- 'Safer' dividend industrials sector 1yr. target gains for ROYMY, CUUHF, CAJ, BGSF, RCII, OMAB, CMRE, HMLP, GMLP, & ATTO ranged 3.46%-84.92% as calculated 3/29/18 from broker targets.
- 37 of 91 industrials were tagged "safer" for dividends because they showed positive one-year returns, and free cash flow yields greater than their dividend yields.
- Top 10 "safer" yields ranged 4.74%-13.5% by EENEY; TAVHY; GUDDY; BGSF, ROYMY; CMRE, CUUHF; ATTO; HMLP; GMLP. Their free cash flow yields ranged 5%-23.46%.
- Besides safety margin, 'safer' dividend industrials stocks also reported payout ratios (lower is better), total annual returns, dividend growth, and P/E ratios, to further reinforce their dividend backing. Total annual returns narrowed the list of 91 to 81 by eliminating stocks reporting negative returns.
- Analyst one-year targets showed that ten highest yield safe dividend industrials could net 7.64% more gain from $5k invested in the lowest priced five than from the same investment in all ten.
Actionable Conclusions (1-10): Analysts Predicted Top Ten Industrials 'Safer' Dividend Equities Could Net 3.46% to 84.92% Gains
Seven of the ten top 'safer' dividend-yielding Industrials by yield (shaded in the chart above) were verified as being among the top ten gainers for the coming year based on analyst 1 year target prices times $1,000. Thus, the dog strategy for this 'safer' dividend industrials group, as graded by analyst estimates for January, proved 70% accurate.
The following probable profit-generating trades were flagged by estimated dividend returns from $1000 invested in each highest yielding stock. That dividend and the aggregate one year analyst median target price, as reported by YCharts, created the 2018-19 data. Ten probable profit-generating trades projected to March 29, 2019 were:
Atento (ATTO) netted $849.23 based on estimates from seven analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 9% opposed to the market as a whole.
Golar LNG Partners (GMLP) netted $453.41 based on a median target price estimate from eleven analysts , plus projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 7% less than the market as a whole.
Hoegh LNG Partners (HMLP) netted $425.68, based on dividends plus a mean target price estimate from nine analysts, less broker fees. The Beta number showed this estimate subject to volatility 11% less than the market as a whole.
Costamare (CMRE) netted $246.03 based on median target price estimates from seven analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 110% more than the market as a whole.
Grupo Aeroportuario (OMAB) netted $182.37 based on target price estimates from eleven analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 23% less than the market as a whole
Rent-A-Center (RCII) netted $141.07, based on dividends plus a mean target price estimate from seven analysts, less broker fees The Beta number showed this estimate subject to volatility 10% less than the market as a whole.
BG Staffing (BGSF) netted $101.64 based on estimates from two analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 73% less than the market as a whole.
Canon (CAJ) netted $78.81 based on estimates from two analysts plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 39% less than the market as a whole.
Stuart Olson (OTCPK:CUUHF) netted $47.51 based on no estimates from any analysts, just dividends, less broker fees. The Beta number showed this estimate subject to volatility 14% more than the market as a whole.
Royal Mail (OTCPK:ROYMY) netted $34.65 based on just dividends, less broker fees. The Beta number showed this estimate subject to volatility 20% less than the market as a whole.
Average net gain in dividend and price was 25.6% on $10k invested as $1k in each of these ten 'Safer' dividend Industrials equities. This gain estimate was subject to average volatility 28% less than the market as a whole.
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." More specifically, these are, in fact, best called, "underdogs".
Sixteen Industries Were Represented by 37 "Safer" Dividend Equities Of The Industrials Sector
Twenty-three industries compose the Industrials sector, and of those, sixteen were represented by the 36 firms whose stocks showed positive returns and margins of cash to cover dividends by this screen as of March 29.
The industry representation broke-out, thus: Shipping & Ports (2); Business Services (3); Engineering & Construction (5); Integrated Shipping & Logistics (2 ); Staffing & Outsourcing Services (2); Diversified Industrials (6); Infrastructure Operations (2); Industrial Distribution (1); Aerospace & Defense (3); Airports & Air Services (1); Conglomerates (2); Airlines (1); Business Equipment (3); Rental & Leasing (1); Waste Management (1); Farm & Construction Equipment (1); Metal Fabrication (0); Pollution & Treatment Controls (0); Railroads (0); Security & Protection Services (0); Tools & Accessories (0); Truck Manufacturing (0); Trucking (0).
The first eight industries listed above populated the top ten 'safer' dividend industrials team by yield.
37 of 91 Industrials Firms Showed 'Safer' Dividends
Periodic Safety Inspection
A previous article discussed the attributes of the 50 Top yield Industrials stocks culled from this master list of 91. You see grouped below the tinted list of 37 that passed the Industrials 'safer' dividend check with positive past-year returns and cash flow yield sufficient to cover their anticipated annual dividend yield. The margin of cash excess is shown in the bold face "Safety Margin" column.
Financial priorities, however, are readily revised by boards of directors declaring company policies cancelling or varying the payout of dividends to shareholders. Stuart Olson (OTCPK:CUUHF), the fourth place yield leader for this pack of industrials, has paid declining variable quarterly dividends. From it's highest Q dividend of $0.1217 paid in July, 2011 Stuart Olson (OTCPK:CUUHF) Q dividend steadily declined to $0.0863 in November 2016. Since then the Q dividend has increased to $0.0946 as paid January, 2018. This article contends that adequate cash flow is a strong justification for a company to sustain annual dividend increases to shareholders.
Three additional columns of financial data, listed after the Safety Margin figures above, reveal payout ratios (lower is better), total annual returns, and dividend growth levels for each stock. This data is provided to reach beyond yield to select reliable payout stocks. Total annual returns narrowed the 91 list to 81 profitable firms for this article. Positive results in all five columns after the dividend ratio is remarkable as a solid financial signal.
To quantify top dog rankings, analyst mean price target estimates provided "market sentiment" measurements of upside potential. Added to the simple high yield metric, analyst mean price target estimates became another tool to dig out bargains.
Yield Metrics Revealed Comely Bargains From Lowest Priced Ten Top-Yielding 'Safer' Dividend Industrials
Ten "Safer" Dividend Industrials firms as of March 29 per YCharts data ranked themselves by yield as follows:
Actionable Conclusions: Analysts Predicted 5 Lowest Priced, of Ten By Yield Could (11) Deliver 24.19% VS. (12) 22.47% Net Gains from All Ten by March, 2019
$5000 invested as $1k in each of the five lowest priced stocks in the "safer" dividend ten Industrials by yield were estimated by analyst 1 year targets to deliver 7.64% more net gain than $5,000 invested as $.5k in all ten. The third lowest priced "safer" dividend Industrials equity, Atento (ATTO) showed the best analyst augured net gain of 84.92% per analyst target estimates.
Lowest priced five "safer" dividend Industrials as of March 29 were: Stuart Olson (OTCPK:CUUHF); Costamare (CMRE); Atento (ATTO); GUD Holdings (OTCPK:GUDDY); Royal Mail (OTCPK:ROYMY), with prices ranging from $5.52 to $15.25.
Higher priced five "Safer" Dividend Industrials as of March 29 were: Hoegh LNG Partners (HMLP); Golar LNG Partners (GMLP); BG Staffing (BGSF); TAV Havalimanlari Holding (OTCPK:TAVHY); Electrocomponents (OTCPK:EENEY), with prices ranging from $16.20 to $39.59. The little industrials dividend equities persevered.
This distinction between five low-priced dividend stocks 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, this glossary instablog to interpret my abbreviated headings, and this instablog to aid your safe investing. --Fredrik Arnold
Stocks listed above were suggested only as possible starting points for your safest "Safer" Industrials dog dividend stock 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.ycharts. com; www.finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance. Dog photo from: telegraph.co.uk
Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
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Make investing gains again. Catch your underdog on Facebook!
At 8:45 AM nearly every NYSE trading day on Facebook/ Dividend Dog Catcher Fredrik Arnold does a quick live video summary of one of four or five stocks contending for a single weekly slot in his Safari To Sweet Success portfolio.
Go to Facebook/Dividend Dog Catcher at 8:45 AM most trading days and watch, like, comment and share the live video. Of course you're welcome to review all the replays, too, anytime.
Yet always remember: Root for the Underdog.
This article was written by
Fredrik Arnold is a retired quality service analyst sharing investment ideas with a primary focus on dividend yields by utilizing free cash flow and one-year total returns as trading indicators.He is the leader of the investing group The Dividend Dog Catcher, where he shares a minimum of one new dividend stock idea per week with focus on yield or extraordinary financial circumstances. All ideas are archived and available after weekly announcement. Learn more.
Analyst’s Disclosure: I am/we are long ADES, BGSF, GV, GE, EEI. 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.
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