Actionable Conclusions (1-10): 23.42% To 61.25% Net Gains For Ten Contender Dogs Come August, 2018
Six of ten top dividend-yielding Contender dogs were verified as being among the top ten of thirty gainers for the coming year based on analyst 1-year target prices. So this month the dog strategy for the Dividend Challengers was graded by Wall St. wizards as 60% accurate.
Ten probable profit-generating trades were revealed in YCharts for August 2018:
Energy Transfer Partners (ETP) was projected to net $612.54, based on dividends, plus median target price estimates from twenty-two analysts, less broker fees. The Beta number showed equal to the market as a whole.
AmTrust Financial Services (AFSI) was projected to net $540.16, based on dividends, plus mean target price estimates from six analysts, less broker fees. The Beta number showed this estimate subject to volatility 16% more than the market as a whole.
Genesis Energy (GEL) was projected to net $426.54, based on dividends, plus mean target price estimates from eleven analysts, less broker fees. The Beta number showed this estimate subject to volatility 20% greater than the market as a whole.
Buckeye Partners (BPL) was projected to net $356.62, based on dividends, plus a mean target price estimate from sixteen analysts, less broker fees. The Beta number showed this estimate subject to volatility 10% more than the market as a whole.
Enterprise Products (EPD) netted $312.55 based on dividends, plus mean target price estimates by twenty-six analysts, less broker fees. The Beta number showed this estimate subject to volatility 10% less than the market as a whole.
Brinker International (EAT) was projected to net $288.52, based on dividends, plus the median of annual price estimates from eighteen analysts, less broker fees. The Beta number showed this estimate subject to volatility 75% less than the market as a whole.
TC Pipelines (TCP) was projected to net $267.28, based on a mean target price estimate from eleven analysts, combined with projected annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 3% less than the market as a whole.
Magellan Midstream (MMP) was projected to net $243.97, based on a median target price estimate from nineteen analysts, combined with projected annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 20% less than the market as a whole.
TransMontaigne Partners (TLP) was projected to net $243.50, based on dividends, plus mean target price estimates from four analysts, less broker fees. The Beta number showed this estimate subject to volatility 68% less than the market as a whole.
Western Gas Partners (WES) was projected to net $234.20, based on dividends, plus a mean target price estimate from seventeen analysts, less broker fees. The Beta number showed this estimate subject to volatility 20% more than the market as a whole.
Average net gain in dividend and price was estimated at 35.26% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 11% less than the market as a whole.
Top 30 Contender Dogs Represented 9 Sectors In August
Yield (dividend / price) results from here August 29 verified by YCharts for thirty stocks from nine of eleven Morningstar sectors revealed the actionable conclusions discussed in this article.
The U.S. Dividend Contenders are maintained by Dave Fish of Moneypaper's DirectInvesting.com, whose articles appear at Seeking Alpha. They are selected based on "10-24 straight years of higher dividends."
The Dividend Dogs Rule
Stocks earned the "dog" moniker by 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." More precisely, these are, in fact, best called, "underdogs".
Top 30 Dividend Contenders
These 30 U.S. Dividend Contenders were selected based on "10-24 straight years of higher dividends."
Actionable Conclusions (11-20) Dividend Dog Metrics Selected 10 Top Contender Stocks By Yield
Top ten Contender Dividend dogs selected 7/30/17 showing top yields 8/29/17, represented just four of the Morningstar eleven sectors: (1) energy [7 listed]; (2) utilities [1 listed]; (3) real estate [1 listed]; (4) consumer defensive [1 listed].
Top Contender stock by yield, Energy Transfer Partners (ETP)  was the tops of the seven Energy firms listed. The remaining energy firms placed second, third, sixth, seventh, ninth, and tenth: Genesis Energy (GEL) ; Buckeye Partners (BPL) ; Holly Energy Partners (HEP) ; TC Pipelines (TCP) ; Western Gas Partners (WES) ; TransMontaigne Partners (TLP) .
A single Utility placed fourth, by yield: AmeriGas Partners (APU) . The one Real Estate representative placed fifth: Omega Healthcare (OHI) . Finally a consumer defensive stock placed eighth, Vector Group (VGR)  to complete the top ten August Contender dogs by yield.
Actionable Conclusions: (21-30) Ten Contender Dogs Showed 19.52% To 51.4% Upsides, While (31) One Showed A Downside Smaller Than Dividends Earned To July, 2018
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 Willed (32) A 14.63% Median Target Price Upside and (33) A 16.28% Gain From 30 Contender Upside Dogs Come August, 2018
Contender stocks were graphed below to show relative strengths by dividend and price as of August 29, 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.
YCharts analyst median 1-year targets projected a 13% 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 12.5% in the coming year. Notice, price versus dividend in the coming year forecasts possible overbought conditions ahead for the Contender top yield dogs as the projected price and dividend vectors narrow their gap to within $35 of convergence in 2018.
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.
Brokers Estimated A 1.85% Advantage For 5 Highest Yield, Lowest Priced Dividend Contender Stocks To August, 2018. Bargains Flow From Low Priced "Small Dogs"
Ten top Dividend Contender dogs were culled by yield for their monthly update from here. Yield (dividend / price) results verified by YCharts did the ranking.
As noted above, top ten Dividend Contender dogs selected 7/30/17 showing the highest dividend yields as of 8/29/17 represented four sectors from the Morningstar eleven sector scheme.
Actionable Conclusions: (34) Analysts Cast 5 Lowest-Priced of the Top Ten Highest-Yield Contender Dogs Fetching 27.55% Vs. (35) 27.05% Net Gains by All Ten by August 2018
$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Contender kennel by yield were predicted by analyst 1-year targets to deliver 1.85% more net gain than $5,000 invested as $.5k in each of all ten. The very lowest priced Contender dividend dog, Energy Transfer Partners (ETP), was projected to deliver the best net gain of 61.25%.
The five lowest-priced Contender dividend dogs for August 29 were: Energy Transfer Partners (ETP); Vector Group (VGR); Genesis Energy (GEL); Omega Healthcare (OHI); Holly Energy Partners (HEP), with prices ranging from $18.56 to $31.41.
Five higher-priced Contender dividend dogs for August 29 were: AmeriGas Partners (APU); TransMontaigne Partners (TLP); Western Gas Partners (WES); TC Pipelines (TCP); Buckeye Partners (BPL), whose prices ranged from $43.10 to $55.68.
That distinction between the 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, this glossary instablog to interpret my abbreviated headings, 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.
Three of these Contender dividend pups qualify as valuable catches! Find them among the now 52 Dogs of the Week I, or the 52 Dogs of the Week II found on The Dividend Dog Catcher premium site. A Dogs of the Week III (DC Safari) portfolio launches this month. 0n September 8. Click here to subscribe or get more information.
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Stocks listed above were suggested only as possible reference points for your Contender Dividend 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: thegreatamericandisconnect.blogspot.com
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.