Thirty-seven MoPay SML Stocks On The Market
Yield (dividend / price) results from here verified by Yahoo Finance for monthly dividend paying Small, Mid, & Large-cap (MoPaySML) stocks as of market closing prices 2/19/16 revealed ten actionable conclusions discussed below. Small-cap firms were valued at $200M to $2B; Mid-cap firms were worth $2B to $10B; Large-caps were valued above $10B. The same scale was used to select funds, trusts, and notes based on their net asset value.
See my most recent 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 analyst price upside estimates expanded the stock universe to include popular growth equities, as desired.
Dog Metrics Revealed Bargains
Thirty-seven small, mid, and large-cap monthly dividend paying stocks were pulled from 755 equities of all sizes for this article. Closed-End Funds, ETFs and ETNs were excluded here and Preferred Shares were included in the FTP list. Real Estate Investment Trusts, MLPs, Royalty Trusts, and Business Development Companies populated the stock list along with common shares.
After January 1, 2016, preferred stocks moved back to be listed with funds trusts and notes. Analyst coverage for all those entities is sparse for preferred shares, funds, trusts, and notes but more robust for common stocks.
Ten top monthly pay SML Cap dividend stocks this week by yield included eight financial firms, one basic materials, and one service entity, covering just three of a possible nine business sectors. Thus, financial firms dominated the top 10 list and loaded the master list of 37.
ARMOUR Residential REIT (NYSE:ARR) led the list and seven other financial representatives. The other financials placed third through sixth, and eighth to tenth: Fifth Street Finance (NYSE:FSC) ; Prospect Capital Corporation (NASDAQ:PSEC) ; American Capital Agency (NASDAQ:AGNC) ; Bluerock Residential Growth REIT, Inc. ; Gladstone Commercial (NASDAQ:GOOD) ; Whitestone REIT (NYSEMKT:WSR) ; Independence Realty Trust, Inc. (NYSEMKT:IRT) .
The lone top yield basic materials MoPay stock placed second: Vanguard Natural Resources, LLC. (NYSE:VNR) . Finally, a lone service ace on the top ten placed seventh, Corus Entertainment Inc (CJR-B.TO) , and completed the February 19th MoPay SML top yield ten dog list.
Monthly Pay Dividend Funds, Trusts, & Preferreds by Yield
50 small-cap monthly dividend paying (MoPay) funds, trusts and notes listed below were culled from nearly 700 candidates by yields calculated as of February 19 to determine the Top Ten.
Ten monthly dividend funds, trusts & preferreds showing the biggest yields (revealed by dividends.com and verified using Yahoo Finance data) again this week featured four preferred stocks (PREF), four closed-end funds (CEFs), one exchange-traded note ((NYSE:ETN)), and one exchange-traded fund (ETF).
Two preferred issues nearing their tipping points bubbled to the top of this list this week, Gastar Exploration A Prf. Stk (GST-PA) , and Gastar Exploration B Prf. Stk (GST-PB) . Both are nearing 50% in projected annual yield.
The leader of the four CEFs placed third, Cornerstone Strategic Value Fund, Inc. (NYSEMKT:CLM) .
The remaining three CEFs placed seventh through ninth: Pimco High Income Fund Com Shs (NYSE:PHK) ; GAMCO Global Gold Natural Resources & Income Trust (NYSEMKT:GGN) ; Center Coast MLP & Infrastructure Trust (NYSE:CEN) .
A lone ETN, placed fifth this week: ETRACS Monthly Pay 2X Leveraged Mortgage REIT ETN (NYSEARCA:MORL) . Finally, a lone ETF placed tenth, Brookfield Global Listed Infrastructure Trust (NYSE:INF)  to round out the list.
Actionable Conclusions: (1) MoPay SML Dogs Mixed Down; (2) Funds, Trusts, & Notes Retreated Bearishly; (3) Dow Dogs Charged Ahead & Remained Overbought
After February 5, MoPaySML top ten dogs fell in dividend and also sagged in price to create a mixed down signal. Dividend dropped 7.7%, while aggregate single share price of those ten equities descended 8.9%.
At the same time, MoPay Funds, Trusts & Preferred top ten dogs soared in dividend and dropped in price to become bearish. Dividend flew up 12.5%, while aggregate single share price of those ten equities declined 3%.
Dow dogs charged as aggregate single share price for the ten increased 1.6% during the days from February 5 to 19, while annual dividend from $10k invested as $1K in each of those ten dogs declined over 20% for the period according to IndexArb. The bullish charge was caused entirely by market price changes and IndexArb estimates of dividends.
As a result, the Dow dogs overbought condition (in which aggregate single share price of the ten above projected annual dividend from $10k invested as $1k each in those ten) widened again.
[I invite you to sign on to my premium site, The Dividend Dog Catcher, to share my discussion about how the Dow (short of tossing out IBM) could, in one move, return to a normal balance where dividends from 10 $1k investments can again exceed the aggregate single share price of those top ten stocks.]
Actionable Conclusion (3): Dow Dogs Remain Overbought
Historically, an overhang of price above dividend gapped to $239 or 62% February 4; surged to the new record $256 or 65% as of March 6; gapped to $295 or 81% for a new annual record April 9; the gap extended to $321 or 90% May 1; swelled to $392 or 104% June 5, marking new 2014-15 yearly record gaps each time.
A July 1 price retreat narrowed the gap to $237 or 63%. However, to begin August, IBM's (NYSE:IBM) high price and dividend pushed the gap to $343 or 89%. As September dawned, Coca-Cola (NYSE:KO) ascended and Pfizer (NYSE:PFE) was back in tenth while nearly all ten dogs dropped in price to temporarily shrink the gap to $273 or 67%. October saw prices rise and dividend fall to move the price over dividend chasm to $305 or 76%. November 6 price action and top dog shuffle put the gap at $305 or 79%. As of December 4, the gap stood at $302 or 78%. As of January 8, the gap closed to $223 or 56%.
As of February 5, however, the sudden market optimism to end January put the gap up to $246 or 59% as of 2/5. That brightness continued to widen the gap to $261 or 63% February 19.
This gap between high share price and low dividend per $1k invested shows an overbought condition. Meaning, no matter which chart you read, these are low risk and low opportunity Dow dogs. The Dow top ten average price per dollar of annual dividend is $24.06.
Actionable Conclusion (4): Advantage for Preferred MoPay Shares?
Conversely, the MoPay dog charts for either stocks or FTPs show those dogs to be volatile, high risk, though potentially more rewarding pups. The SML MoPay stocks top ten average price per dollar of annual dividend is $7.06.
The opportunity gaps, and price per dividend dollar in fact, point to an advantage for funds, trusts and preferred stocks in the MoPay universe. The SML MoPay FTP stocks top ten average price per dollar of annual dividend is $3.70 which is likely fueled by the advantage of the trusts and funds to return capital to investors in addition to dividends.
Actionable Conclusion (5) Financial Sector Equities Now Top Basic Materials 7 To 3 on Upside and Net Gain Lists
Actionable Conclusion (6) Wall St. Analysts Projected a 45.14% Average 1 yr. Upside for Top 10 MoPaySML Dogs Come January 29, 2017
One-year median target price set by brokerage analysts multiplied by the number of shares in a $1k investment revealed ten stocks showing the highest upside price potential into 2017, out of 30 selected by yield in 2016. The number of analysts providing price estimates was noted after the name for each stock. Three to nine analysts have proven most accurate in target price estimating
Actionable Conclusion (7) Closed-End Funds & Exchange-Traded Entities Exceed Preferred Stocks By 6 To 4 On February 19 MoPay Top 10 FT&P List
Top ten funds, trusts, and preferreds paying monthly dividends showed yields ranging from 14.39% to 48.56%, promising investors strong returns not counting price appreciation.
Actionable Conclusions: Wall St. Predicted (8) A 19.98% Average 1 yr. Upside and (9) A 24.55% Average Gain for Top 30 SML Stocks As Of February 19, 2017
Top 30 dogs on the MoPay stock list graphed below show relative strengths by dividend and price as of February 19, 2016, and those projected by analyst mean price target estimates to the same date in 2017.
A hypothetical $1000 investment in each equity was divided by the current share price to find the number of shares purchased. The number of shares was then multiplied by projected annual dividend amounts to find the dividend return. Thereafter the analyst mean target price was applied to gauge each stock's upside to 2017.
Historic prices and actual dividends paid from $1000 invested in each of the highest-yielding stocks and the aggregate single share prices of those thirty stocks divided by 3 created the data points for 2016. Projections based on estimated increases in dividend amounts from $1000 invested in the thirty highest-yielding stocks and aggregate one-year analyst target share prices from Yahoo Finance divided by 3 created the 2017 data points on the chart below: Green for price and blue for dividend.
Yahoo reported Thomson/First Call analyst survey numbers that predicted a 16.2% lower dividend from $10K invested as $1k in the average ten of this group, while aggregate single share price of those ten was estimated to increase over 15% in the coming year. The number of analysts contributing to the mean target price estimate for each stock was noted in the next to the last column on the charts. Three to nine analysts were considered optimal for a valid projected estimate. Estimates provided by one analyst were not applied (n/a).
A beta (risk) ranking for each stock was provided in the far right column on the above chart. A beta of 1 meant the stock's price would move with the market. Less than 1 showed lower than market movement. Higher than 1 showed greater than market movement. A negative beta number indicated the degree of a stock price movement opposed to market direction.
Actionable Conclusion (10): Wall St. Wonks Forecast 40.09% to 96.55% Net Gains By Top 10 MoPaySML Dogs As Of February 19, 2017
This week, five of the ten top dividend yielding MoPaySML dogs were verified as being among the top ten by upside and gain for the coming year based on analyst 1-year target prices. So, for this period, dog methodology graded by Wall St. wizards was 50% accurate.
Ten probable profit generating trades revealed by Thomson/First Call in Yahoo Finance for February 19, 2017, were:
Vanguard Natural Resources was projected to net $965.51 based on dividend plus the median target price estimate from seven analysts less broker fees. The Beta number showed this estimate subject to volatility 45% less than the market as a whole.
Whitestone REIT was projected to net $640.94 based on dividends plus the median of annual price estimates from six analysts less broker fees. The Beta number showed this estimate subject to volatility 11% less than the market as a whole.
Bluerock Residential REIT (NYSEMKT:BRG) was projected to net $634.45 based on the median target price estimate from six analysts combined with projected annual dividend less broker fees. A Beta number was not available for BRG.
Vermillion Energy, Inc. (NYSE:VET) was projected to net $633.51 based on dividends plus the lowest target price estimate from one of five analysts less broker fees. The Beta number showed this estimate subject to volatility 36% less than the market as a whole.
Enerplus Corporation (NYSE:ERF) was projected to net $593.56 based on the lowest target estimate from seven analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 1% more than the market as a whole.
Fifth Street Finance was projected to net $499.48 based on dividends plus the median of annual price estimates from twelve analysts less broker fees. The Beta number showed this estimate subject to volatility 3% opposite the market as a whole.
Independence Realty Trust, Inc. was projected to net $430.75 based on a median target price estimate from five analysts combined with its projected annual dividend less broker fees. A Beta number was not available for IRT.
PennantPark Floating Rate Capital (NASDAQ:PFLT) was projected to net $343.96 based on dividends plus median target price estimate from four analysts less broker fees. The Beta number showed this estimate subject to volatility 36% less than the market as a whole.
STAG Industrial, Inc. (NYSE:STAG) was projected to net $334.25 based on the median target price estimate from fourteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 5% more than the market as a whole.
New York REIT, Inc. (NYSE:NYRT) was projected to net $300.89 based on dividends plus the median of annual price estimates from three analysts less broker fees. A Beta number was not available for NYRT.
The average net gain in dividend and price was 53.77% on $10k invested as $1k in each of these ten MoPay dogs. The averaged Beta number showed this estimate, subject to volatility 32% less than the market as a whole.
Dog Metrics Extracted Bargains
As noted above, ten top monthly pay SML Cap dividend stocks by yield this week included eight financial firms, one basic materials, and one service entity, covering just three of a possible nine business sectors. Financial firms loaded the top 10. As of market close, February 19, MoPay leaders by yield were as follows:
Actionable Conclusions: Analysts Asserted (11) 5 Lowest Priced of Top Ten Highest Yield MoPay SMLs Deliver 46.77% VS. (12) 43.06% Net Gains from All Ten As Of February 19, 2017
$5000 invested as $1k in each of the five Lowest-priced stocks in the top ten MoPaySML kennel by yield were predicted by analyst 1 year targets to deliver 8.59% more net gain. The very lowest priced MoPaySML dog, Vanguard Natural Resources, LLC. , was projected to deliver the greatest net gain of 96.55%.
Lowest price five MoPaySML dogs as of February 19 were: Vanguard Natural Resources, LLC. ; Fifth Street Finance ; Gladstone Investment (NASDAQ:GAIN); Independence Realty Trust, Inc. ; Prospect Capital Corporation , with prices ranging from $2.07 to $6.83.
The higher priced five MoPaySML dogs for February 19 were: Corus Entertainment Inc. (CJR-B.TO); Bluerock Residential REIT ; Whitestone REIT ; American Capital Agency; Armour Residential REIT (ARR), whose prices ranged from $9.67 to $19.38.
This distinction between five low priced dividend dogs and the general field of ten reflects the "basic method" Michael B. O'Higgins employed for beating the Dow. It also works well for teasing bargains out of this list of top yielding MoPay category leaders, as you see.
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. It's also the work analysts got paid big bucks to do.
A 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.
All the stocks listed above were suggested only as decent starting points for a MoPay dog dividend stock investment research process in late February, 2016. These were not recommendations.
Net gain and 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.
See my instablog for specific instructions about how to best apply the dividend dog data featured in this article.
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.dividend.com; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance.
Disclosure: I am/we are long ARR, FSC, CSCO, INTC, PFE, VZ.
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.