Dividend Dogs Rule
The "dog" moniker was earned by stocks exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where (3) yield (dividend/price) grew higher than their peers. Thus, the highest yielding stocks in any collection became known as "dogs."
What Sectors Paying Monthly Dividends Show Up With "Safe" Equities?
Top ten MoPay equities by yield listing cash margins greater than their announced annual dividends came from the financial services (4), real estate (2), consumer cyclical (2), industrial (1), and utilities (1) sectors.
23 MoPay Dogs Have Cash Margins Above Dividends
Annual Safety Inspection
A previous article discussed the attributes of 63 Utilities stocks from which these twenty-three were sorted. You see below the list that passed the dividend "stress" test. These twenty-three monthly pay dividend dogs report sufficient annual cash flow yield to cover their anticipated annual dividend yield. The margin of excess is shown in the last column.
Financial guarantees however are easily over-ruled by a cranky board of directors or company policy canceling or varying the payout of dividends to shareholders. For example, on the list below, Fifth Street Finance (FSC), and Prospect Capital (PSEC) cut their monthly dividends from $.092 to $.06 and from $.111 To $.083 respectively as of January 2015. Also, American Capital Agency (AGNC) announced July 27 a reduction of its $.20 monthly shareholder payout to $.18 as of September.
Dog Metrics Were Employed To Find Bargain MoPay "Safe" Stocks
Ten "Safest" top MoPay revenue stocks showing the biggest yields August 19 per YCharts data ranked themselves by yield as follows:
Actionable Conclusions: (1) Analysts Expect 5 Lowest Priced of Ten Monthly Pay Dividend Dogs To Deliver 6.5% VS. (2) 6.83% Net Gains from All Ten by August, 2017
$5000 invested as $1k in each of the five lowest priced stocks in the "safe" ten MoPay kennel by yield were determined by analyst 1 year targets to deliver 4.88% LESS net gain than $5,000 invested as $.5k in all ten. The very lowest priced safe MoPay dog, Fifth Street Finance, was projected to deliver the best net gain of 16.14%.
Lowest priced five "safe" MoPay dogs as of August 19 were: Fifth Street Finance; Prospect Capital; Gladstone Investment (GAIN); Gamehost (GH.TO); Corus Entertainment (OTCPK:CJREF), with prices ranging from $5.90 to $9.95.
Higher priced five Safe MoPay dogs for August 19 were: Artis REIT (OTC:ARESF); Bird Construction (BDT.TO); Superior Plus (SPB.TO); DirectCash Payments Inc. (DCI.TO); American Capital Agency, whose prices ranged from $10.13 to $19.87.
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. Its 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 net gain estimates mentioned 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.
See my instablog for specific instructions about how to best apply the dividend dog data featured in this article.--Fredrik Arnold
Stocks listed above were suggested only as possible starting points for your safest MoPay dog dividend stock purchase research process. These were not recommendations.
Three of these monthly paying dividend pups qualify as valuable catches! They are listed with the 52 Dogs Of The Week (DOTW) found on The Dividend Dog Catcher premium site. Click here to subscribe or get more information.
A top performing DOTW dog for the first quarter has been named. A second quarterly winner was discovered May 13. A third quarter winner is to be announced Monday, August 22.
For a free copy of both previous quarterly reports Q1, & Q2 and analysis of the new winning Arnold Q3 pick Monday August 22, send your e-mail address, ticker symbol for your favorite dividend stock, and name of your favorite team of any sport or activity to: fredrika120@gmail.com. Remember: E-mail, ticker, team!
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 ycharts. com; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance. MoneyDog photo from: louiethelovemuffin.com
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
