Basic Materials Source 9 Of 10 Top CCC Combo Dogs In April

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Includes: AHGP, AMID, APLP, ARLP, BWL.A, EEP, ETE, GEL, GMLP, HCP, MCY, MFIN, MMLP, NGL, PAA, STON, T, WMB, WPZ
by: Fredrik Arnold

Summary

Leading CCCCombined dividend dogs (3 Champs +3 Contenders +4 Challengers) WMB, ETE, GMLP, MMLP, WPZ, APLP, ARLP, AMID, AHGP, NGL, yields ranged from 4.82% to 32.36% April 8.

Top ten CCCCombo yield dogs mixed up as Dow dogs charged. Thirty top Combo Dogs ranged in yield from 3.97%. Two CCC dogs showed downsides.

Top ten ComboCCC pack showed 1-year upsides of 15.3% to 100.82%, with gains 26.41% to 114.34%. Analysts cast average 13.56% upside and 23.42% gain for 30 Combo leaders.

Analyst estimated gains by EEP, PAA, TAXI, GEL, STON, GMLP, ETE, ARLP, WMB, led by top dog WPZ averaged 52.17%. HP and MCY losses averaged 8.93%.

Ten Top CCC Combo dividend dogs by yield projected 14.76% LESS gains from $5k invested in the lowest-priced five than from the same investment in all ten.

April CCC Composite Dogs

Yield (dividend/price) results from David Fish's Dividend Champions, Contenders, & Challengers [CCC] collected members (as of April 8 market closing prices) were paired with annual dividends projected by dripinvesting.org March 31. That data charted below showed just two of nine business sectors providing the top ten yielding CCC dogs. Nine from basic materials sector and one services. Those ten stocks posted yields averaging 20.68%.

Actionable conclusions by yield, target price upsides and net gains for top Champion, Contender, and Challenger dog selections combined in March, are presented step by step below.

Conclusion (1) Top 10 Dividend CCC Combo Dog Yields Ranged 14.52% to 32.41% as of March 22

Seeking Alpha reader requests prompted this series of index-specific articles reporting dividend yield plus price upside results for these indices: Dow 30, S&P 500, S&P Aristocrats, NASDAQ 100, Champions, Contenders, Challengers, CCC Combined, and Global. Bonus reports cover Bad Boy AllStars, and Sector Leaders.

Thirty For the Show

This article was written to reveal bargain stocks to buy and hold up to one full year. See Dow 30 article for 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 Ranked 30 Champion, Contender, & Challenger Stocks by Yield

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David Fish's March 31 composite of 10 Champions, 10 Contenders, and 10 Challengers list contained stocks distinguished as having paid consistently increasing dividends for five to over 50 years. Four challengers (those raising dividends 5 to 9 straight years), three contenders (raising dividends 10 to 24 straight years), and three champions (raising dividends 25 or more years running) as ranked by yield were selected to compose the top ten. Price data was sourced from Yahoo.com as of April 8 market close. Annual dividend calculations as of 3/31 came from dripinvesting.org.

As noted previously, most members of the Top 10 CCC dog list were from the basic materials sector. For this 4/3/3 list, all seven challengers and contenders were basic materials sector dogs. The champions were a mix of service, technology, and financial sector representatives.

NGL Energy Partners LP (NYSE:NGL) [1] led the seven basic material sector representatives. Others placed second through seventh: American Midstream Partners LP (NYSE:AMID) [2]; Alliance Holdings GP LP (NASDAQ:AHGP) [3]; Alliance Resource Partners LP (NASDAQ:ARLP) [4]; Archrock Partners LP (NASDAQ:APLP) [5]; Martin Midstream Partners LP (NASDAQ:MMLP) [6]; and Williams Companies (NYSE:WMB) [7].

Finally, three non-basic material companies from the Champions list placed eighth to tenth: HCP Inc. (NYSE:HCP), a financial firm [9]; AT&T Inc. (NYSE:T), technology [9]; and Bowl America Class A (NYSEMKT:BWL.A), services [10], to complete the April top ten CCC Composite list of dogs by yield.

Dividend Vs. Price Results Compared With Dow Dogs

Periodic strength of ten top CCC composite dogs by yield was charted below as of market closing prices from 4/8/16 and compared to those of the Dow. 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.

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Actionable Conclusion (2): Top CCC Composite Dogs Mixed Up As (3) Dow Dogs Charged On Into April

CCCC dividend from $10k invested as $1k in each dog increased slightly as aggregate single share price rose after March to make the mix-up. CCCC top ten dog dividend pushed up 0.46% while price rose 6.75%. CCC composite dogs moved no closer to becoming overbought as aggregate single share price of the ten top dogs stayed to 9 times less than the total annual dividend in April. Last month, the number was 9.75 times the amount estimated to be derived from $10k invested as $1k in each of the ten dogs.

Dow dogs, however, charged, as aggregate single share price for those ten increased 10.8% between March 22 and April 8. Meanwhile, annual dividend from $10k invested as $1K in each of the top ten declined 2.2% to produce the charge, according to IndexArb.

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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 each in those ten) increased after March.

Actionable Conclusion (4): Dow Dogs Are Overbought

The overhang set a new annual record in May at $421 or 117%. The July/August market set the gap at $392 or 106%. September shrank the gap to $279 or 67%. October expanded the chasm again to $323 or 82%. November-December constricted the gap somewhat to $271 or 70%. January narrowed the gap slightly to $246 or 57%.

In February, when $30 Intel (NASDAQ:INTC) with its dividend dollar replaced Procter & Gamble's (NYSE:PG) $75 price and $2.80 dividend, the gap of Dow price over dividend grew to $265 or 65%. But P&G reclaimed slot ten in March to join big dogs IBM (NYSE:IBM) and Boeing (NYSE:BA) to put the gap to $406 or 106%. April's expansion, fueled by JPM (NYSE:JPM) making the top ten Dow, went to $414 or 107%.

This gap between high share price and low dividend per $1k invested shows an overbought condition. Meaning, these are low risk and low opportunity Dow dogs. The Dow top ten average price per dollar of annual dividend was $26.18.

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Compared to the Dow, the CCC Combo ten after coming closest to overbought last April, spectacularly widened the gap in January and February where aggregate dividend value of $1k investments in each of the ten soared higher above the aggregate single share price. March made the margin tighter. April widened the gap slightly. Still, in marked contrast to the Dow, CCCC Dog top ten average price per dollar of annual dividend was $7.35 as of April 8.

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Should Dow prices ever to move to a level 30-35% lower, they could again become attractive dividend buys! As it stands, the Dow has become an index of growth stocks as their dividends have progressively been devalued by excessively high market prices.

Actionable Conclusions: (5) Ten CCCC Dogs Pursued 39.53% Average Upsides Into April 2017; (6) Two CCCC Dogs Produced Downsides Averaging 12.58%

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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" metrics, analyst mean price target estimates, these provided another tool to dig out bargains.

Actionable Conclusions: Wall St. Wizards Conjured (7) 13.56% Average Upsides, & (8) 23.42% Average Net Gain from Top 30 Dividend Combined CCC Dogs By April 2017

Top thirty dogs from David Fish's Dividend Combined CCC index were graphed below as of April 8, 2016 as compared to analyst mean price target estimates for the same date in 2017.

A hypothetical $1000 investment in each equity was divided by the current share price to find the number of shares purchased. The shares number 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 stock price upsides and net gains including dividends less broker fees as of 2017.

Historic 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 data points for 2016. Projections based on estimated increases in dividend amounts from $1000 invested in the thirty highest yielding stocks and aggregate one-year analyst target share prices from Yahoo Finance divided by 3 created the 2017 data points green for price and blue for dividend.

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Analyst data reported by Yahoo finance projected a 10.2% lower dividend from $30K invested as $1k in each stock in this group while aggregate single share price was projected to increase 8.2% 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 had a better history of estimate accuracy.

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 (9): Analysts Estimated Ten Dividend CCCC Dogs Would Net 26.4% to 114.34% By April 2017

Five of the ten top dividend yielding Champion dogs were among the ten gainers for the coming year based on analyst 1-year target prices. So this month the dog strategy as graded by Wall St. wizards was 50% accurate.

Ten probable profit generating trades were revealed by Thomson/First Call in Yahoo Finance into 2017.

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Williams Partners LP (NYSE:WPZ) from the challenger list was projected to net $1,143.40 based on dividends plus median target price estimate from twelve analysts less broker fees. The Beta number showed this estimate subject to volatility 54% more than the market as a whole.

Williams Companies from the contender list was projected to net $861.77 based on dividend plus median target price estimates from seven analysts less broker fees. The Beta number showed this estimate subject to volatility 45% more than the market as a whole.

Alliance Resource Partners LP from the contender list was projected to net $720.96 based on estimates from three analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 29% less than the market as a whole.

Energy Transfer Equity LP (NYSE:ETE) from the contender list was projected to net $668.12 based on a median target price estimate from six analysts combined with projected annual dividend less broker fees. The Beta number show 90% more than the market as a whole.

Golar LNG Partners LP (NASDAQ:GMLP) from the challenger list was projected to net $359.97 based on estimates from ten analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 2% less than the market as a whole.

StoneMor Partners LP (NYSE:STON) from the contender list was projected to net $358.04 based on dividends plus a median target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 52% less than the market as a whole.

Genesis Energy LP (NYSE:GEL) from the contender list was projected to net $285.74 based on dividends plus a median target price estimate by twelve analysts less broker fees. The Beta number showed this estimate subject to volatility 22% more than the market as a whole.

Medallion Financial Corp. (NASDAQ:TAXI) from the challenger list was projected to net $285.49 based on dividends plus median target price estimate from two analysts less broker fees. The Beta number showed this estimate subject to volatility 53% more than the market as a whole.

Plains All American Pipeline LP (NYSE:PAA) from the contender list was projected to net $269.42 based on dividends plus median target price estimates from twenty analysts less broker fees. The Beta number showed this estimate subject to volatility 8% less than the market as a whole.

Enbridge Energy Partners LP (NYSE:EEP) from the challenger list was projected to net $264.14 based on dividends plus median target price estimate from twelve analysts less broker fees. The Beta number showed this estimate subject to volatility 40% more than the market as a whole.

The average net gain in dividend and price was 52.17% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 21% more than the market as a whole.

Actionable Conclusion (10): (Bear Alerts) Analysts Projected Two CCCC Dogs To Show Net Losses Averaging 9.33% By 2017

Probable losing trades revealed by Thomson/First Call in Yahoo Finance in 2017 were:

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HCP Inc. was projected to lose $73.39 based on dividend and a median target price estimate from fourteen analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 78% less than the market as a whole.

Mercury General Corp. (NYSE:MCY) was projected to lose $105.11 based on dividend and a median target price estimate from two analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 39% less than the market as a whole.

The average net loss in price plus broker fees including annual dividends was predicted to be 8.93% on $2k invested as $1k in each of these two dogs. This loss estimate was subject to average volatility 58% less than the market as a whole.

Dog Metrics Failed To Extract Bargains

As you now know, ten CCCC dividend dogs showing the biggest dividend yields as of April 8 represented only two of ten business sectors: basic materials (9) and services (1). Listed as of market close, April 8, the CCC Combo dividend dogs arranged themselves by yield as follows:

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Actionable Conclusions: Analysts Augur (11) 5 Lowest Priced of Top Ten Highest Yield Challengers Deliver 41.2% Vs. (12) 48.33% Net Gains from All Ten As Of April 8, 2017

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$5000 invested as $1k in each of the five lowest-priced stocks in the top ten CCC kennel by yield was subject to 14.76% LESS net gain than $5,000 invested as $500 in each of all ten. The highest priced CCC dog, Williams Partners LP, was projected to deliver the greatest net gain of 114.34%.

Lowest priced five CCC dogs as of April 8 were: American Midstream Partners LP, NGL Energy Partners LP, Energy Transfer Equity LP, Archrock Partners LP, and Alliance Resource Partners LP, whose prices ranged from $6.53 to $11.89.

The higher priced five CCC dogs as of April 8 were: Golar LNG Partners LP, Alliance Holdings Group LP, Williams Companies, Martin Midstream Partners LP, and Williams Partners LP, whose prices ranged from $15.08 to $21.91.

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. It also works well for teasing bargains out of this list of top yielding CCC Composite dogs, as you see.

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.

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

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.

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Stocks listed above were suggested only as possible starting points for your 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 dripinvesting.org; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance.

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