Sun Coke A Surprise Favorite Of Arnold Dividend Dog Followers In May

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Includes: ADC, AMZA, BBD, CLDT, CLM, CPTA, GGN, KO, LADR, MFIN, NAT, NRZ, PSEC, SNR, SXCP
by: Fredrik Arnold

Summary

Arnold "followers" surveyed May 10 returned 40 replies and a list of 35 favorite (FFave) dividend dogs. Two followers recommended SXCP.

Yields ranged from none to 22.06% as of market close May 18. Top 10 FFave dog leaders, SNR, NAT, GGN, PSEC, MFIN, NRZ, CPTA, AMZA, CLM, & SXCP, mixed down.

Analyst target upsides for 30 FFaves averaged 8.09% with 13.97% net gains. 10 top upsides and gains were by ADC, KO, NAT, LADR, CLDT, NRZ, CPTA, SNR, SXCP, & MFIN.

$5k invested in the lowest-priced five top yield FFaves showed 6.51% LESS net gain than from $5k invested in all 10.

These lists come as suggested guides. Consider these stocks as reference points for your mid-May stock investment studies.

Follower Votes

May 10, I messaged all 6,100 Arnold Seeking Alpha followers. I requested their e-mail address, favorite dividend stock, and favorite team. In exchange for their answers, I offered each respondent a summary and quarterly report describing my 2 best performing dogs of the week and 1 worst choice (DOTW) from my first and second 13 monthly posts for each of two quarters listed on my premium site. Similar offers went out in September, December, March, and April. DOTW selections are published every Sunday exclusively in my Seeking Alpha premium pages. That site now lists 38 ace DOTWs plus that one poor pick joker.

Five duplicate dividend dog favorites were submitted by follower replying to my survey. They were MO, NRZ, O, PSEC, and SXCP. For teams, "none" was again the top response. A great default team choice came in, U.S. Army, which, of course could mean the West Point teams. It could, however, mean the guys overseas, too. That's the thing about teams, they are universal.

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

I'll be sending more top money dividend dog of the week selections. Maybe, a most promising newcomer.

Now, tangible financial results for May are here...

35 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's book "Beating The Dow" (HarperCollins, 1991), now named Dogs of the Dow. O'Higgins's 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 Rated "Follower Favorite" Stocks by Yield. Actionable Conclusions, (1) SXCP, led May FFaves; (2) Top 10 Included Four Monthly Paying Issues 5/18/16

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35 follower favorites above were sorted by yield calculated as of market close 5/18/16. Three of nine Yahoo sectors were represented in the top 10: basic materials (1), financials (8) (including closed end and exchange traded funds), and services (1). Four of the 10 paid dividends monthly.

Top FFave stock by yield, SunCoke Energy Partners (NYSE:SXCP) [1] was the lone basic materials stock. Eight financial entities placed second, through eighth, and tenth: Cornerstone Strategic Value Fund, Inc. (NYSEMKT:CLM) [2], InfraCap MLP ETF (NYSEARCA:AMZA) [3], Capitala Finance (NASDAQ:CPTA) [4], New Residential Inv (NYSE:NRZ) [5], Medallion Financial (formerly TAXI) (NASDAQ:MFIN) [6], Prospect Capital Corporation (NASDAQ:PSEC) [7], GAMCO Glb Gold Natural Res & Income (NYSEMKT:GGN) [8], and New Senior Investment Gr (NYSE:SNR) [10]. Four of these financial entities paid the monthly stipends.

Finally, a service firm, made the top echelon in ninth place, Nordic American Tankers (NYSE:NAT) [9], to complete the representation of market sectors in the May "follower favorite" top 10 by yield.

FFave Dividend vs. Price Results Contrasted With Dow Dogs

Periodic strength of 10 top "follower favorite" dogs by yield was graphed below as of market closing prices through 5/18/2016 and matched against that of the Dow ten. Projected annual dividend history from $10k invested as $1k in each of the 10 highest yielding stocks and the total single share price history of those 10 stocks created the data points shown in green for price and blue for dividend.

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Actionable Conclusions: (3) FFave Dogs Mixed Down, As (4) Dow Dogs Retreated After April

"Follower favorite" top 10 yielders continued to drop in dividend after April while aggregate single share price dropped too. Annual dividend from $10k invested as $1k in each stock fell 12% after April while aggregate single share price of the 10 dropped 28.8%.

Dow dogs retreated after April as aggregate single share price fell while dividend increased. Total single share price for the Dow 10 decreased 5% between April 22 and May 18, while annual dividend from $10k invested as $1K in each of the top 10 Dow dogs rose 3.5% for the period.

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

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Actionable Conclusion (5): Dow Dogs Stay Overbought

Historically, the overhang of price over dividend was $313 or 87% in June 2015. 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%. March put the chasm at $361 or 91%, and April expanded the new record gap for the past year to $397 or 106%. May has now narrowed the chasm to $345 or 89%.

Compared to the follower favorites, Dow dividends are highly overpriced. The Dow top 10 May 18 average price per dollar of annual dividend was $25.91.

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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 May top 10 average price per dollar of annual dividend is $6.34, just 24.5% of the Dow price per dividend dollar. The followers do dig out bargain stocks!

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Actionable Conclusion (6) Analysts Target FFave Top 10 Dogs For 9.99% To 49.05% Price Upsides By May 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 8.08% Average Upside and (8) 13.97% Net Gain for Top 30 FFave Dogs As Of May 18, 2017

A hypothetical $1k 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 $30k invested as $1k in each of the highest yielding stocks and the aggregate single share prices of those 30 stocks divided by three created data points for 2016. Projections based on estimated increases in dividend amounts from $1k invested in the 20 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 an 8.5% lower 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 one meant the stock's price would move with the market. Less than one showed lower than market movement. Higher than one showed greater than market movement. A negative beta number indicated the degree of a stock price's movement opposite of market direction.

Actionable Conclusion (9): Analysts Asserted FFave Top 10 Dogs Would Net 12.8% to 60.6% By May 18, 2017

Six of the 10 top dividend yielding "follower favorite" dogs were verified as being among the 10 net gainers for the coming year based on analyst one-year target prices. So this period the dividend dog strategy as graded by Wall St. wizards was 60% accurate for the "follower favorite" top 10.

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

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Medallion Financial was projected to net $606.02 based on dividends plus the median target price estimate from two analysts less broker fees. The Beta number showed this estimate subject to volatility 28% more than the market as a whole.

SunCoke Energy Partners was projected to net $593.37 based on the median target price estimate from four analysts combined with dividend and subtracting broker fees. The Beta number showed this estimate subject to volatility 137% more than the market as a whole.

New Senior Investment Group was projected to net $398.87 based on median target price estimates from three analysts plus on projected annual distributions less broker fees. The Beta number showed this estimate subject to volatility 43% less than the market as a whole.

Capitala Finance was projected to net $283.15 based on the median target price estimate from 12 analysts combined with projected annual dividend less broker fees. No Beta number was available for CPTA.

New Residential Investment was projected to net $258.66 based on the median target price estimate from 11 analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 6% less than the market as a whole.

Chatham Lodging Trust. (NYSE:CLDT) was projected to net $225.50 based on dividends plus a median target price estimate from six analysts less broker fees. The Beta number showed this estimate subject to volatility 17% more than the market as a whole.

Ladder Capital (NYSE:LADR) was projected to net $224.85 based on a median target price estimate from seven analysts combined with a projected annual dividend less broker fees. No Beta number was available for LADR.

Nordic American Tankers was projected to net $208.19 based on dividends plus the median target price estimate from six analysts less broker fees. The Beta number showed this estimate subject to volatility 29% more than the market as a whole.

Coca-Cola Co. (NYSE:KO) was projected to net $138.96 based on a median target price estimate from 20 analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 47% less than the market as a whole.

Agree Realty Corp. (NYSE:ADC) was projected to net $128.18 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 46% less than the market as a whole.

The average net gain in dividend and price was calculated to be 30.668% on $10k invested as $1k in each of these 10 dogs. This gain estimate was subject to average volatility 9% more than the market as a whole.

Actionable Conclusion (10): (Bear Alert) Analysts Predicted One FFave Dog To Show Net Loss of 12.97% By May 2017

One probable losing trade revealed by Thomson/First Call in Yahoo Finance in 2017 was:

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Banco Bradesco S.A. (NYSE:BBD) was projected to lose $129.69 based on dividend and a median target price estimate from six analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 117% more than the market as a whole.

10 FFave Dogs Get 6.51% LESS Gain From 5 Highest Yield, Lowest Priced

10 top FFave dividend paying stocks as of market closing May 18 were culled by Yield (dividend/price) results verified by Yahoo Finance.

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These top FFave dogs included firms, as noted above, from three of nine sectors in the top 10: basic materials (1), financials (8), and service (1).

Actionable Conclusion: (11) Analysts Estimated Five Lowest Priced of Top 10 High Yield FFave Dogs Will Deliver 27% Vs. (12) 28.9% Net Gains for All 10 by May 18, 2017

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$5k invested as $1k in each of the five lowest priced stocks in the top 10 "follower favorite" May kennel by yield were predicted by analyst one-year targets to deliver 6.51% LESS net gain than $5,000 invested as $.5k in each of all 10.

The second lowest priced "follower favorite" dog, Medallion Financial, was projected to deliver the best net gain of 60.6%.

Lowest priced five "follower favorite" dogs for May 18 were GAMCO Glb Gold Natural Res & Income Fund, Medallion Financial, Prospect Capital Corporation, New Senior Investment Grp, and InfraCap MLP ETF, with prices ranging from $6.38 to $10.61.

Higher priced five "follower favorite" dogs for May 18 were SunCoke Energy Partners, New Residential Investment, Capitala Finance, Nordic American Tankers, and Cornerstone Strategic Value Fund, whose prices ranged from $10.77 to $15.86.

This distinction between five low priced dividend dogs and the general field of 10 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 mid-May 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.

Eight of these follower favorite dividend pups are part of the now 39 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, and analyst mean target price by Thomson/First Call in Yahoo Finance.

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

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.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.