100 Low-Priced/High-Yield Dividend Dogs: Get 'Em While They're Hot

|
Includes: ALSMY, BPT, CPTA, CPYYY, FLMN, ITAYY, NCMI, NYMT, OXSQ, PNNT, SGTPY, TLTZY, UAN, ZMPLF
by: Fredrik Arnold
Summary

These 100+ low-price, top-yield dividend Dogs displayed 4.5%+ forward yield, $2.00-$10 prices, and $100M+ market caps 8/6/19. Yields >8.2% winnowed the list to 30. Only 22 had positive broker-price targets.

Low-price, target-estimated August-net-gains ranged 17.2-61.68% for TLTZY, ITAYY, SGTPY, CPYYY, PNNT, NCMI, BPT, CPTA, UAN, and top pick, FLMN, per YCharts dividend data.

30 top yield $2-10 stocks ranged 8.32-38.26%. Top ten, CPTA, OXSQ, NYMT, ZMPLF, ALSMY, TLTZY, ITAYY, SGTPY, CPYYY, and top pick, BMT, averaged 19.65% yield.

Top-ten firms by Wall Street target-price upsides CPTA, BPT, UAN, CAMT, FLMN, TGLS, EPM BRY, BHR, and top dog, NZTCF averaged a 83.95% broker-estimated price gain.

$5k invested 8/6/19 in the lowest-priced five $2-10 top-yield ten less projected net-gain than from $5k in all ten, per broker targets.  The high-price larger Top Dogs dominated the August $2-10 hot dog pack.

Actionable Conclusions (1-10): Brokers Calculated 17.1% To 61.68% Net Gains For Ten $2-10 Top Yield Stocks By August 5, 2020

Six of ten top yield $2-10 hot dogs were also among the top ten gainers for the coming year (based on analyst 1-year targets). So, this forecast for $2-$10 top dogs, as graded by Wall Street brokers, was 60% accurate.

Projections based on dividends from $1000 invested in the highest yielding stocks and aggregate one-year analyst median target prices of those stocks, as reported by YCharts, created the 2020 data points. Note: one-year target prices from single analysts were not applied (n/a). Ten probable profit-generating trades to August 6, 2020, were:

Source: YCharts

Falcon Minerals Corp. (FLMN) was projected to net $616.80 based on dividends, plus the median of target estimates from nine brokers, less broker fees. A beta number was not available for FLMN.

CVR Partners, LP (UAN) netted $519.92 based on the median of target price estimates from two analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk 3% over the market as a whole.

Capitala Finance Corp. (NASDAQ:CPTA) was projected to net $420.33, based on target price estimates from six analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 11% over the market as a whole.

BP Prudhoe Bay (BPT) was projected to net $372.60, based on just dividends, less broker fees. The Beta number showed this estimate subject to risk 18% opposite the market as a whole.

National CineMedia, Inc. (NCMI) was projected to net $308.96 based on the median of target price estimates from six analysts, plus the estimated dividends, less broker fees. The Beta number showed this estimate subject to risk 26% under the market as a whole.

Pennant Park Investment (PNNT) was projected to net $279.89, based on the median of target price estimates from nine analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk 14% more than the market as a whole.

Centrica PLC (OTCPK:CPYYY) was projected to net $238.40 based on only the estimated dividends, less broker fees. The Beta number showed this estimate subject to volatility 89% under the market as a whole.

Surgutneftegas PJSC (OTCPK:SGTPY) was projected to net $235.00 based on just dividends, less broker fees. The Beta number showed this estimate subject to volatility 56% under the market as a whole.

Indo Tambangraya Megah PT (OTCPK:ITAYY) was projected to net $231.20, based on dividends, plus the median of target price estimates from two analysts, less broker fees. The Beta number showed this estimate subject to volatility 41% opposite the market as a whole.

Tele2 (OTCPK:TLTZY) was projected to net $171.90, based on dividends less broker fees. The Beta number showed this estimate subject to volatility 41% less than the market as a whole.

The average net gain in dividend and price was estimated at 33.95% on $10k invested as $1k in each of these ten stocks. This gain estimate was subject to average volatility 53% less than the market as a whole.

Source: dark-horse-adaptations.blogspot.com

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."

31 Broker Price Target Upsides

  • Source:YCharts

100 <$10 Price Top Dogs By Yield

Source:YCharts

Actionable Conclusions (11-20) Top Ten $2-10 Dog Yields Ranged 12.33-38.26%.

Top ten $2-10 hot dogs selected 8/6/19 by yield represented seven of eleven Morningstar sectors.

Top stock on the list was the first of two energy representatives, BP Prudhoe Bay Royalty Trust [1]. The other energy issue placed third, Surgutneftegas PJSC [3]. A single utilities member placed second, Centrica PLC [2].

Two representatives from basic materials placed fourth and seventh, Indo Tambangraya Megah PT [4], and Zimplats Holdings Ltd (OTCPK:ZMPLF) [7]. Then, a single communication services representative placed fifth, Tele2 AB [5], followed by a lone industrials representative placing sixth, Alstom SA (OTCPK:ALSMY) [6].

The lone real estate sector representative placed eighth, New York Mortgage Trust, Inc. (NYMT) [8], then two financial services representatives placed ninth and tenth, Oxford Square Capital Corp. (OXSQ)) [9], and Capitala Finance Corp. [10] to complete the $2-10 hot dog top ten for August 2019-20.

Actionable Conclusions: (21-30) Five $2-10 Top Yield Stocks Showed 17.83% To 53.11% Upsides To August 2020; (31) Lowest Downsides Found Three at 1.64-20.63%.

Source:YCharts

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

Analysts Cast A 0.66% Disadvantage On 5 Highest Yield, Lowest Priced $2-10 Top Yield Dogs To August 2020

Ten top $2-10 hot dogs were culled by yield for this August update. Yield (dividend/price) results verified by YahooFinance did the ranking.

Source:YCharts

As noted above, top ten $2-10 hot dogs selected 8/6/19 showing the highest dividend yields represented seven of eleven sectors in the Morningstar scheme.

Actionable Conclusions: Analysts Estimated 5 Lowest-Priced Top Ten Highest-Yield $2-10 Hot Dogs (32) Delivering 19.36% Vs. (33) 19.49% Net Gains From All Ten By August 6, 2020

Source:YCharts

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten $2-10 hot dogs collection was expected by analyst 1-year targets to deliver 0.66% less net gain than $5,000 invested as $.5k in all ten. The ninth lowest priced $2-10 hot dog, LSC Capitala Finance Corp., was projected by analysts to deliver the best net gain of 42.03%.

Source:YCharts

The five lowest-priced top $2-10 hot dogs as of August 6 were: Indo Tambangraya Megah PT; Centrica PLC; Alstom SA; Surgutneftegas PJSC; Zimplats Holdings Ltd., with prices ranging from $2.40 to $5.70.

Five higher-priced $2-10 hot dogs from August 6 were: New York Mortgage Trust Inc.; Oxford Square Capital Corp.; Tele2 AB; Capitala Finance Corp.; BP Prudhoe Bay Royalty Trust, whose prices ranged from $6.10 to $8.57.

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.

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 10%+ Yield WallStar purchase or sale research process. These were not recommendations.

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 YCharts. Dog photo: dark-horse-adaptations.blogspot.com

Disclosure: I am/we are long MFCSF. 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.

Additional disclosure: 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.

In addition my YCharts data supplier makes no warrants regarding their forward looking dividend accuracy. Here is their dividend yield statement: "2) We allow a dividend yield to persist for 365 days after the most recent reported dividend if a dividend is cut. Hence, this data should not be used for backtesting purposes. For true historical testing purposes, one would need the date the company announced a cut or increase in the dividend to get the proper expected dividend yield as of a given date."

The forward yield won't catch changes as there is not an automated method for turning those announcements into that kind of data. A specific use case would require additional over-site after the screening had taken place to catch these instances. I wish there was an easier way, and I will submit feedback, but as of yet this has been how we've always done things for lack of a better method.