The June 8 introduction to monthly pay dividend dogs drew reader comments suggesting additions. The list below is still composed mainly by stocks but some funds and trusts have started to creep in. The previous article included a link to a collection of sixteen stocks supplemented by dozens of funds and trusts. The list below has now grown by six to include most of the additions suggested by readers.
Dogs of the Index Metrics Call Out Current Bargains
For this article the list of now 22 companies paying out monthly dividends was ranked using the two key dog performance metrics: (1) stock price; (2) annual dividend. Dividing the annual dividend by the price declared the percentage yield by which each dividend dog stock was ranked.
Historically dividend dog investors utilized this ranking system to select portfolios of five or ten stocks in any one index, sector, survey, or list to trade. They awaited the results from their investments in the lowest priced, highest yielding stocks and prayed that the price of every stock they now owned climbed higher (having locked in a high yield percentage at purchase).
Dogs of the index strategy, popularized by Michael B. O'Higgins in the book "Beating The Dow" (HarperCollins, 1991), revealed how high yielding stocks whose prices increase (and whose dividend yields therefore decrease) can be sold off once each year to sweep gains to reinvest the seed money into higher yielding stocks in the same index.
The twenty two monthly dividend paying (mo pay) stocks listed below were ranked by yields calculated as of July 12 to determine the Top Ten.
Ten monthly dividend stocks showing the biggest yields as of July 12 included equities representing just three of nine market sectors. The top yielding stock as revealed by Yahoo Finance data, was one of eight in the financial sector, Armour Residential REIT (ARR). The other seven financial firms were: Full Circle Capital Corp. (FULL), Fifth Street Finance Corp (FSC), Prospect Capital Corp. (PSEC), Gladstone Capital Corp (GLAD), Gladstone Commercial Corp (GOOD), Whitestone REIT (WSR), Gladstone Investment Co (GAIN). The balance of the top ten included: one basic materials firm, Enerplus Corporation (ERF); one utility, Atlantic Power Corporation (AT) representing the sectors.
Dividend vs. Price Results
Below relative strengths for the top ten Monthly Pay Dividend Dogs by yield was graphed as of June 4, 2012 and compared to those of the Dow. Six months of historic projected annual dividend history from $1000 invested in the ten highest yielding stocks and the total single share prices of those ten stocks created the data points for each month shown in green for price and blue for dividends.
Conclusion: High Risk Monthly (Mo) Pay Dividend Dogs Chase a Bull While Dow Dogs Get Bear Tracked
The top ten Mo Pay Dogs broke out of their bear path all year as measured by dividend vs. price performance between January and June. Aggregate single share price for the top ten declined 17.6% while projected dividends from those ten invested at $1k each increased 18.54% for that period. The gap between aggregate single share prices sinking beneath rising projected dividends from $1k invested in those ten equities widened.
From June 4 to July 12 however two new additions added to a bull charged list displayed 8.26% rising aggregate share price for the top ten combined with a 7.65% lower dividend amount from $1k invested in each of those ten.
Meanwhile, the Dow index moved back to convergence as aggregate total single share prices dropped 15.58% while dividends from $1k invested in the top ten rose .415% to move within $1 of each other in July.
As of July 12 Mo Pay Dogs showed $624 or 155% more dividends (with equally bigger risk) at an $293 or 73% lower aggregate single share price than the Dow top ten.
Conclusion Too: Analysts Forecast July 2013 Gains at 21.81%
Top ten dogs for the Mo Pay list were graphed below to show relative strengths by dividend and price as of July 12, 2012 and those projected to July 12, 2013.
Historic prices and actual dividends paid from $1000 invested in the ten highest yielding stocks and the aggregate single share prices of those ten stocks created the data points for 2012. Projections based on estimated increases in dividend amounts from $1000 invested in the ten highest yielding stocks and aggregate one year analyst mean target prices as reported by Yahoo Finance created the 2013 data points green for price and blue for dividends.
For the coming year Yahoo Finance projected a 8.23% lower dividend from $1k invested in each stock within this group while aggregate single share price for the ten was projected by analysts to increase by 15.15%. Probable profit generating trades revealed by Yahoo for 2013 were Gladstone Capital netting $208.03, Gladstone Commercial Corp. netting $221.13, Enerplus Corporation netting $738.08, Whitestone REIT netting $203.19, and Gladstone Investment Corp netting $220.05 as of next July. The resulting net gain from dividends and swept price gains was 21.81% from $10k invested according to analyst estimates.
Stay tuned also for Mo Pay comparisons to other dog lists including dividend champions. Look for semi-annual updates on how well or whether projected gains for 2013 hold.
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.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.