Followers Favor Monthly Pay Dividend Dogs In April Survey

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Includes: ARR, CEQP, CLM, GSK, NGL, NMFC, O, ORC, PNNT, PSEC, ROYT, STB, STWD, WMB, WPZ
by: Fredrik Arnold

Summary

Arnold "followers" surveyed April 6 sent 35 replies and a list of 31 favorite (FFave) dividend dogs. Four follower top ten choices paid monthly distributions.

Yields ranged from zero to 29.14% as of April 22. Top ten FFave leaders, NMEC, WPZ, PSEC, WMB, ARR, ORC, PNNT, NGL, CLM, and CEQP, charged. Dow dogs, charged too.

Analyst target upsides for 30 FFaves averaged 5.2% with 24.38% net gains. The 10 top upsides were shown by MO, PNNT, ORC, STB, RTN, GSK,SLW, STWD, ROYT, and WPZ.

$5k invested in the lowest-priced five top yield FFaves showed 45.68% LESS net gain than from $5k invested in all ten. These lists come as suggested guides.

How Followers Voted

Mid-afternoon, April 6, I messaged all Arnold Seeking Alpha followers. I requested their e-mail addresses, favorite dividend stock, and favorite team. In exchange for their answers, I offered each respondent a summary and quarterly report describing my best performing dog of the week (DOTW) from first 13 listed on my premium site. Similar offers went out in September, December and March. DOTW selections are published every Sunday exclusively in my Seeking Alpha premium pages. That site now lists thirty-six ace DOTWs.

Only two duplicate dividend dog favorites were submitted by followers (for Realty Income (NYSE:O) and Prospect Capital (NASDAQ:PSEC)). As for teams, "none" was again the top response. Another exotic European soccer team was named by a Dutch fan, Feyenoord Rotterdam.

The polls are always open. Try again to e-mail me your favorite dividend stock at fredrika120@gmail.com. You're still eligible to contribute to the May survey. Remember to include all three: dividend stock, e-mail address, and team.

I'll be sending another follower e-blast, too. After May 12, I'll be announcing the top money dividend dog of the week from Q2 of my 52 DOTW selections.

Now tangible money moves in follower stock picks for April are reported here...

Thirty-one For the Money

Yield (dividend/price) results verified by Yahoo Finance for "follower favorite" stocks as of market closing prices 4/22/16 revealed actionable conclusions discussed below. See 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 Found "Follower Favorite" Stocks by Yield. Actionable Conclusions, (1) CEQP led April FFaves; (2) Top Ten Included Four Monthly Paid Distributions

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Thirty one follower favorites above were sorted by yield calculated as of market close 4/22/16. Three of nine sectors were represented in the top ten: basic materials (4); financials (5); and conglomerates (1). Four of the ten paid dividends monthly.

Top FFave stock by yield, Crestwood Equity Partners LP (NYSE:CEQP) [1] was tops of four basic materials entities. The other three basics placed third, seventh, and ninth: NGL Energy Partners LP (NYSE:NGL) [3]; Williams Companies (NYSE:WMB) [7]; and Williams Partners L.P. (NYSE:WPZ) [9].

Five financial stocks placed second, fourth through sixth, and eighth: Cornerstone Strategic Value Fund (NYSEMKT:CLM) [2], PennantPark Investment (NASDAQ:PNNT) [4], Orchid Island Capital, Inc. (NYSE:ORC) [5], ARMOUR Residential REIT (NYSE:ARR) [6], and Prospect Capital Corporation [8]. Four of these paid the monthly stipends.

Finally, a conglomerate firm made the top echelon in tenth place, New Mountain Finance (NYSE:NMFC) [10], 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 4/22/2016 and matched against that of the Dow ten. 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 Conclusions: (3) FFave Dogs Charged, As (4) Dow Dogs Did Also Through April

"Follower favorite" top ten yielders continued to drop in dividend after March while aggregate single share price ramped up. Annual dividend from $10k invested as $1k in each stock fell 13.4% while aggregate single share price of the ten inclined 20.7%. The result continued an all out bullish charge begun after February.

Dow dogs charged also through April as aggregate single share price arose while dividend decreased. Total single share price for the Dow ten increased 2.2% between March 10 and April 22, while annual dividend from $10k invested as $1k in each of the top ten Dow dogs dropped 4.9% for the period.

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) widened their gaps a lot.

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Actionable Conclusion (5): Dow Dogs Remain Overbought

Historically, the overhang of price over dividend was a record $313 or 87% in May. As of August 21, the gulf between price over dividend dropped to 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%. March put the chasm at $361 or 91%, and April expanded the new record gap for the past year to $397 or 106%.

Compared to the follower favorites, Dow dividends are highly overpriced. The Dow top ten April 22 average price per dollar of annual dividend went up to $26.78.

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Conversely, the "follower favorite" chart shows those dogs to be made of volatile, high risk, and potentially highly profitable pups. The FFave April top ten average price per dollar of annual dividend is $5.74, just 21.5% of the Dow price per dividend dollar. The followers know where to dig out bargain stocks!

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Actionable Conclusion (6) FFave Top Ten Dogs Project 7.40% To 96.82% Analyst Target Price Upsides To April 2017

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To quantify 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 Estimated (7) A 5.2% Average Upside and (8) 12.25% Net Gain for Top 30 FFave Dogs As Of April 22, 2016

A hypothetical $1,000 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 the 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 $1,000 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 2017 data points green for price and blue for dividend.

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Analysts as quoted by Yahoo, forecast a 3.5% higher dividend from $30k invested as $1k in each stock in this group of 30 while aggregate single share price was projected to increase 5% 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 price movement opposite of market direction.

Actionable Conclusion (9): Analysts Alleged FFave Top Ten Dogs Would Net 13.6% to 106.56% By April 22, 2017

Three 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 this period the dividend dog strategy as graded by Wall St. wizards was 30% accurate for the "follower favorite" top ten.

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

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Williams Partners L.P. was projected to net $1,065.64 based on dividends plus the median target price estimate from twelve analysts less broker fees. The Beta number showed this estimate subject to volatility 154% more than the market as a whole.

Pacific Coast Oil Trust (NYSE:ROYT) was projected to net $331.35 based on the only target price estimate from one analyst combined with no annual dividend but subtracting broker fees. The Beta number showed this estimate subject to volatility 116% more than the market as a whole.

Cornerstone Strategic Value Fund was projected to net $287.39 based on no target price estimate from any analysts but based only on projected annual distributions less broker fees. No beta number was available for CLM.

Starwood Property Trust (NYSE:STWD) was projected to net $236.96 based on the median target price estimate from nine analysts combined with projected annual dividend less broker fees. The Beta number 55% less than the market as a whole.

PennantPark Investment was projected to net $233.09 based on the median target price estimate from eight 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.

Orchid Island Capital, Inc. was projected to net $221.05 based on dividends plus a median target price estimate from three analysts less broker fees. The Beta number showed this estimate subject to volatility 52% less than the market as a whole.

Student Transportation Inc. (NASDAQ:STB) was projected to net $160.91 based on a median target price estimate from three analysts combined with a projected annual dividend less broker fees. A Beta number showed this estimate subject to volatility 13% less than the market as a whole.

New Mountain Finance was projected to net $156.33 based on dividends plus the median target price estimate from four analysts less broker fees. The Beta number showed this less than the market as a whole.

GlaxoSmithKline (NYSE:GSK) was projected to net $155.30 based on a median target price estimate from three analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility equal to the market as a whole.

Williams Companies was projected to net $132.42 based on a median target price estimate from eight analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 45% more than the market as a whole.

The average net gain in dividend and price was calculated to be 29.8% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 33% more than the market as a whole.

Ten FFave Dogs Get 46.68% LESS Gain From 5 Highest Yield, Lowest Priced

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Dividend paying stocks as of market closing April 22 were culled by yield (dividend/price). Results verified by Yahoo Finance showed top FFave dogs included firms, as noted above, from three of nine sectors in the top ten: basic materials (4); financials (5); and conglomerate (1).

Actionable Conclusion: (10) Analysts Asserted 5 Lowest Priced of Top Ten High Yield FFave Dogs Will Deliver 11.31% VS. (11) 21.20% Net Gains for All Ten by April 22, 2017

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$5,000 invested as $1k in each of the five lowest priced stocks in the top ten "follower favorite" March kennel by yield were predicted by analyst 1-year targets to deliver 46.68% LESS net gain than $5,000 invested as $.5k in each of all ten.

The highest priced "follower favorite" dog, Williams Partners L.P., was projected to deliver the best net gain of 106.56%.

Lowest priced five "follower favorite" dogs for April 22 were: PennantPark Investment; Prospect Capital Corporation; Orchid Island Capital, Inc.; New Mountain Finance Corp.; and NGL Energy Partners LP, with prices ranging from $6.48 to $13.33.

Higher priced five "follower favorite" dogs for April 22 were: Cornerstone Strategic Value Fund; Crestwood Equity Partners LP; Williams Companies; ARMOUR Residential REIT; and Williams Partners L.P., whose prices ranged from $15.38 to $28.96.

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% to 80% accurate on the direction of change and about 0% to 20% accurate on the degree of the change.

The stocks listed above were suggested only as decent starting points for a "follower favorite" dog dividend stock purchase/sale research process in late-April, 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.

Seven of these follower favorite dividend pups are part of the now 36 Dogs of the Week found on The Dividend Dog Catcher premium site. Click here for more details and to subscribe. You'll be glad you did!

One click will answer all your questions about price and guarantees. Sign up. It's virtually no 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.

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 indexarb.com; dividend.com; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance.

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

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.