Top CCC Combo Dogs Are Energy, Financial, And REITs For June/July

Summary

• Leading CCC Combined dividend dogs (3 Champs + 3 Contenders + 4 Challengers) MCY, BWL.A, HCP, PAA, STON, SUN, WMB, GMLP, MFIN, and MMLP had yields ranging from 4.64% to 13.64% as of July.
• Top ten CCC Combo yield dogs mixed down as Dow dogs charged. Thirty top Combo Dogs ranged in yield from 3.57% to 13.64%. Five CCC dogs showed 2.56% to 8.2% downsides.
• Top ten Combo CCC pack showed 1-year upsides of 8.21% to 37.53%, with gains of 13.34% to 46.92%. Analysts estimated average 5.34% upside and 12.73% Net gain for 30 Combo leaders.
• Analyst estimated gains by TCP, ETE, WDR, GMLP, SXL, CBL, WMB, STON, MFIN, topped by SUN, averaged 26.36%. HP's loss was 5.99%.
• Ten Top CCC Combo dividend dogs by yield projected 2.38% LESS gains from $5k invested in the lowest priced five than from the same investment in all ten.

Dividend Dogs Defined

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."

CCC Composite Dogs In June/July

Yield (dividend/price) results from David Fish's Dividend Champions, Contenders, & Challengers (CCC) collected members (as of July 8 market closing prices) were paired with annual dividends projected by dripinvesting.org as of June 30. That data charted below showed four of nine Yahoo business sectors (or six of eleven Morningstar sectors) providing the top ten yielding CCC dogs: three from the basic materials (energy) sector, three from services (1 consumer cyclical and 2 industrial), three financial (2 financial services and 1 real estate), and one technology (technology). Those ten stocks posted yields averaging 11.79%.

Actionable conclusions by yield, target price upsides, and net gains for top Champion, Contender, and Challenger dog selections combined in May were presented step by step below.

Conclusion (1) Top 10 Dividend CCC Combo Dog Yields Ranged 10.5% to 13.64% as of July 8

Seeking Alpha reader requests prompted this series of index-specific articles reporting dividend yield plus price upside results for these indices: Dow 30; S&P 500; S&P Aristocrats; NASDAQ 100; Russell 1000; Russell 2000; Champions; Contenders; Challengers; CCC Combined; and Global. Bonus reports cover Bad Boy AllStars and Sector Leaders.

Thirty for the Show

This article was written to reveal bargain stocks to buy and hold for up to one full year. See the Dow 30 article for 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.

Dog Metrics Revealed 30 Champion, Contender, and Challenger Stocks by Yield

David Fish's June 30 composite of 10 Champions, 10 Contenders, and 10 Challengers list contained stocks distinguished as having paid consistently increasing dividends for five to over fifty years. Four Challengers (those raising dividends 5-9 straight years), three Contenders (raising dividends 10-24 straight years), and three Champions (raising dividends 25 or more years running), as ranked by yield, were selected to compose the top ten. Price data was sourced from Yahoo Finance as of the July 8 market close. Annual dividend calculations as of 6/30 came from dripinvesting.org.

As noted previously, four of nine Yahoo business sectors (or six of eleven Morningstar sectors) provided the top ten yielding CCC dogs. For this 4/3/3 list, four Challengers, three Contenders, and three Champions were a mix of basic materials, service, technology, and financial sector (or energy, industrial, consumer cyclical, financial services, real estate, and technology) representatives.

Martin Midstream Partners LP (MMLP) [1] led the three basic material (energy) sector representatives. Other basic material firms placed fourth and fifth: Williams Companies (WMB) [4] and Sunoco LP (SUN) [5], respectively.

Services (industrial) dogs placed third and ninth: Golar LNG Partners LP (GMLP) [3] and Seaspan Corp. (SSW) [9]. Another services (consumer cyclical) firm placed seventh, Stage Stores Inc. (SSI) [7].

Tops of three financial sector (financial services and real estate) firms placed second, Medallion Financial Corp. (MFIN) [2]. The other two financial representatives placed sixth and eighth: CBL & Associates Properties Inc. (CBL) (real estate) [6] and Waddell & Reed Financial Inc. (WDR) [10], respectively.

Finally, one technology company placed tenth, Seagate Technology plc (STX) [10], to complete the June/July top ten CCC Composite list of dogs by yield.

Dividend vs. Price Results Contrasted Dow Dogs

Periodic strength of ten top CCC Composite dogs by yield was charted below as of market closing prices from 7/8/16 and compared to those of the Dow.

Projected 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.

Actionable Conclusion (2): Top CCC Composite Dogs Mixed Down As (3) Dow Dogs Charged Bullishly Into July

CCC dividend from $10k invested as $1k in each dog fell as the aggregate single-share price sagged after May to make the mix down. CCC top ten dog dividend dropped 5.9%, while price stepped down 1.3%. CCC Composite dogs moved a bit closer to becoming overbought as the aggregate single-share price of the ten top dogs moved from 4.07 times to 3.88 times less than the total annual dividend derived from $10k invested as $1k in each of the ten dogs in July.

Dow dogs charged bullishly, as their aggregate single-share price for the top ten soared 16% between May 26 and July 8. Meanwhile, annual dividend from $10k invested as $1K in each of the top ten dropped 6.4%, according to IndexArb.

As a result, the Dow dogs' overbought condition (where the aggregate single-share price of the ten exceeded the projected annual dividend from $10k invested as $1k each in those ten) expanded greatly after May.

Actionable Conclusion (4): Dow Dogs Become More Overbought

August 2015 set the overbought gap at $343, or 89%. As September dawned, nearly all ten dogs dropped in price to temporarily shrink the gap to $273, or 67%. October saw prices rise and dividend fall to move the price over dividend chasm to $305, or 76%. November 6 price action and top dog shuffle put the gap at $305, or 79%. As of December 4 the gap stood at $302, or 78%.

Come January 8, 2016, prices of the ten Dow top dogs fell, and dividends rose, to push the overbought gap down to $224, or 56%. In February, the gap grew to $246, or 59%. The March charge put the gap up to $293, or 73%. April set a 2016 record, expanding to $400, or 104%. May's price retreat brought the price over dividend gap down to $350, or 91%, and June put the gap down to $342, or 90%. The July surge was led first by heavyweight Exxon Mobil (XOM) muscling little General Electric (GE) out on the tenth slot by yield. Then, JPMorgan Chase (JPM) pushed Merck (MRK) out of the ninth slot. The resulting gap between the aggregate single-share price of ten dogs above dividends projected from $10K invested as $1K per each of the ten was $414, or 114%.

The Dow dogs remain overbought and overpriced. Meaning, these are low-risk and low-opportunity Dow dogs. The Dow top ten average price per dollar of annual dividend was $27.30.

Compared to the Dow, the CCC Combo ten, after moving toward overbought last October, spectacularly widened the gap in November and January, where aggregate dividend value of $1k investments in each of the ten soared higher above the aggregate single-share price. March found the margin tighter. April widened the gap slightly. Then, May dropped dividend and rose price to put the gap a little below where they were last October. Still, in marked contrast to the Dow, CCC Dog top ten average price per dollar of annual dividend was $10.99 as of July 8 (up from $10.86 as of May 26).

Should Dow prices ever to move to a level 30-35% lower, they could again become attractive dividend buys! As it stands, the Dow has become an index of growth stocks, as their dividends have progressively been devalued by excessively high market prices.

Actionable Conclusions: (5) Ten CCC Dogs Cast 18.03% Average Upsides As Of July 2017; (6) One CCC Dog Projected An 8% Loss

To quantify top dog rankings, analyst mean price target estimates provide a "market sentiment" gauge of upside potential. Added to the simple high yield "dog" metrics, analyst mean price target estimates, these provided another tool to dig out bargains.

Actionable Conclusions: Wall St. Wizards Predicted (7) 5.34% Average Upside, and (8) 12.73% Average Net Gain from Top 30 Dividend Combined CCC Dogs By July 2017

Top thirty dogs from David Fish's Dividend Combined CCC index were graphed below as of July 8, 2016 as compared to analyst mean price target estimates for the same date in 2017.

A hypothetical $1000 investment in each equity was divided by the current share price to find the number of shares purchased. The number of shares 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 stock price upsides and net gains including dividends less broker fees as of 2017.

Historical 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 the data points for 2016. Projections based on estimated increases in dividend amounts from $1000 invested in the thirty highest-yielding stocks and aggregate one-year analyst target share prices from Yahoo Finance divided by 3 created the 2017 data points shown in green for price and blue for dividend.

Analyst data reported by Yahoo finance projected a 5.4% lower dividend from $30K invested as $1k in each stock in this group, while the aggregate single-share price was projected to increase 3.23% 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 had a better history of estimate accuracy.

A beta (risk) ranking for each 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's price movement opposite of market direction.

Actionable Conclusion (9): Analysts Augured Ten Dividend CCC Dogs Netting 13.34% to 46.9% Gains By July 2017

Six of the ten top dividend-yielding Champion dogs were among the ten gainers for the coming year, based on analyst 1-year target prices. So this month, the dog strategy as graded by Wall St. wizards was 60% accurate.

Ten probable profit-generating trades were revealed by Thomson/First Call in Yahoo Finance into 2017:

Sunoco LP from the Challenger list was projected to net $469.21, based on dividends plus median target price estimate from fourteen analysts less broker fees. The Beta number showed this estimate subject to volatility 621% more than the market as a whole.

Medallion Financial Corp. from the Challenger list was projected to net $406.72, based on dividends plus median target price estimate from two analysts less broker fees. The Beta number showed this estimate subject to volatility 51% more than the market as a whole.

StoneMor Partners LP (STON) from the Contender list was projected to net $364.55, based on dividends plus a median target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 54% less than the market as a whole.

Williams Companies from the Contender list was projected to net $293.01, based on dividend plus median target price estimates from eight analysts less broker fees. The Beta number showed this estimate subject to volatility 46% more than the market as a whole.

CBL & Associates Properties from the Challenger list was projected to net $248.53, based on estimates from twelve analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 3% more than the market as a whole.

Sunoco Logistics Partners LP (SXL) from the Contender list was projected to net $210.99, based on dividends plus median target price estimates from seventeen analysts less broker fees. The Beta number showed this estimate subject to volatility 9% less than the market as a whole.

Golar LNG Partners LP from the Challenger list was projected to net $190.32, based on estimates from ten analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 3% less than the market as a whole.

Waddell & Reed Financial from the Challenger list was projected to net $175.18, based on dividends plus a median target price estimate by eight analysts less broker fees. The Beta number showed this estimate subject to volatility 77% more than the market as a whole.

Energy Transfer Equity LP (ETE) from the Contender list was projected to net $144.31, based on a median target price estimate from eleven analysts, combined with projected annual dividend less broker fees. The Beta number show 84% more than the market as a whole.

TC Pipelines LP (TCP) from the Contender list was projected to net $133.37, based on dividends plus median target price estimate from eight analysts less broker fees. The Beta number showed this estimate subject to volatility 3% more than the market as a whole.

The average net gain in dividend and price was projected to be 26.36% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 82% more than the market as a whole.

Actionable Conclusion (10): (Bear Alert) Analysts Projected A CCC Dog To Show A Net Loss Of 5.99% By 2017

A probable losing trade revealed by Thomson/First Call in Yahoo Finance in 2017 was:

Helmerich & Payne Inc. (HP) was projected to lose $59.88, based on dividend and a median target price estimate from twenty-nine analysts, including $20 of broker fees. The Beta number showed this estimate subject to volatility 152% opposite the market as a whole.

Actionable Conclusion (11): Would You Choose HP vs. SUN Based On Analyst Upside Projections Versus This Price History?

Year-to-date price performance of Helmerich & Payne, Inc., the CCCC portfolio "loser" red-lined by analysts, showed a strong upside compared to the negative trending price record for analyst-tagged upside leader Sunoco LP.

History obviously played no part in this analyst forecast.

Dog Metrics Attempted to Dig For Additional Bargains

As you now know, ten CCC dividend dogs showing the biggest dividend yields as of July 8 represented four of nine Yahoo business sectors (or six of eleven Morningstar sectors) providing the top ten yielding CCC dogs. Listed as of market close, July 8, the CCC Combo dividend dogs arranged themselves by yield as follows:

Actionable Conclusions: Analysts Speculate (9) 5 Lowest-Priced of Top Ten Highest-Yield CCC Combo Dogs Deliver 20.54% Vs. (10) 21.04% Net Gains from All Ten As Of July 8, 2017

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten CCC kennel by yield was subject to 2.38% LESS net gain than $5,000 invested as $500 in each of all ten. The highest-priced CCC dog, Sunoco LP, was projected to deliver the greatest net gain of 46.92%.

The five lowest-priced CCC dogs as of July 8 were: Stage Stores Inc., Medallion Financial Corp., CBL & Associates Properties Inc., Seaspan Corp., and Waddell & Reed Financial Inc., whose prices ranged from $5.29 to $16.601.

The five higher-priced CCC dogs as of July 8 were: Golar LNG Partners LP, Williams Companies, Martin Midstream Partners LP, Seagate Technology plc, and Sunoco LP, whose prices ranged from $18.02 to $28.72.

This distinction between the five low-priced dividend dogs and the general field of ten reflects the "basic method" Michael B. O'Higgins employed for beating the Dow. It also works sometimes for teasing bargains out of this list of top-yielding CCC Composite dogs, as you see.

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 20-80% accurate on the direction of change and about 0-20% accurate on the degree of the change.

Annual Analyst Accuracy

You see below the one-year result of ten analyst target estimates for CCC Combo stocks per Yahoo Finance data covering this article from early July 2015. These graded the "basic method" Michael B. O'Higgins employed for beating the Dow. The key shows: losses in a reddish tint; poor results tinted yellow; gains tinted green; and no tint means no difference.

The "basic method" top ten annual analyst accuracy score for the Top Ten CCCCombo by yield between early July 2015 vs. 2016 was seven losses and three gains. No small dogs were gainers - three of five big dogs gained. O'Higgins' basic method failed this annual test on this collection of dividend dogs. (We know it works on the Dow.)

See my instablog for specific instructions about how to best apply the dividend dog data featured in this article.

Net gain and 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.

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A top-performing DOTW dog for the first quarter has been named. A second quarterly winner was discovered May 13. The third quarterly top gain dog will be announced in August.

For a free copy of both quarterly reports and analysis of the winning Arnold Q1, Q2, and coming Q3 August picks, send your e-mail address, ticker symbol for your favorite dividend stock, and name of your favorite team of any sport or activity to: [e-mail]. Remember: E-mail, ticker, team!

The stocks listed above were suggested only as possible starting points for your 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 indexarb.com; YCharts.com; analyst mean target prices by Thomson/First Call in Yahoo Finance.

Analyst’s Disclosure: I am/we are long CSCO, GE, INTC, PFE, VZ. 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.