets to deliver 35.67% more net gain than $5,000 invested as $.5k in each of all ten.

The lowest-priced "follower favorite" dog, Navios Maritime Partners L.P., was projected to deliver the best net gain of 176.10%.

The five lowest-priced "follower favorite" dogs for January 16 were: Navios Maritime Partners L.P., Memorial Production Partners LP, New York Mortgage Trust Inc., PennantPark Investment Corporation, and Orchid Island Capital, Inc., with prices ranging from $2.31 to $8.47.

Five higher-priced "follower favorite" dogs for January 28 were: UBS ETRACS Mthly Py 2xLvg Mortg REIT ETN, UBS ETRACS 2xLvg Lng WF Busn Dev Co ETN, Cornerstone Strategic Value Fund, Inc., CorEnergy Infrastructure Trust, Inc., and CVR Refining, LP, whose prices ranged from $10.38 to $16.04.

This distinction between five low-priced dividend dogs and the general field of ten reflects the "basic method" Michael B. O'Higgins employed for beating the Dow. The added scale of projected gains based on analyst targets contributed a unique element of "market sentiment" gauging upside potential. It provided a "here and now" equivalent of waiting a year to find out what might happen in the market. It's also the work analysts got paid big bucks to do.

A caution is advised, however, as analysts are historically 20-80% accurate on the direction of change and about 0-20% accurate on the degree of change.

The stocks listed above were suggested only as decent starting points for a "follower favorite" dog dividend stock purchase/sale research process in January, 2016. These were not recommendations.

See my instablog for specific instructions about how to best use the dividend dog data featured in this article.

The net gain/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.

Do any of these follower favorite dividend pups qualify as valuable catches? Check out the now 23 Dogs of the Week found on The Dividend Dog Catcher premium site. Click here to subscribe.

One click will answer all your questions about price and guarantees. Sign up. It's little risk. If for any reason you choose to end your subscription, you'll get a prorated refund from Seeking Alpha!

Perhaps the Seeking Alpha Marketplace is the best financial advisory bargain on the internet.

The stocks listed above were suggested only as possible reference points for your FFave dog 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.

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

Disclosure: I am/we are long T, CSCO, GE, PFE, VZ, APTS.

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.