September to November invitations at the bottom of my Seeking Alpha articles requested an e-mail address, favorite dividend stock, and favorite team from readers. In exchange for these answers, a summary was offered of monthly top gaining dogs and quarterly reports describing my 3 best performing dogs of the week (DOTW) from my SA marketplace blog site, The Dividend Dogcatcher.
Last week, November 16, the full complement of 52 ace DOTWs revealed 12 top monthly dogs, 4 top quarterly winners and a dog of the year that were honored in an on-line celebration.
(That list of winners is yours in exchange for your e-address, favorite stock ticker and team. Click the message link at the top of this article. You're now eligible to contribute to the December survey. Remember to include all three: e-mail; ticker; team.)
Now here are the tangible results from the 15 Safe follower favorites for November...
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."
What Sectors Show Up As "Safe" Among the Follower Favorites?
Of eleven sectors, nine were represented by the 15 stocks with cash margins greater than their announced annual dividends. These included: real estate; financial services; basic materials; energy; industrials; communication services; technology; healthcare; consumer defensive. Only the consumer cyclical sector and utilities were not represented.
The count of 15 safe follower favorite safe sector dogs by industry showed: (1) real estate had two; (2) financial services had four; (3) basic materials had two; (4) energy had one; (5) industrials had one; (6) communication services had one; (7) technology had one; (8) healthcare had one; (9) consumer defensive had one. The first six were represented in the top ten by yield.
Periodic Safety Check
A previous article discussed the attributes of the 30 follower favorite stocks from which these fifteen were sorted. You see above the tinted green list that passed the dividend "stress" test. These 15 follower favorite dogs report sufficient annual cash flow yield to cover their anticipated annual dividend yield. The margin of excess is shown in the bold face "Safety Margin" column.
Financial guarantees however are easily over-ruled by a cranky board of directors or company policy cancelling or varying the payout of dividends to shareholders. For example, Orchid Island Capital, Inc. (NYSE:ORC) on the list below cut its monthly dividend from $18 to $.15 in June, 2015. Also Prospect Capital Corporation (NASDAQ:PSEC) chopped its monthly dividend from $0.111 to $0.083 in February 2015, to suit it's cash flow.
Three additional columns of real estate cash data listed after the Safety Margin figures reveal payout ratios (lower is better), total annual returns, and dividend growth levels for each stock. This data is provided to reach beyond yield to select reliable payout stocks.
Dog Metrics Dug Out Bargains In Follower Favorite "Safe" Stocks
Ten "Safest" top follower favorite firms showing the biggest yields November 17 per YCharts data ranked themselves by yield as follows:
Ten top FFave dividend paying stocks as of market closing November 17 were culled by Yield (dividend / price) results verified by Yahoo Finance.
Top ten FFave "Safe" dogs included firms, as noted above, from six of eleven sectors in the top ten.
Actionable Conclusion: (12) Analysts Alleged 5 Lowest Priced of Top Ten High Yield FFave "Safe"Dogs To Deliver 15.57% VS. (13) 14.96% Net Gains for All Ten by November 17, 2017
$5000 invested as $1k in each of the five Lowest priced stocks in the top ten "follower favorite" November kennel by yield were predicted by analyst 1 year targets to deliver 4.12% more net gain than $5,000 invested as $.5k in each of all ten.
The very lowest priced "follower favorite" dog, TeeKay Tankers Ltd.(NYSE:TNK), was projected to deliver the best net gain of 26.93%.
Ten FFave "Safe" Dogs Show 4.12% more Gain From 5 Highest Yield, Lowest Priced
Lowest priced five "follower favorite" safe dogs for November 17 were: TeeKay Tankers Ltd.; Prospect Capital Corporation ; Orchid Island Capital, Inc.; New Residential Investment (NYSE:NRZ); Old Republic International Corp. (NYSE:ORI), with prices ranging from $2.42 to $17.77.
Higher priced five "follower favorite" safe dogs for November 17 were: SunCoke Energy Partners (NYSE:SXCP); Summit Midstream Partners LP (NYSE:SMLP); Enviva Partners, LP (NYSE:EVA); Banco Latinoamericano de Comercio (NYSE:BLX); AT&T, Inc (NYSE:T), whose prices ranged from $19.80 to $40.20.
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 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.
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 the monthly top dogs, the quarterly reports, and the dog of the year winner, send your e-mail address, ticker symbol for your favorite dividend stock, and name of your favorite team of any sport or activity to: email@example.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: telegraph.co.uk.
Disclosure: I am/we are long T.
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.