Industrial Safety Check Nets 33 Of 50 November Dogs

by: Fredrik Arnold


Thirty-three of 50 November industrial sector dog dividends are safe because their reported free cash flow yield exceeds dividend yield. Yes, those 33 have sufficient margin to pay promised dividends.

Top 10 safe yields from QUAD; TNK; PBI; TOO; BDI.TO; CPLP; AIM.TO; GMLP; STING; NNA ranged 4.45%-12.27%. Their cash flow yields ranged 11.02%- 55.34%.

Besides their safety margin, Industrial Sector dogs were also screened for low payout ratios, total annual returns and dividend growth as of November 17 market close.

Broker targets revealed lowest priced five of ten top yield safe Industrial Sector dogs chasing 25% more gains from $5k invested than from $5K invested in all ten.

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 known as "dogs."

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What Industries In The Industrial Sector Show Up As "Safe"?

Firms in ten industrial sector industries listed cash margins greater than their announced annual dividends in November: shipping & ports; business services; rental & leasing services; business equipment; industrial distribution; diversified industrials; farm & construction equipment; aerospace & defense; integrated shipping; tools & accessories.

Top ten Industrial sector dogs showing the biggest dividend yields by this screen as of November 17 represented four industries: (1) shipping & ports had six stocks; (2) business services included two stocks; (3) rental & leasing services had one stock (4) business equipment showed one stock.

33 Industrial Cash Flows Cover Dividends

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Periodic Safety Inspection

A previous article discussed the attributes of 50 Industrial stocks from which these thirty-three were sorted. You see below the list that passed the dividend "stress" test. These thirty-three industrial dogs list 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 canceling or varying the payout of dividends to shareholders. For example, Teekay Tankers (NYSE:TNK) on the list below has paid a variable quarterly dividend that has ranged from $.03 to $.12 over the past year. Capital Product Partners LP (NASDAQ:CPLP) cut it's quarterly dividend from $0.239 to $0.075 as of May 2016, where it remains.

Three additional columns of industrial data listed after the Safety Margin, figures reveal payout ratios, total annual returns, and dividend growth levels for each stock. This data can be very useful for going beyond yield in picking reliable payout stocks.

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Dog Metrics Found Bargains In Industrial "Safe" Stocks

Ten "Safest" top industrial dividend equities that showed the biggest yields November 17 per YCharts data ranked themselves by yield as follows:

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Actionable Conclusions: (1) Analysts Expect 5 Lowest Priced of "Safe" Ten High Yield Industrial Dogs To Deliver 31.79% VS. (2) 25.43% Net Gains from All Ten by November, 2017

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$5000 invested as $1k in each of the five lowest priced stocks in the "safe" ten Industrial kennel by yield were determined by analyst 1 year targets to deliver 25% more net gain than $5,000 invested as $.5k in all ten. The fifth lowest priced safe Industrial dog, Scorpio Tankers (NYSE:STNG) showed the best net gain of 48.46% per analyst targets.

Lowest priced five "safe" Industrial Sector dogs as of November 17 were: Navios Maritime Acquisitions (NYSE:NNA); Teekay Tankers; Capital Product Partners; Black Diamond Group (BDI.TO); Scorpio Tankers, with prices ranging from $1.63 to $4.32.

Higher priced five "safe" Industrial dogs for November 17 were: Teekay Offshore Partners (NYSE:TOO); Aimia (AIM.TO); Pitney Bowes (NYSE:PBI); Golar LNG Partners (NASDAQ:GMLP); Quad/Graphics (NYSE:QUAD), whose prices ranged from $5.58 to $26.95.

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.

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 and this instablog to aid your safe investing. --Fredrik Arnold

Stocks listed above were suggested only as possible starting points for your safest Industrial dog dividend stock research process. These were not recommendations.

Four of these industrial 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.

It's about time to make investing fun again. 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: 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;; analyst mean target price by Thomson/First Call in Yahoo Finance. Dog photo from:

Disclosure: I am/we are long GE.

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.