Fredrik Follower Fave Dividend Dogs: 55 Safe Out Of 130 In October

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Includes: ABBV, AGNC, ALDW, BLX, CEQP, CORR, CYS, EFC, GE, GMLP, MCD, MO, NLY, NYMT, PMT, STWD, SXCP, T, TNK
by: Fredrik Arnold

Summary

Arnold "followers" surveyed October 12 returned 25 replies which were added to the past year accumulation of Favorite (FFave) dividend dogs which totaled 130.

55 of those 130 were called "safe" payers because their free cash flow yield exceeded their dividend yield. 130 yields ranged 0.51-46.01%. The 55 Safe Faves ranged .51-16.33%.

Top ten safe faves CORR, NLY, GMLP, AGNC, CEQP, CYS, EFC, PMT, SXCP, & NYMT charged bullishly as Dow dogs charged too.

Analyst upsides for 10 Top FFaves of 30 averaged 15.2% by CYS, NLY, F, KO, ALDW, MO, T, ABBV, EFC & TNK.

$5k invested in the lowest-priced five top yield Safe FFaves showed 0.33% LESS net gain than from $5k invested in all ten.

Followers Voted

An October 12 message blast to all 6,800 Arnold Seeking Alpha followers requested their e-mail address, favorite dividend stock and favorite team. In exchange for their answers, I offered a list of the 12 best performing dogs for each month since last August, and current status report on the 3 best performing dogs for the past three quarters from data collected from my now complete 52 dogs of the week (DOTW). Similar offers went out in September and December 2015, plus March, April, May and June, July, August and September this year. Those DOTW selections and updates are published every Sunday or Monday exclusively in my Seeking Alpha premium pages. As mentioned, that site now has its full complement of 52 ace DOTWs.

The fourth quarterly winner and the "dog of the year" TOP MONEY MAKER will be announced at the free for all first annual dividend dog of the year award webinar on shindig. November 16 at 11AM to Noon EST. Go here to reserve your seat.

Root for the Underdog

For a free copy of the DOTW monthly and quarterly status report described above, 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!

Now, here are the tangible financial results for the 55 Safe Favorites from September 2015 to 2016.

The 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 affectionately known as "dogs."

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One Hundred Thirty For the Money

Yield (dividend / price) results verified by Yahoo Finance for "follower favorite" stocks as of market closing prices 10/14/16 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.

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By Yield,"Follower Favorite" Stock Actionable Conclusions Were: (1) CVRR, Led 130 Accumulated FFaves, Which Included (2) Sixteen Monthly Payers

The fifty five "Safe" follower favorites sorted by yield calculated as of market close 10/14/16 showed five of eleven YChart/Morningstar sectors represented in the top ten.

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Top dog was one of five real estate dogs, followed by basic materials (1), financial services (1), energy (1), and industrial (1) . (Closed end funds, and exchange traded funds and notes were excluded since an equity screener was the only tool employed in the safety survey). One of the top ten "Safe" favorite dogs paid monthly dividends.

The whole pack was led by the top real estate firm, by yield, New York Mortgage Trust (NASDAQ:NYMT) [1]. The other four REITs placed third, fifth, seventh, ninth, and tenth: PennyMac Mortgage Investment (NYSE:PMT) [3], CYS Investments (NYSE:CYS) [5], AGNC Investment (NASDAQ:AGNC) [7], Annaly Capital Management (NYSE:NLY) [9], and CorEnergy Infrastructure Trust (NYSE:CORR) [10]. AGNC paid monthly dividends.

Second "Safe" FFave stock by yield, SunCoke Energy Partners (NYSE:SXCP) [2] was the lone basic material representative in the top ten this month. Fourth place as claimed by the financial service representative, Ellington Financial (NYSE:EFC) [4].

An energy firm placed sixth, and an industrial sector shipper was eighth: Crestwood Equity Partners (NYSE:CEQP) [6], and Golar LNG Partners (NASDAQ:GMLP) [8] to complete the representation of market sectors in the October follower favorite "Safe" aggregated top ten by yield.

FFave "Safe" October Dividend vs. Price Representatives Charged As Did the Dow Dogs

Periodic strength of ten top "follower favorite" dogs by yield graphed below as of market closing prices through 10/14/2016 was compared to the strength of the Dow ten. Forecast 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 "Safe" Dogs Charged, (4) As Did Dow Dogs After September

"Follower favorite" top ten yielder dividend from $10k invested as $1k in each dropped, while aggregate single share price soared. Annual dividend fell 13.5% lower after September as share price of the ten erupted 28%.

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Dow dogs also charged after September, though not so dramatically as the Faves. Aggregate single share price rose 1.8% between September 16 and October 14, while annual dividend from $10k invested as $1K in each of the top ten Dow dogs fell 0.11% 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 a mite.

Actionable Conclusion (5): Dow Dogs Stay Overbought

Historically, January saw the gap at $275 or 65%. March put the chasm at $361 or 91%, and April expanded the gap to $397 or 106%. May narrowed the chasm to $345 or 89%, but June brought the pack kicking and screaming to $380 or 102%. July widened the gap to $446 or 125%, then August pushed the price over dividend chasm to $486 or 133%. September put little dog, General Electric (NYSE:GE) in tenth to replace McDonald's (NYSE:MCD) and the whole pack retreated to $354 or 94%. October price and dividend action put the Dow gap at $368 or 97%.

Compared to the follower favorites, Dow dividends are highly overpriced. The Dow top ten October 14 average price per dollar of annual dividend was $26.49.

Conversely, the "follower favorite" chart shows those dogs to be made of volatile, high risk and potentially highly profitable pups. The FFave October top ten average price per dollar of annual dividend was $8.41, just 32% of the Dow price per dividend dollar. The Arnold followers do find bargain stocks!

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Actionable Conclusion (6) Analyst Targets Scan FFave "Safe" Top Ten Dogs To Foresee 7.66% To 38.78% Price Upsides, And (7) Predict One Dog Down 39.65% By October, 2017

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.

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Actionable Conclusions: Wall St. Brokers Estimated (8) A 4.43% Average Upside and (9) 10.42% Net Gain for Top 30 FFave "Safe" Dogs As Of October 14, 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 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 $1000 invested in the thirty highest yielding "follower favorite" 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.

Analysts as quoted by Yahoo, forecast a 3.1% lower dividend from $30K invested as $1k in each stock in this group of 30 while aggregate single share price was projected to increase 3.6% 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 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.

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Actionable Conclusion (10): Analysts Assert FFave "Safe" Top Ten Dogs Net 13.15% to 45.9% By October 14, 2017

Four 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 40% accurate for the "follower favorite" top ten.

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

Teekay Tankers (NYSE:TNK) was projected to net $459.09 based on dividends plus the median target price estimate from twelve analysts less broker fees. The Beta number showed this estimate subject to volatility 128% more than the market as a whole.

Ellington Financial was projected to net $354.14 based on median target price estimates from five analysts plus on projected annual distributions less broker fees. The Beta number showed this estimate subject to volatility 65% less than the market as a whole.

New York Mortgage Trust was projected to net $206.19 based on the median target price estimate from seven analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 50% more than the market as a whole.

AbbVie (NYSE:ABBV) was projected to net $181.28 based on the median target price estimate from eighteen analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 43% more than the market as a whole.

AT&T Inc (NYSE:T) was projected to net $176.33 based on median target price estimates from twenty-three analysts plus on projected annual distributions less broker fees. The Beta number showed this estimate subject to volatility 67% less than the market as a whole.

CYS Investments was projected to net $176.17 based on the median target price estimate from seven analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 28% less than the market as a whole.

Starwood Property Trust (NYSE:STWD) was projected to net $170.08 based on dividends plus a median target price estimate from nine analysts less broker fees. The Beta number showed this estimate subject to volatility 46% less than the market as a whole.

Annaly Capital Management was projected to net $1673.83 based on the median target price estimate from ten analysts combined with dividend while subtracting broker fees. The Beta number showed this estimate subject to volatility 79% less than the market as a whole.

Alon USA Partners (NYSE:ALDW) was projected to net $154.45 based on a median target price estimate from five analysts, plus annual dividend less broker fees. The Beta number showed this estimate subject to volatility 18% more than the market as a whole.

Altria Group (NYSE:MO) was projected to net $132.15 based on a median target price estimate from ten analysts, plus annual dividends less broker fees. The Beta number showed this estimate subject to volatility 33% less than the market as a whole.

The average net gain in dividend and price was calculated to be 21.78% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 8% less than the market as a whole.

FFAVE "Safe" Top and Bottom Analyst Pick Price YTD Momentum Histories Contradict Brokers Points Of View

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The top dog has a more negative history than the bottom dog on the follower favored analyst upside scale. The lowest FFave "loser" Banco Latinoamericano (NYSE:BLX) shows better price upside year to date than the analyst upside star stock, Teekay Tankers. Upside momentum contradicts these Wall Street Wizard picks. This evidence coincides with Michael O'Higgins and similar contrarian pundits.

Ten FFave "Safe" Dogs Show 0.33% LESS Gain From 5 Highest Yield, Lowest Priced

Ten top FFave dividend paying stocks as of market closing October 14 were culled by Yield (dividend / price) results verified by Yahoo Finance.

Top FFave "Safe" dogs included firms, as noted above, from five of nine sectors in the top ten: real estate dogs (5), basic materials (1), financial services (1), energy (1), and industrial (1).

Actionable Conclusion: (12) Analysts Alleged 5 Lowest Priced of Top Ten High Yield FFave "Safe"Dogs To Deliver 24.82% VS. (13) 14.87% Net Gains for All Ten by October 14, 2017

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$5000 invested as $1k in each of the five lowest priced stocks in the top ten "follower favorite" September kennel by yield were predicted by analyst 1-year targets to deliver 0.33% LESS net gain than $5,000 invested as $.5k in each of all ten.

The sixth lowest priced "follower favorite" dog, Ellington Financial, was projected to deliver the best net gain of 35.41%.

Lowest priced five "follower favorite" safe dogs for October 14 were: New York Mortgage Trust; CYS Investments; Annaly Capital Management, Inc.; PennyMac Mortgage Investment; SunCoke Energy Partners, with prices ranging from $5.88 to $15.50.

Higher priced five "follower favorite" safe dogs for October 14 were: Ellington Financial; AGNC Investment; Crestwood Equity Partners; Golar LNG Partners; CorEnergy Infrastructure Trust, whose prices ranged from $14.01 to $28.93.

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 mid-October, 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.

Three of these follower favorite sector dividend pups qualify as valuable catches! Find them as three of the now 52 Dogs of the Week found on The Dividend Dog Catcher premium site. Click here to subscribe or get more information.

For a free copy of both previous quarterly reports Q1, & Q2 and analysis of the new winning Arnold the Q3 pick, 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!

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 ycharts.com; indexarb.com; dividend.com; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance. Dog photo: attackofthecute.com.

Disclosure: I am/we are long GE, CSCO, PFE, T, VZ, APTS, FSC, ARR.

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.