Dividend Dog Data April Aggregation
Three buy and hold lists featured below produced ten actionable conclusions.
To draw these conclusions, March 4 closing price and estimated annual dividends were referenced. 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 by companies which suddenly cut monthly dividends to save cash. (Recent examples included: BreitBurn (BBEP) severing common share dividends November 30; Gold Resource (NYSEMKT:GORO) cut dividends 80% from $.01 to $.002 per month January 6, then to $.0016 February 6; also Hugoton (NYSE:HGT) declared no cash dividends January 19 and February 19; NASDAQ suspended trading of UDF IV (NASDAQ:UDF) February 18 after an FBI raid of UDF offices); finally, March 4, VNR announced "suspension of distributions on both common and preferred units..." Thus, the segment is volatile.
"[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
"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
"At this level of risk, I'm only buying monthly dividend payers. Dividend if cut only [sits] for a month and not a quarter." - Sinjjn Smythe
"...love those monthly payers." - Hardog
"Some of us are comfortable investing in Dog stocks because we feel the reward is worth the risk. As long as [my sin stock] continues to pay and raise the dividend like it has for 16 years now, it will have a spot in my portfolio." - Miz Magic DiviDogs
"One thing to point out: These stocks are not buy & hold. If you buy any of these stocks, set a price where you will sell... trailing stops work real good & with mopays you can get out & get back in without losing a whole quarter of dividends..." - drking
"I don't know how many times I've kicked myself for not investing in a beaten down group only to find it spring back up months later." - User 13258352
Dogs of the Index Data Diving Found Bargains
For this article, fifty-two dividend equities plus sixty funds, trusts and preferred shares were culled from nearly 700 entities listed here paying monthly returns. All were ranked as of April 1, 2016 using the two key dog performance metrics: (1) stock price and (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 April represented only one of the nine Yahoo market sectors.
All the top seven dogs revealed by Yahoo Finance data were from the financial sector: Armour Residential REIT (NYSE:ARR) ; Wheeler Real Estate Investment Trust Inc. ; Full Circle Capital Corporation (NASDAQ:FULL) ; Orchid Island Capital Inc (NYSE:ORC) ; Javelin Mortgage Investment Corp. (NYSE:JMI) ; Fifth Street Finance (NASDAQ:FSC) ; Prospect Capital Corporation (NASDAQ:PSEC) ; Stellus Capital Investment Corporation (NYSE:SCM) ; Five Oaks Investment Corp. (NYSE:OAKS) ; American Capital Agency (NASDAQ:AGNC)  to complete the April MoPay top ten 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 price April 1 were compared with analyst mean target prices one year out. Ten stocks displayed 17.89% to 69.61% price upsides for the coming year based on analyst 1-year targets
Five stocks on the price upside list were not on the top ten list by yield. One from the basic materials sector placed in the top slot, Vermilion Energy, Inc. (NYSE:VET) .
Four of the five upside performers from outside the top ten by yield were financial firms which placed fourth, sixth, ninth, and tenth: Whitestone REIT (NYSE:WSR) ; Independence Realty Trust (NYSEMKT:IRT) ; PennantPark Floating Rate Capital (NASDAQ:PFLT) ; and Harvest Capital Credit (NASDAQ:HCAP) .
Price upside, of course, is defined as the discrepancy between the current price and analyst target one year median price for each stock.
Ten MoPay stocks showing the highest upside price potential into 2017 were gleaned from 30 selected by yield. The number of analysts providing price estimates was noted after the name for each stock. Three to nine analysts have historically provided the most accurate mean target price estimates.
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 April 1 to determine the Top Ten.
Ten monthly dividend funds, & trusts showing the biggest yields for March as revealed by dividends.com and verified using Yahoo Finance data featured four closed-end funds (CEFs), one preferred share (PREF), and five exchange traded notes (ETNs).
The preferred share placed second, BreitBurn Energy Partners LP Preferred (BBEPP) .
At top was one of the four CEFs: Cornerstone Strategic Value Fund, Inc. (NYSEMKT:CLM) . Its sister issue placed fourth, Cornerstone Total Return Fund, Inc. (NYSEMKT:CRF) . The other two CEFs placed ninth, and tenth, Gabelli Global Gold Natural Resources & Income Trust (NYSEMKT:GGN) , and Stone Harbor Emerging Market Total Income Fund (NYSE:EDI) .
Tops of the five ETNs placed third, ETRACS Monthly Pay 2X Leveraged Mortgage REIT ETN (NYSEARCA:MORL) . The four remaining ETNs placed fifth, through eighth: UBS ETRACS M Py 2xLvg WF MLP Ex-Engy ETN (NYSEARCA:LMLP) , and UBS E-TRACS 2X ClosedEnd ETN (NYSEARCA:CEFL) ; Credit Suisse Silver Shares Covered Call Exchange Traded Notes (NASDAQ:SLVO) ; UBS ETRACS M Py 2x Lvg US Sm Cp HiDiv ETN (NYSEARCA:SMHD) , to round out this top ten FTP list.
Notice in the graph below how adding the preferred stocks to this list pushed the dividends to another level beginning in January. The demise of two preferred share dividends after March dropped the dividend vector back toward earth.
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 readers contributed mightily. Reader suggestions continued in 2014 following the January, February, March, April, May, June, July, August, September, October, November, and December articles. 2015 continued with readers contributing in January, February, March, April, May, June, July, August, September, October, November, and December.
The 2016 articles in January, February, March, and this month continue to compare and contrast 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 April 1, 2016 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 Conclusions: (1) MoPay Dogs Charged, & (2) Dow Dogs Did Likewise
Ten top MoPay dogs dropped in dividend but rose in price after March to continue a bullish charge. Aggregate dividend from $10k invested as $1k in each of the top ten stocks fell 3% while total single share price of those ten inclined 27% in that time.
Meanwhile, Dow dogs also charged as they displayed less annual dividend from $10k invested as $1K in each of the top ten, dropping 4% after March. Meanwhile, aggregate single share price rose 13%. As a result, the Dow dogs overbought condition (where aggregate single share price of the ten exceeded projected annual dividend from $10k invested as $1k in each) became exceedingly greater.
Historically, the overhang was $420 or 117% May 1; swooned to $392 or 104% June 5, coming off a new 2014-15 yearly record May gap.
A July 1 price retreat narrowed the gap to $237 or 63%. However to begin August, IBM's (NYSE:IBM) high price and dividend pushed the gap to $343 or 89%. As September dawned, Coca-Cola (NYSE:KO) ascended and Pfizer (NYSE:PFE) was back in tenth while nearly all ten dogs dropped in price to temporarily shrink the gap to $273 or 67%. October saw prices rise and dividend fall to move the price over dividend chasm to $305 or 76%.
November 6 price action and top dog shuffle put the gap at $305 or 79%. As of December 4, the gap stood at $302 or 78%. Come January 8, prices of the ten Dow top dogs fell, and dividends rose, to push the overbought gap down to $224 or 56%. In February, the gap grew to $246 or 59%. The March charge put the gap up to $293 or 73%. April approached the last May 2015 record, expanding to $400 or 104%.
The Dow Dogs remain overbought and overpriced. Meaning, these are low risk and low opportunity Dow dogs. The Dow top ten average price per dollar of annual dividend was $26.33.
In marked contrast to the Dow, MoPay dividend dog top ten average price per dollar of annual dividend was a low $6.63 as of April 1. That's about one quarter the price of an annual dollar of Dow dividends.
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 (3): Wall St. Wizards Cast A 33% 1-year Average Net Gain from TOP10 April MoPay Stocks
Top dogs on the MoPay stock list were graphed below to show relative April 1, 2016 compared those projected by analyst mean price target estimates to the same date in 2017.
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 2016. 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 2017 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 a 14.5% lower dividend from $10K invested as $1k in the top ten March MoPay dogs while aggregate single share price was projected to increase by 10.8% in the coming year.
Actionable Conclusion (4): Analysts Augured Average NEXT10 MoPay Net Gains of 16% to April 2017
Ten monthly dividend equities that showed the next best yields April 1 represented two Yahoo market sectors: financials, and basic materials.
The NEXT ten dogs showed 14% 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 16.6% in the coming year.
Actionable Conclusion (5): Analysts Forecast LAST10 MoPay DiviDog Average Net Gains of 17% to April 2017
Ten monthly dividend equities April 1 represented three of the nine Yahoo market sectors: services, financials, and basic materials.
The LAST ten dogs showed 6.8% lower dividend from $10k invested as 1k in each stock while aggregate single share price for the last ten was projected by analysts to increase 14.6% 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 (6): Analysts Expect Ten MoPay Dog Stocks to Net 26% to 81% Gains To April 2017
Five of the ten top dividend 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 1 by Wall St. wizards was 50% accurate.
Ten probable profit generating trades revealed by Yahoo Finance come 2017 were:
Wheeler Real Estate (NASDAQ:WHLR) netted $806.45 based on estimates from three analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 24% more than the market as a whole.
Vermilion Energy, Inc. netted $743.32 based on dividends plus a median target price estimate from three analysts less broker fees. The Beta number showed this estimate subject to volatility 37% less than the market as a whole.
Five Oaks Investment Corp. netted $551.17 based on estimates from three analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 19% less than the market as a whole.
Full Circle Capital netted $394.34 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 85% less than the market as a whole.
Stellus Capital Investment netted $387.45 based on estimates from five analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 82% less than the market as a whole.
Independence Realty Trust netted $350.94 based on dividends plus the median of annual price estimates from five analysts less broker fees. A Beta number was not available for IRT.
Whitestone REIT netted $346.83 based on dividends plus median target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 13% less than the market as a whole.
Fifth Street Finance netted $336.03, based on dividend plus median target price estimates from ten analysts less broker fees. The Beta number showed this estimate subject to volatility 3% opposite the market as a whole.
Harvest Capital Credit netted $266.62, based on dividend plus mean target price estimates from two analysts less broker fees. The Beta number showed this estimate subject to volatility 86% less than the market as a whole.
PennantPark Floating Rate Capital netted $261.96 based on dividends plus the mean of annual price estimates from four analysts less broker fees. The Beta number showed this estimate subject to volatility 36% less than the market as a whole.
Average net gain in dividend and price was 44.47% on $1k invested in each of these ten MoPay dog stocks. This gain estimate was subject to average volatility 44% less than the market as a whole.
Top Ten Dividend & Price Results For Funds, Trusts, & Preferreds (FTPs) vs. MoPay Stocks
Below relative strengths for the top ten MoPay FTP Dogs by yield was graphed as of April 1, 2016 and compared to those of the ten top 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 (7): MoPay Top Ten DiviDog Funds Trusts, & Preferreds Charged As Did MoPay Stocks Into April
The chart above shows MoPay funds, trusts, & preferreds tumbled in dividend as price increased to get charging amidst the March madness and shamrocks. Projected dividend from 10k invested as $1k in each of the top ten funds and trusts fell 29% while aggregate single share price of the top ten over the same period went up 13.4%.
As of April 1, the top MoPay fund, trust and preferred dogs showed $711 or 47% more dividend at a $32 or 35% higher aggregate single share price than the MoPay stock top ten.
In further contrast to the Dow, Ten top MoPay FTP dividend dog top ten average price per dollar of annual dividend was the lowest $4.46 as of April 1. That's nearly one-sixth the price of an annual dollar of Dow dividends or 70% of MoPay stock price per dollar of annual dividend.
Actionable Conclusion (8): Buy and Hold Monthly Dividend Paying Stocks, Funds & Trusts, If You Dare
Stock analysts don't hazard guesses as to when or how much fund, trust & preferred stock prices will rise or fall. They are paid to gauge individual stocks, and a few funds and partnerships. Hence this monthly pay FT dog diligence only revealed a list of funds and trusts to buy and hold based on yield only, if you dare.
Dog Metrics Extracted More Bargains From Five Lowest Priced Highest Yield Monthly Pay Stocks
Ten monthly pay stock equities were culled by yield from here. Yield (dividend/price) results verified by Yahoo Finance did the ranking.
Actionable Conclusions: (9) Analysts Assert 5 Lowest Priced of Top Ten Highest Yield MoPay Dividend Stocks Generated 44.03% Vs. (10) 33.29% Net Gains from All Ten by April 2017
$5000 invested as $1k in each of the five Lowest priced stocks of the top ten MoPay dividend dog kennel by yield were predicted by analyst 1-year targets to deliver 32.25% more net gain than $5,000 invested as $.5k in all ten. The very lowest priced MoPay dividend dog, Wheeler Real Estate Investment Trust Inc., was projected to deliver the best net gain of 80.64%.
Lowest priced five MoPay dividend dogs for April 1 were: Wheeler Real Estate Investment Trust Inc; Full Circle Capital Corporation; Fifth Street Finance; Five Oaks Investment Corp.; and Javelin Mortgage Investment Corp, with prices ranging from $1.21 to $7.18.
Higher priced five MoPay dividend dogs for April 1 were: Prospect Capital Corporation; Stellus Capital Investment Corporation; Orchid Island Capital Inc; American Capital Agency; and ARMOUR Residential REIT Inc., whose prices ranged from $7.27 to $21.64.
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 same technique, you now see, can also be used to find the more rewarding dogs in the MoPay Stock kennel.
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% to 80% accurate on the direction of change and about 0% to 20% accurate on the degree of the change.
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.
See my instablog for specific instructions about how to best apply the dividend dog data featured in this article. - Fredrik Arnold
Gains/declines 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.
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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/we are long ARR, FSC, CSCO, PFE, 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.