Seeking Alpha

89 Over 10%Yield, Under $10 Priced Dividend Dogs Fall Fortunes

|
Includes: AI, AM, ATVDY, BPT, CCRGF, CSIOF, CTPZY, EDCFF, ENLC, GFKSY, MMLP, SMLP, TLRD, WPG, YZCHF
by: Fredrik Arnold
Fredrik Arnold
Dividend investing, Growth, momentum, research analyst
Summary

These >10% Yield@<$10 Priced dividend Dogs are sourced from YCharts which allows a dividend yield to persist for 365 days after the most recent reported dividend if a dividend is cut.

Low-price target-estimated October net-gain estimates ranged 28.37%-89.96% for ATVDY, AI, EDCFF, CCRGF, TLRD; SMLP, ENLC, CSIOF, AM, and top pick, MMLP, per YCharts dividend data.

30> 10% Yield@<$10 Priced stock yields ranged 15.15%-46.39%. Top ten, YZCHF, WPG, BPT, MMLP, SMLP GFKSY, ATVDY, EDCFF, CCRGF, and top ranked, CSIOF, averaged 29.44% yield.

Top-ten firms by Wall Street target-price upsides BPT, ANH, SACH, GARS, AM, ORC, BGCP, VEON, MMLP, and top dog, AETUF averaged a 48.4% broker-estimated price gain.

$5k invested 10/16/19 in the lowest-priced five >10% Yield @ 10% Yield@<$10 Priced dog pack.

Foreword

To quote a comment from a reader of August's high-yield, low priced dividend dog list, this is "dangerous advice". Hence, it is to be used at your own risk.

I have always advised that high dividends are a sure sign of high risk. Combine that signal with a low-price offer and you have the stuff of legends and horror stories. Especially, in light of Y Charts declaration that YCharts allows a dividend yield to persist for 365 days after the most recent reported dividend if a dividend is cut. Therefore, a few line items you see calculated here could be inaccurate.

Happy hunting, but beware of the numbers put up by the top ten by yield on this list of 89. In short, this is a risky business. These are Dogs of the Low, not of the Dow.

Actionable Conclusions (1-10): Brokers Calculated 28.37% To 89.96% Net Gains For Ten >10%Yield@<$10 Priced Stocks By October 16, 2020

Six of ten top yield >10%Yield@<$10 Priced dogs were among the top ten gainers for the coming year (based on analyst 1-year targets). So, this forecast, as graded by Wall St. Brokers, was 60% accurate.

Projections based on dividends from $1,000 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 projected profit-generating trades to October 16, 2020, were:

Source: YCharts

Martin Midstream Partners LP (MMLP) was projected to net $899.59 based on the median of target price estimates from five analysts, plus the estimated dividends, less broker fees. The Beta number showed this estimate subject to risk 25% over the market as a whole.

Antero Midstream (AM) was projected to net $541.12 based on dividends, plus the median of target estimates from twelve brokers, less broker fees. A Beta number was not available for AM.

Casio Computer (OTCPK:CSIOF) was projected to net $453.90 based on estimated dividends alone, less broker fees. The Beta number showed this estimate subject to risk 14% over the market as a whole.

EnLink Midstream LLC (ENLC) netted $453.90 based on the median of target price estimates from twelve analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk 105% over the market as a whole.

Summit Midstream Partners (SMLP) was projected to net $439.34, based on dividends, plus the median of target price estimates from seven analysts, less broker fees. The Beta number showed this estimate subject to risk 65% over the market as a whole.

Tailored Brands Inc. (TLRD) was projected to net $436.47, based on the median of prices estimated by two analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 79% over the market as a whole.

Intu Properties (OTCPK:CCRGF) was projected to net $524.54, based on dividends alone, less broker fees. The Beta number showed this estimate subject to risk 2% more than the market as a whole.

Enel Generacion Costanera SA (OTCPK:EDCFF) was projected to net $339.90, based on dividends alone, less broker fees. The Beta number showed this estimate subject to risk 26% more than the market as a whole.

Arlington Asset Investment (AI) was projected to net $299.05 based on the median of target price estimates from four analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 2% over the market as a whole.

Atresmedia Corporacion de Medios de Comunicacion SA (OTCPK:ATVDY) was projected to net $283.70, based on dividends alone, less broker fees. A Beta number was not available for ATVDY.

The average net gain in dividend and price was estimated at 44.93% on $10k invested as $1k in each of these ten stocks. This gain estimate was subject to average risk 10% more than the market as a whole.

Source: theartisanhound.co.uk

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".

50 Broker Price Target Upsides

Source:YCharts

89 >10%Yield@<$10 Priced Top Dogs By Yield

Source:YCharts

Actionable Conclusions (11-20) Top Ten >10%Yield@<$10 Priced Dog Yields Ranged 21.00-46.39%

Top ten >10%Yield@<$10 Priced dogs selected 10/16/19 by yield represented six of eleven Morningstar sectors.

Top stock on the list was the lone technology stock, Casio Computer Co. Ltd. [1]. Then, two real estate sector representatives placed second and ninth, Intu Properties PLC (OTCPK:CCRGF) [2], and Washington Prime Group Inc. (WPG) [9].

One utilities member placed third, Enel Generacion Costanera SA (OTCPK:EDCFF) [3], and Cia de Transmissao de Energia Eletrica Paulista (OTCPK:CTPZY) [9], and thereafter, a consumer cyclical representative placed fourth, Atresmedia Corporacion de Medios de Comunicacion SA (OTCPK:ATVDY)[4].

Four energy representatives placed fifth through eighth, Gulf Keystone Petroleum Ltd. (OTCQX:GFKSY) [5]; Summit Midstream Partners LP (SMLP) [6]; Martin Midstream Partners LP (MMLP) [7]; BP Prudhoe Bay Royalty Trust (BPT) [8].

Finally, one basic materials stock placed tenth, Yanzhou Coal Mining Co Ltd (OTCPK:YZCHF) [10], to complete the >10%Yield@<$10 priced dog top ten for October 2019-20.

Actionable Conclusions: (21-30) Ten >10%Yield@<$10 Priced Top Yield Stocks Showed 0.0% To 65.83% Upsides To October 2020; (31) Lowest Downside Caught One at -26.83%

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 6.52% Disadvantage For 5 Highest Yield, Lowest Priced >10%Yield@<$10 Dogs To October 2020

Ten top >10%Yield@<$10 Priced dogs were culled by yield for this October update. Yield (dividend/price) results verified by Yahoo Finance did the ranking.

Source: YCharts

As noted above, top ten >10%Yield@<$10 Priced dogs selected 10/16/19 showing the highest dividend yields represented six of eleven sectors in the Morningstar scheme.

Actionable Conclusions: Analysts Estimated 5 Lowest-Priced Top Ten Highest-Yield >10%Yield@<$10 Priced Dogs (25) Delivering 32.06% Vs. (26) 34.30% Net Gains From All Ten By October 16, 2020

Source:YCharts

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten >10%Yield@<$10 Priced dogs collection was expected by analyst 1-year targets to deliver 6.52% less net gain than $5,000 invested as $0.5k in all ten. The seventh lowest priced >10%Yield@<$10 Priced dog, Martin Midstream Partners LP (MMLP), was projected by analysts to deliver the best net gain of 89.96%.

Source: YCharts

The five lowest-priced top >10%Yield@<$10 Priced dogs as of October 6 were: Enel Generacion Costanera SA (OTCPK:EDCFF); Gulf Keystone Petroleum Ltd (OTCQX:GFKSY); Intu Properties PLC (OTCPK:CCRGF); Casio Computer Co. Ltd. (OTCPK:CSIOF); Yanzhou Coal Mining Co. Ltd. (OTCPK:YZCHF), with prices ranging from $0.18 to $1.04.

Five higher-priced >10%Yield@<$10 Priced dogs from October 16 were: Atresmedia Corporacion de Medios de Comunicacion SA (OTCPK:ATVDY); Martin Midstream Partners LP (MMLP); Washington Prime Group Inc (WPG); Summit Midstream Partners LP (SMLP); BP Prudhoe Bay Royalty Trust (BPT), whose prices ranged from $3.84 to $8.98.

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@<$10 Priced dividend dog purchase or sale research process. These were not recommendations.

Graphs and charts were compiled by Rydlun & Co., LLC from data derived from Indexarb.com; YCharts.com; Yahoo Finance; analyst mean target price by YCharts. Dog photo: theartisanhound.co.uk

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: 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.

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. "