Monthly pay (MoPay) dividend dog stock lists reviewed in June and July prompted reader suggestions to expand the stocks list to include funds, trusts, and partnerships. A list of MoPay equities to buy and hold in October resulted from reader additions supplemented with a high yield collection from here. Thereafter the docile, sleeping dogs list was supplemented by a second upside potential article in October.

Now, upon further review, reader comment, and sober reflection, this article compared and contrasted recent stocks and their evident upside potential with docile buy and hold fund and trust candidates.

The Monthly Pay Dividend Advantage

Quarterly and annual pay dividend stock owners anxiously await announcements from a firm, fund, or analyst to learn if their next dividend will be higher, lower, or paid at all. Monthly pay stocks, funds, trusts, and partnerships inform the holder every four and one third weeks by check or statement. If the equity reduces or suspends a payment, the holder can sell out of the investment immediately to cut future losses.

Dogs of the Index Metrics Cull Out Current Bargains

For this article, 19 equities plus 30 funds and trusts out of over 200 paying monthly dividends were ranked using the two key dog performance metrics: (1) stock price; (2) annual dividend. Dividing the annual dividend by the price declared the percentage yield by which each dividend dog stock was ranked.

Historically, dividend dog investors utilized this ranking system to select portfolios of five or ten stocks in any one index, sector, survey, or list to trade. They awaited the results from their investments in the lowest priced, highest yielding stocks and prayed that the price of every stock they now owned climbed higher (having locked in a high yield percentage at purchase).

Dogs of the index strategy, popularized by Michael B. O’Higgins in the book “Beating The Dow” (HarperCollins, 1991), revealed how high yielding stocks whose prices increase (and whose dividend yields therefore decrease) can be sold off once each year to sweep gains to reinvest the seed money into higher yielding stocks in the same index. Prior to the publication of the O’Higgins book, Dow dogs were known by some market watchers as “fallen angels.”

Monthly Pay Dividend Stocks

Ten monthly dividend equities showing the biggest yields as of November 13, 2012 represented three of nine market sectors. The top dog stock as revealed by Yahoo Finance data was one of six financial firms, Armour Residential REIT (ARR). The other five financial firms placed third, fourth, seventh, ninth and tenth: Full Circle Capital Corp. (FULL); Fifth Street Finance (FSC); Whitestone REIT (WSR); Gladstone Investment (GAIN); Gladstone Commercial REIT (GOOD). A single utility made the top ten MoPay stock list in second place, Just Energy Group Inc. (JE). The remaining three slots were filled by basic material concerns: Pengrowth Energy (PGH) in fifth position; Vanguard Natural Resources (VNR) in sixth place; Enerplus Corporation (ERF) in the number eight slot.

Dividend vs. Price Results

Below relative strengths for the top ten MoPay dividend dog stocks by yield was graphed as of November 12, 2012. Nine periods of historic projected annual dividend history from $1000 invested in the ten highest yielding stocks and the total single share prices of those ten stocks created the data points for each period shown in green for price and blue for dividends.

Conclusion One: Mo Pay Dividend Dog Stocks Are Bearish

The chart showed MoPay dividend dog stocks in a bear market pattern. Since January, dividend from 1k invested in each of the top ten stocks jumped 12% while aggregate single share price of the ten for nine periods declined 5%.

Conclusion Two: Analysts Forecast November 2013 Gains near 32%

Top ten dogs for the MoPay stock list were graphed below to show relative strengths by dividend and price as of November 12, 2012 and those projected by analyst mean price target estimates to the same date in 2013.

Historic prices and actual dividends paid from $1000 invested in the ten highest yielding stocks, and the aggregate single share prices of those ten stocks created the data points for 2012. Projections based on estimated increases in dividend amounts from $1000 invested in the ten highest yielding stocks and aggregate one year analyst mean target prices as reported by Yahoo Finance created the 2013 data points green for price and blue for dividends. Note: one year target estimated prices below current price were not included.

Charting Upside Potential

The top ten equities paying out monthly dividends were ranked using the two key dog performance metrics: (1) stock price; (2) annual dividend. Dividing the annual dividend by the price declared the percentage yield by which each dividend dog stock was primarily ranked. (3) One year mean target price estimates by analysts supplemented eight equities showing higher prices for 2013.

A hypothetical $1000 investment in each equity was divided by the current share price to find a number of shares purchased. The number of shares was multiplied by projected annual per share dividend amounts to find a dividend return amount. Thereafter, one year mean target prices multiplied by the number of shares supplemented the dividend amount minus a flat $20 broker fee to determine a net gain amount for the 12 stocks showing upside price gains into 2013.

For the coming year, Yahoo Finance projected a 16% lower dividend from $1k invested in each stock within this MoPay group, while aggregate single share price for the ten was projected by analysts to increase by 20%.The number of analysts contributing to the mean target price estimate for each stock is noted in the last column on the charts. Three to nine analysts is considered optimal for a higher probability projection estimate.

Net gains from five probable profit generating trades were revealed by Yahoo Finance for 2013:

Armour Residential REIT netted $335.96, based on mean target price estimates from eight analysts.

Pengrowth Energy netted $1,089.55, based on estimates from three analysts.

Vanguard Natural Resources netted $334.44, based on estimates from ten analysts.

Enerplus Corporation netted $568.00, based on estimates from four analysts.

Gladstone Investment netted $326.42 to 2013, based on estimates from two analysts.

The total net gain in dividend and price for all ten MoPay top dog stocks was 31.85% on $10k invested.

Monthly Pay Dividend Funds and Trusts

The thirty top monthly dividend paying (MoPay) funds and trusts culled from over 200 candidates listed above were ranked by yields calculated as of November 12 to determine the Top Ten.

Ten monthly dividend funds and trusts showing the biggest yields as of November 13, 2012 featured eight funds and two trusts. The top dog fund as revealed by Yahoo Finance data was Cornerstone Progressive Return Fund (CFP). Second place fund was Cornerstone Strategic Value Fund (CLM). Top trust on the list placed third, New York Mortgage Trust Inc. (NYMT). Two Alpine funds were in fourth and fifth positions by yield: Alpine Total Dynamic Dividend Fund (AOD); Alpine Global Dynamic Dividend Fund (AGD). The second half of the top ten funds and trusts were: AGIC Convertible and Income Fund II (NCZ) in sixth position; PIMCO High Income Fund (PHK), seventh; AGIC Convertible & Income Fund (NCV), eighth; Prospect Capital Corporation (PSEC), ninth; PIMCO Global StocksPLUS & Income Fund (PGP), tenth.

Dividend vs. Price Results

Below, relative strengths for the top ten MoPay Dividend Dogs by yield was graphed as of November 12, 2012 and compared to those of the Dow. Nine periods of historic projected annual dividend history from $1000 invested in the ten highest yielding stocks and the total single share prices of those ten stocks created the data points for each period shown in green for price and blue for dividends.

(click to enlarge)

Conclusion Three: Mo Pay Top Ten Dividend Dog Funds and Trusts Are Very Bearish; Dow Not So Much

The chart showed MoPay dividend dog funds and trusts in an extreme bear market pattern. Since January projected dividend from 1k invested in each of the top ten funds and trusts soared 55% while aggregate single share price of the ten for the nine periods declined 28%. The gap between aggregate single share prices sinking beneath rising projected dividends from $1k invested in those ten equities widened from 667.2% in January to 1567% in November.

Since January the top ten Dow dog projected dividend from $1k invested in each pup increased 6.5% while aggregate single share price rose 10%. Since the data source for Dow dividends, indexArb.com anticipates future increases, dog dividend kept pace with price. The most recent gap for the Dow shows aggregate single share price rising above dividend from $k invested in each of the top ten dogs by 2.7% revealing an overbought condition.

As of November 12 the top MoPay fund and trust Dogs showed $1036 or 246.6% more dividends (with equally bigger risk) at a $344 or 79.7% lower aggregate single share price than the Dow top ten.

Conclusion Four: Buy and Hold Monthly Dividend Paying Funds & Trusts If You Dare

Stock analysts don’t hazard guesses as to when or how fund prices will rise. They are paid to gauge individual stocks, and some trusts ad partnerships. Hence this MoPay Dog analysis revealed a list of funds and trusts to buy and hold if you dare.

This monthly report series was initiated in December 2011 with dog dividend methodology applied to each of eight major market sectors. In alphabetical order, those sectors were: basic materials, consumer goods, financial, healthcare, industrial goods, services, technology and utilities.

The ninth sector, conglomerates, according to Yahoo Finance, contained just eight firms, five of which paid dividends. Thus the reporter declined to apply dog metrics a sector containing fewer than ten dividend equities.

Dogs of the Index Metrics Selected Ten Top Basic Materials Stocks

Two key metrics determined the yields that ranked these sector dog stocks: (1) stock price; (2) annual dividend. Dividing the annual dividend by the price of the stock declared the percentage yield by which each dog stock was ranked.

Historically dividend dog investors utilized this ranking system to select portfolios of five or ten stocks in any one index, sector, or survey to trade. They awaited the results from their investments in the lowest priced, highest yielding stocks and prayed that the price of every stock they now owned climbed higher (having locked in a high yield percentage at purchase).

This Dogs of the Index strategy, popularized by Michael B. O’Higgins in the book “Beating The Dow” (HarperCollins, 1991), revealed how high yielding stocks whose prices increased (and whose dividend yields therefore decreased) could be sold off once a year to sweep gains and reinvest the seed money into higher yielding stocks in the same index.

Comparative Methods Used

First, the entire list of basic materials sector companies was sorted by yield as of July 2 using Ycharts.com to reveal the top thirty. Market performance of these thirty selections was then reviewed using four months of historic projected annual dividend history from Yahoo Finance along with annual divided projections adjusted for market realities.

Thereafter, this article assessed the relative strengths of the basic materials sector top ten dividend dogs as of June 1 and July 2 opening prices vs. the Dogs of the Dow May 11 and June 14 stock lists. Annual dividends from $1000 invested in the ten highest yielding stocks in the sector and index were compared to the aggregate single share prices of those top ten stocks in each.

Basic Materials Dividend Dogs

Top ten basic materials stocks paying the biggest dividends in May largely represented oil and/or gas industries: Enerplus (ERF); Whiting (WHX); Pengrowth Energy (PGH); QR Energy (QRE); Sandridge Permian Trust (PER); MV Oil Trust (MVO); Exterran Partners (EXLP). Only three of the top ten basic materials firms do not mention oil or gas in their industry description: Great Northern (GNI); Oxford (OXF); Rhino (RNO).

In June, the top ten added four oil industrials as replacements, and in the process, cast Oxford out of the dog pound: Whiting USA Trust II (WHZ); Chesapeake Granite Wash Trust (CHKR); Compressco Partners (GSJK); VOC Energy Trust (VOC).

Dividend vs. Price Results Compared to Dow Dogs

Below is a graph of the relative strengths of the top ten basic materials dividend sector stocks by yield as of market close 7/2/2012 compared to those of the Dow. Using six months of historic projected annual dividend history from $1000 invested in the ten highest yielding stocks each month and the total single share prices of those ten stocks created the data points for each month shown in green for price and blue for dividends.

Conclusion: Basic Material Dogs Still Chased by That Bear

The May and June basic materials collections of mainly oil and gas dividend payers have stayed the bearish course since February, when this sector came under attack. Aggregate dividends from $10k invested in each of the top ten stocks have increased 30.95%, since while aggregate prices fell 31.67% for the period.

Meanwhile, the Dow index has stabilized in a overbought pattern where aggregate single share prices exceed the annual estimated dividends from $1k invested in those ten by $75 or 18.75%.

Basic materials sector top ten dogs now show $987 or 246.72% more dividends (with equally bigger risk) at a $265 or 55.86% lower aggregate share price for the top ten dogs than those of the Dow as of July 2.

Conclusion Too:

2013 Projects 39.17% Net Gain from These 10 dogs

Top ten dogs for the Basic Materials sector were graphed below to show relative strengths by dividend and price as of June 1, 2012 and those projected to June 1, 2013.

Historic prices and actual dividends paid from $1000 invested in the ten highest yielding stocks and the aggregate single share prices of those ten stocks created the data points for 2012. Projections based on estimated increases in dividend amounts from $1000 invested in the ten highest yielding stocks and aggregate one year target share prices from Yahoo Finance created the 2013 data points green for price and blue for dividends.

Yahoo projected 18.17% lower dividends for this group, while price was projected to increase by 18.61% in the coming year. Probable profit generating trades revealed by Yahoo for 2013 were Enerplus Corporation netting $792.74, Pengrowth Energy Corp. netting $874.82, QR Energy netting $524.74, MV Oil Trust netting $376.20 and Exterran Partners netting $591.48 this year to make the total gain 39.17% on $10k invested.

A summary will conclude this series of articles each month showing comparative results of yield and price for all eight sectors reported: basic materials, consumer goods, financial, healthcare, industrial goods, services, technology, and utilities. Stay tuned also for periodic updates on how well or whether the projected gains for 2013 hold.