Dogcatcher Readers Jump On Juicy January Stocks And Funds

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Includes: BTI, CHI, CLNY, CMFN, CPLP, ET, FDUS, FEI, FPL, GARS, MO, MRCC, PVL, SXCP, VOD
by: Fredrik Arnold
Summary

From Dec. 14 through Jan. 14, readers named 48 equities/funds in the comments and suggestions.

This month's 10 analyst target augured top net gain reader faves/rogues were MO, FDUS, VOD, CLNY, GARS, SXCP, BTI, CMFN, CPLP, and ET, averaging 57.54% net. One lose emerged.

Ten analyst target augured top price upside reader faves and rogues were MO, FDUS, VOD, SXCP, GARS, CMFN, CLNY, BTI, CPLP, and ET, averaging a 47.95% price gain.

By yield, the following made the top 10: CHI, FPL, FEI, FDUS, MRCC, GARS, SXCP, CPLP, CMFN, and PVL, averaging 12.62% yields.

$5k invested in the lowest-priced five of 10 top yield January ReFa/Ro showed 13.4% more net gains than from the same investment in all 10.

Reader Selections

Since May 2017, any dividend-paying stock mentioned in a message, e-mail or comment to the author is fair game for a reader favorite listing in this series of articles. Thus, It is possible that only rogues and discontinued, or dreadful, doubtful dividend issues may appear.

Lately readers and other contributors have questioned the intent, purpose, validity, and usefulness of my daily stock lists. Most, however praise the effort to sort promising opportunities out of the thousands of dividend offers.

Most valuable to the writer, however, are those reader comments that truly catch errors in my calculations. Examples like my blunder claiming DF.TO a monthly pay when it only paid four dividends last year; AVH on the January MoPay list when it stopped paying dividends in September; non-dividend paying Trez Capital (TZS.TO) and Canadian Life (LFE.TO) stocks last month; showing Chevron as both a low price and higher price stock in the Aristocrats in November, and giving General Mills the GM ticker symbol in a previous month come to mind.

Below are 48 tangible results for the reader favorite & rogue equities and funds mentioned between December 14 and January 14.

Source: YCharts

Actionable Conclusions (1-10): Analysts Detected 29.26% To 75% Net Gains For 10 ReFa/Ro Stocks & Funds To January 2020

Five reader-favorite stocks were verified as being among the top 10 gainers for the coming year based on analyst one-year target prices. (They are tinted gray in the chart above). Thus, the yield-based forecast for the reader-fave stocks, as graded by Wall St. wizards, was 50% accurate.

The following probable profit-generating trades were identified by projections based on estimated dividend returns from $1k invested in each of the highest yielding stocks. That dividend and the median of aggregate one-year analyst target prices, as reported by YCharts, created the 2019-20 data points.

Note: one-year target prices by a lone analyst was applied to the lone loser. Ten probable profit-generating trades projected to January 14, 2019 were:

Energy Transfer LP (ET) was projected to net $750.42, based on the median of target estimates from eighteen analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 86% more than the market as a whole.

Capital Product Partners LP (CPLP) was projected to net $912.55, based on dividends, plus a median target price estimate from eight analysts, less broker fees. The Beta number showed this estimate subject to volatility 7% over the market as a whole.

CM Finance Inc (CMFN) was projected to net $644.04, based on a median target price estimate from two analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 20% under the market as a whole.

British American Tobacco PLC (BTI) was projected to net $638.04, based on dividends plus a huge median target price estimate from five analysts, less broker fees. The Beta number showed this estimate subject to volatility 11% under the market as a whole.

SunCoke Energy Partners LP (SXCP) netted $625.17 based on dividends plus the median of target price estimates from four analysts less broker fees. The Beta number showed this estimate subject to volatility 33% more than the market as a whole.

Garrison Capital Inc (GARS) was projected to net $624.32, based on target price estimates from seven analysts, plus annual dividends, less broker fees. The Beta number showed this estimate subject to volatility 51% less than the market as a whole.

Colony Capital Inc (CLNY) netted $585.00 based on the median target price estimate from 4 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 42% over the market as a whole.

Vodafone Group PLC (VOD) was projected to net $513.91, based on a median of target price estimates from three analysts, plus the projected annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 8% less than the market as a whole.

Fidus Investment Corp (FDUS) was projected to net $370.48 based on a median target price from five analysts plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 7% over the market as a whole.

Altria Group Inc (MO) was projected to net $292.63, based on a median of target price estimates from seventeen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 54% less than the market as a whole.

Average net gain in dividend and price was estimated at 57.54% on $10k invested as $1k in each of these ten stocks. This gain estimate was subject to average volatility 9% above the market as a whole.

Source: YCharts

Actionable Conclusion (11): (Bear Alert) Analysts Anticipated One ReFa/Ro To Lose 6.5% By January 2020

The probable losing trade revealed by one analyst in YCharts was:

Permianville Royalty Trust (PVL) projected a loss of $65.12 based on dividend and a projected target price estimate from one analyst, including $10 of broker fees. The Beta number showed this estimate subject to volatility 12% less than the market as a whole.

Source: YCharts

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."

44 For the Money

Yield (dividend/price) results from YCharts.com verified by Yahoo Finance for FoFa/Ro stocks as of market closing prices 12/17/18 for 44 equities revealed the 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 analysts' price upside estimates expanded the stock universe to include popular growth equities, as desired.

Actionable Conclusions (12-21): ReFa/Ro Top Equity, By Yield, Permianville Royalty Trust (PVL), Led 48 For January

Source: YCharts

ReFa/Ro sorted by yield calculated as of market close 11/14/18 represented all 11 Morningstar sectors among 48 equities.

Of the leading ten by yield, the top reader mention was one energy representative, Permianville Royalty Trust (PVL) [1].

Four financial services firms placed second, and fifth to seventh: CM Finance Inc (CMFN) [2]; Garrison Capital Inc (GARS) [5]; Monroe Capital Corp (MRCC) [6]; Fidus Investment Corp (FDUS) [7].

One industrials representative placed third by yield, Capital Product Partners LP (CPLP) [3]. Then one basic materials firm placed fourth, SunCoke Energy Partners LP (SXCP) [4].

Finally, two closed end investment companies placed eighth and ninth in the top ten, First Trust MLP & Energy Inc Fund (FEI) [8], and First Trust New Opps MLP & Energy (FPL) [9]. Then an exchange traded fund took the tenth place, Calamos Convertible Opps & Income (CHI), to complete the top 10.

Actionable Conclusions: (22-31) Top 10 ReFa/Ro By Price Upsides Showed 43.68% To 140% Gains To December 2019.

Source: YCharts

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

Analyst Targets Predicted A 13.4% Advantage For 5 Highest Yield, Lowest Priced Reader Favorite Stocks To January 2020

10 top ReFa/Ro were culled by yield for their monthly update. Yield (dividend/price) results verified by YCharts did the ranking.

Source: YCharts

As noted above, top 10 FoFa/Ro selected 1/14/19 showing the highest dividend yields represented: energy (1), financial services (4), Industrials (1), basic materials (1), CEIC's (2) ETFs (1).

Actionable Conclusions: Analysts Predicted 5 Lowest-Priced Of the Top 10 Highest-Yield Follower Favorite Dogs To (32) Deliver 41.5% Vs. (33) 36.59% Net Gains by All 10 To January 2020

Source: YCharts

$5k invested as $1k in each of the five lowest-priced stocks in the top 10 FoFaves kennel by yield were predicted by analyst one-year targets to deliver 13.4% more net gain than $5k invested in all 10. The very lowest priced ReFa/Ro top yield stock, Capital Product Partners LP (CPLP), was projected to deliver the best net gain of 70.93%.

Source: YCharts

The five lowest-priced ReFa/Ro top yield dogs for January 14 were: Capital Product Partners LP (CPLP); Permianville Royalty Trust (PVL); CM Finance Inc (CMFN); Garrison Capital Inc (GARS); First Trust New Opps MLP & Energy (FPL), with prices ranging from $2.28 to $8.45 per share.

Five higher-priced ReFa/Ro for January 14 were: Calamos Convertible Opps & Income (CHI); First Trust MLP & Energy Inc Fund (FEI), Monroe Capital Corp (MRCC), SunCoke Energy Partners LP (SXCP), and Fidus Investment Corp (FDUS) whose prices ranged from $9.71 to $13.01.

The distinction between five low-priced dividend dogs and the general field of 10 reflected Michael B. O'Higgins' "basic method" for beating the Dow. The scale of projected gains based on analysts' 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.

The 48 equities and funds discussed in this article were suggested by Seeking Alpha members, nicknamed: And whatever you do; billgatesisevilus; birder; Bleed Blue Chip; Bogiedog; DisruptiveDave; DividendInvestorLA; fatface; gymrat; huthutho; Jaap01; jyabc888; keltus 1952; labman106; LDDavis; lijianqiuyan; Manchego; Mickey01; minnesota72; modaddy786; mysonchino; Oil Can; Pablo; pgould66; Roger field; S@m; TK8500; Uday Deshpande; wesph15; West Gray Grass Cutting.

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.

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 Indexarb, YCharts, Yahoo Finance; analyst mean target price by Thomson/First Call from Yahoo Finance. Dog photo: infobarrel.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.