Follower Favorite Top Dogs Spot An Industrial For Gains Plus A REIT ETF For Yield In July

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Includes: ADRNY, AI, AMZA, BGS, CIM, CLM, CYS, ETP, MORL, NEWM, NILSY, ORC, PSEC, RAS, SDLP, TOO, UNIT
by: Fredrik Arnold

Summary

June 15-July 14 Arnold dividend dog "followers" suggested 36 favorites from their comments and suggestions. The list was posted after 30 unique underdog tickers are noted. Every comment was read.

This month's ten analyst-target-augured top-net-gain follower favorites (FoFaves) were: CBL.TO; UNIT; NEWM; BGS; ADRNY; ETP; SDLP; RAS; NILSY; TOO averaging 55.34% net.

By price upside, alone, ten FoFaves made the top tier: ORC; NYLD; IRM; UBA; F; TLP; ETE; RAS; AMID; ETP. They gained 27% on average.

By yield, the following top ten underdogs made this June  write-up: CYS; PSEC; MORL; AMID; RAS; ORC; AI; CLM; BPT; AMZA. They averaged 16.36% yields. (Yes, one made all-three lists.).

$5k invested in the lowest-priced five top yield FoFaves showed 45.06% more dividend than from $5k invested in all ten.

Follower Selections

Until May blatant invitations at the bottom of my Seeking Alpha articles requested an e-mail address, favorite dividend stock ticker, and favorite team from readers. In exchange for these answers, a summary of reports describing my best performing dogs of the week (DOTW) in two portfolios was sent.

However reference to outside e-mail addresses are no longer permitted by S.A. Thus, from now on, when you send me a message, or comment on any of my new posts, I may include the dividend stock you mention in a follower favorite feature.

Here are tangible results for the follower favorites so selected as of July, 2017...

Actionable Conclusions (1-10): Analysts Predicted 28% To 123.6% Net Gains For Ten FoFave Dogs By July 2018

Three of ten top dividend-yielding Follower Favorite dogs were verified as being among the top ten of thirty gainers for the coming year based on analyst 1-year target prices. (As tinted gray in the chart above). So, the yield-based forecast for the FoFave dogs, as graded by Wall St. wizards, was 30% accurate.

Ten probable profit-generating trades were revealed in YCharts for July 2018:

Teekay Offshore Partners (TOO) was projected to net $1236.00, based on dividends plus mean target price estimates from five analysts, less broker fees. The Beta number showed this estimate subject to volatility 250% greater than the market as a whole.

MMC NORILSK NICKEL (OTCPK:NILSY) was projected to net $736.45, based on dividends, plus mean target price estimates from one analyst, less broker fees. No Beta number was available for NILSY.

RAIT Financial Trust (RAS) was projected to net $715.58, based on dividends, plus mean target price estimates from two analysts, less broker fees. The Beta number showed this estimate subject to volatility 35% more than the market as a whole.

Seadrill Partners (SDLP) was projected to net $610.09, based on dividends, plus a mean target price estimate from two analysts, less broker fees. The Beta number showed this estimate subject to volatility 189% more than the market as a whole.

Energy Transfer Partners (ETP) netted $488.07 based on mean target price estimates from two analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 46% more than the market as a whole.

Koninklijke Ahold (OTCQX:ADRNY) was projected to net $468.08, based on a target estimate from a single analyst, plus annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 70% less than the market as a whole.

B&G Foods (BGS) was projected to net $381.20, based on dividends plus a median target estimate from nine brokers, less broker fees. The Beta number showed this estimate subject to volatility 90% less than the market as a whole.

New Media Investm’t Group (NEWM) based on a mean target price estimate from three analysts,]dividends, less broker fees. No beta number was available for AMZA

Uniti Group (UNIT) was projected to net $307.57, based on target price estimates from ten analysts, plus the projected annual dividend, less broker fees. A Beta number was not available for UNIT.

Callidus Capital (CBL.TO) was projected to net $280.48, based on target price estimates from three analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 222% over the market as a whole.

Average net gain in dividend and price was estimated at 55.34% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 76% more than the market as a whole.

Actionable Conclusions (11): Analysts Expected A 4.95% Net Loss From One FoFave Dogs By July 2018

Prospect Capital (PSEC) was projected to lose $49.48, based on target price estimates from four analysts, plus annual dividend, less broker fees. A Beta number was not available for PSEC.

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. So, the highest yielding stocks in any collection have become affectionately known as "dogs." More precisely, these are, in fact, best called, "underdogs"

Thirty For the Money

Yield (dividend / price) results from YCharts.com verified by Yahoo Finance for "follower favorite" stocks as of market closing prices 7/14/17 revealed actionable conclusions discussed below. See any 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.

Actionable Conclusion (12): "Follower Favorite" Stock, By Yield, MORL, Led 36 June FFaves

Thirty-six follower favorites sorted by yield calculated as of market close 7/14/17 included ten of eleven Morningstar sectors, no closed end investment companies, one ETN, and two ETFs.

Of the leading ten, the top dog was an ETN, followed by an ETF, one from the industrials sector, four real estate entities, two from financial services, and one energy firm. Three of the top ten favorite dogs paid monthly dividends.

The whole pack was led by the top ETN by yield, UBS ETRACS Monthly Pay 2x Leverage Mortgage REIT ETN (MORL) [1]. Second was the ETF, InfraCap MLP ETF (AMZA) [2]. An industrial top dog placed third, Teekay Offshore Partners (TOO) [3].

Four real estate investment trusts placed fourth, fifth, ninth and tenth, RAIT Financial Trust (RAS) [4], and Orchid Island Capital (ORC) [5]. At the tail in ninth and tenth were, CYS Investments (CYS) [9], and, Chimera Investment (CIM) [10].

Two financial services representatives placed sixth, and eighth: Arlington Asset Investment (AI) [6], and Prospect Capital (PSEC) [8]. Finally the lone energy representative secured the seven slot, Seadrill Partners (SDLP) [7], to complete the top ten.

Actionable Conclusions: (13-22) Top Ten FFave Dogs Showed 22.79% To 108% Upsides To July, 2018; (23) A Downside Was -15.23%.

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 provided another tool to dig out bargains.

Actionable Conclusions: Wall St. Wizards Estimated (24) A 19.5% Median Target Price Upside and (25) 24.5% Net Gain From 30 FoFave Upside Dogs Come July 2018

Follower Favorite top thirty stocks were graphed below to show relative strengths by dividend and price as of July 14, 2017, and those projected by analyst mean price target estimates to the same date in 2018.

A hypothetical $1,000 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 gauged the stock price upsides and net gains including dividends, less broker fees, as of 2018.

Historic prices and actual dividends paid from $10,000 invested as $1k in each of the stocks and the aggregate single share prices of those ten stocks created data points for 2017. Projections based on estimated dividend amounts from $1,000 invested in the ten stocks and aggregate 1-year analyst target share prices from Yahoo Finance created the 2018 data points green for price and blue for dividend.

Analysts projected a 13.7% lower dividend from $10k invested as $1k in ten dogs in this group while aggregate single share price for those ten was projected to increase by 16% in the coming year. Notice, price lower than dividend in the coming year forecasts no overbought condition coming within $600 of these Follower Favorite top yield dogs.

The number of analysts contributing to the target price estimate for each stock was noted in the next to the last column on the charts. Three to nine analysts was optimal for a valid projection estimate. Estimates provided by one analyst were generally not applied (n/a).

A beta (risk) ranking for each stock was provided in the far right column of 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 movement opposite of market direction.

Analysts Forecast A 45.06% Disadvantage For 5 Highest Yield, Lowest Priced Follower Favorite Stocks To July 2018

Ten top FoFave dogs were culled by yield for their monthly update. Yield (dividend / price) results verified by YCharts did the ranking.

As noted above, top ten FFave dogs selected 7/14/17 showing the highest dividend yields represented just four of eleven sectors plus two funds.

Actionable Conclusions: Analysts Expected (26) 5 Lowest-Priced of the Top Ten Highest-Yield Follower Favorite Dogs To Deliver 51.12% Vs. (27) 35.24% Net Gains by All Ten by July, 2018

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten FoFaves kennel by yield were predicted by analyst 1-year targets to deliver 45.06% more net gain than $5,000 invested as $.5k in all of those ten. The second lowest priced Follower Favorite top yield dog, Teekay Offshore Partners (TOO), was projected to deliver the best net gain of 123.6%.

The five lowest-priced FFave top yield dogs for July 14 were: RAIT Financial Trust (RAS); Teekay Offshore Partners (TOO); Seadrill Partners (SDLP); Prospect Capital (PSEC); CYS Investments, Inc. (CYS), with prices ranging from $2.08 to $8.46.

Five higher-priced FFave dogs for July 14 were: InfraCap MLP ETF (AMZA); Orchid Island Capital, Inc. (ORC) Arlington Asset Investment Corp.(AI); Cornerstone Strategic Value (CLM); UBS ETRACS Mthly Py 2xLvg Mortg REIT ETN (MORL); Chimera Investment (CIM), whose prices ranged from $9.74 to $18.65.

The distinction between five low-priced dividend dogs and the general field of ten reflected Michael B. O'Higgins' "basic method" for beating the Dow. The scale of projected gains based on analyst targets added 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. Caution is advised, since analysts are historically only 20% to 80% accurate on the direction of change and just 0% to 20% accurate on the degree of change.

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

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.

Five of these top 36 Follower Favorite pups by yield qualify as a valuable catches! Find them among the now 52 Dogs of the Week I found on The Dividend Dog Catcher premium site, or the forty-eight Dogs of the Week II now available. Click here to subscribe or get more information.

Make investing fun

Suggest a favorite stock for my next follower favorite article. Message me with your favorite stock ticker. I will include it in that article. Just send the ticker symbol for your favorite dividend stock (or two) by clicking on the envelope icon next to my name below the headline of this article, or simply make a comment in the comments sector below. Submit your top ticker, and remember: Root for the Underdog.

Stocks listed above were suggested only as possible reference points for your FoFave dog 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 www.indexarb.com; YCharts.com; finance.yahoo.com; analyst mean target price by Thomson/First Call in YahooFinance. Dog photo: realearningforachange.com.

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.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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