Thirty-six MoPay SML Stocks on the Market
Yield (dividend / price) results from here verified by Yahoo Finance for monthly dividend paying Small, Mid, and Large cap (MoPaySML) stocks as of market closing prices on 3/25/16 revealed thirteen actionable conclusions discussed below. Small cap firms were valued at $200M(illion) to $2B(illion); 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-six 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 [REITs], Master Limited Partnerships [MLPs], Royalty Trusts [RTs], and Business Development Companies [BDCs] 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 serious for common stocks.
Ten top monthly pay SML cap dividend stocks this week by yield included nine financial firms and one service entity, covering just two of a possible nine business sectors. As usual, financial firms dominated the top 10 list and loaded the master list of 36, as firms dealing in basic materials fell lower by yield.
ARMOUR Residential REIT (NYSE:ARR)  led the list and eight other financial representatives. The other financials placed second through seventh, ninth, and tenth: Fifth Street Finance (NYSE:FSC) , Prospect Capital Corporation (NASDAQ:PSEC) , American Capital Agency Corp. (NASDAQ:AGNC) , Bluerock Residential Growth REIT, Inc. (NYSEMKT:BRG) , Independence Realty Trust, Inc. (NYSEMKT:IRT) , Gladstone Investment (NASDAQ:GAIN) , PennantPark Floating Rate Capital (NASDAQ:PFLT) , and Gladstone Commercial Corp. (NASDAQ:GOOD) , respectively.
Finally, a lone service dog in the top ten, Corus Entertainment Inc. (OTCPK:CJREF, CJR-B.TO) , placed eighth and completed the March 25th MoPay SML top yield ten dog list.
Monthly Pay Dividend Funds, Trusts, and Preferreds by Yield
48 small and 2 mid cap monthly dividend-paying (MoPay) funds, trusts and notes listed below were culled from nearly 700 candidates by yields calculated as of March 25 to determine the top ten.
Ten monthly dividend funds, trusts, and preferreds showing the biggest yields (as revealed by Dividends.com and verified using data from Yahoo Finance) this week featured two preferred stocks [PREF], six closed-end funds [CEFs], one exchange-traded note [ETN], and one exchange-traded fund [ETF].
The leader of the six CEFs placed first: Cornerstone Strategic Value Fund (NYSEMKT:CLM) .
The remaining five CEFs placed fourth, fifth, seventh eighth, and tenth: GAMCO Global Gold Natural Resources & Income Trust (NYSEMKT:GGN) , PIMCO High Income Fund (NYSE:PHK) , Voya Global Equity Dividend and Premium Opportunity Fund (NYSE:IGD) , Guggenheim Strategic Opportunities Fund (NYSE:GOF) , and Western Asset Global High Income Fund (NYSE:EHI) , respectively.
A lone ETN placed second this week: UBS ETRACS Monthly Pay 2X Leveraged Mortgage REIT ETN (NYSEARCA:MORL) .
The top preferred stock of two placed third: BreitBurn Energy Partners LP Preferred (BBEP) . It is the lone basic material survivor in these ranks. The lower-yield preferred stock in the top ten is from services and placed sixth: Liquor Stores N.A. Ltd. (OTCPK:LQSIF) .
Finally, a lone ETF placed ninth, Brookfeld Global Listed Infrastructure Income Fund (NYSE:INF) , to round out this FTP top ten list.
Actionable Conclusions: (1) MoPay SML Dogs Mixed Up; (2) Funds, Trusts, and Notes Charged Bullishly; (3) Dow Dogs Charged Meekly Ahead to Become More Overbought
After March 18, MoPaySML top ten dogs rose in both dividend and price to mix up. Dividend went up 0.36%, while the aggregate single share price of those ten equities ascended 2.88%.
At the same time, MoPay Funds, Trusts, and Preferred top ten dogs dropped in dividend and swelled in price to become bullish. Dividend tumbled 30%, while the aggregate single share price of those ten equities inclined 8.4%.
Dow dogs charged meekly, with the aggregate single share price for the ten increasing 1.9% during the days from March 18 to 25, while the annual dividend from $10k invested as $1K in each of those ten dogs declined 3.11% for the period, according to IndexArb. The bullish charge was caused entirely by market price changes.
As a result, the Dow dogs' overbought condition (in which the aggregate single share price of the ten above projected annual dividend from $10k invested as $1k each in those ten) widened to an annual record.
Actionable Conclusion (3): Dow Dogs Remain Overbought
The overhang gapped to $295 or 81% record in April; then broke the new annual record again in May at $311 or 87%. June saw the gap narrow to $286 or 77%. The July/August market set a new high for the gap at $329 or 85%. September shrank the gap to $279 or 67%. October expanded the chasm again to $323 or 82%. November-December constricted the gap somewhat to $271 or 70%. January narrowed the gap slightly to $246 or 57%. In February, when $30 Intel (NASDAQ:INTC) with its dividend dollar replaced Procter & Gamble's (NYSE:PG) $75 price and $2.80 dividend, the gap of Dow price over dividend grew to $265 or 65%. But P&G reclaimed slot ten in March to join big dogs IBM Corp. (NYSE:IBM) and Boeing (NYSE:BA) to move the gap to a record of $422 or 113% as of 3/25/16.
This gap between high share price and low dividend per $1k invested shows an overbought condition. Meaning, these are low-risk and low-opportunity Dow dogs. The Dow top ten average price per dollar of annual dividend was $26.75.
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 $7.87.
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 $5.43, which is likely so much lower due to trusts' and funds' ability to return capital to investors, in addition to dividends.
Actionable Conclusion (5) Financial Sector Equities Now Top Basic Materials 8 to 2 on Upside and Net Gain Lists
Notice, also, that the three basic materials dogs no longer flaunt the greater returns, as their bubbles have deflated or burst.
Actionable Conclusion (6) Wall St. Analysts Projected a 24.4% Average 1-year Upside for the Top 10 MoPaySML Dogs Come March 25, 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 and Exchange-Traded Entities Exceed Preferred Stocks by 8 to 2 on the March 25 MoPay Top 10 FT&P List
Top ten funds, trusts, and preferreds paying monthly dividends showed yields ranging from 12.82% to 30.74%, promising investors strong returns not counting price appreciation.
Actionable Conclusions: Wall St. Wizards Wanted (8) 9.44% Average 1-year Upside and (9) 15.43% Average Gain for Top 30 SML Stocks as of March 25, 2017
The top 30 dogs on the MoPay stock list graphed below show relative strengths by dividend and price as of March 25, 2016 and those projected by analyst mean target price 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.
Historical prices and actual dividends paid from $1000 invested in each of the highest-yielding stocks and the aggregate single share prices of those 30 stocks divided by 3 created the data points for 2016. Projections based on estimated increases in dividend amounts from $1000 invested in the 30 highest-yielding stocks and aggregate 1-year analyst target share prices from Yahoo Finance divided by 3 created the data points for 2017 shown in green for price and blue for dividend on the chart below.
Yahoo reported Thomson/First Call analyst survey numbers that predicted a 8.65% lower dividend from $10K invested as $1k in the average ten of this group, while the aggregate single share price of those ten was estimated to increase over 6.45% 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 was 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's price movement opposed to market direction.
Actionable Conclusion (10): Wall St. Wizards Wanted 22-44.8% Net Gains by the Top 10 MoPaySML Dogs as of March 25, 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 March 25, 2017 were:
Bluerock Residential Growth REIT was projected to net $447.96, based on the median target price estimate from four analysts, combined with projected annual dividend less broker fees. A Beta number was not available for BRG.
Independence Realty Trust, Inc. was projected to net $432.91, 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.
Fifth Street Finance was projected to net $374.00, based on dividends plus the median of annual price estimates from ten analysts less broker fees. The Beta number showed this estimate subject to volatility 3% opposite the market as a whole.
Whitestone REIT (NYSEMKT:WSR) was projected to net $373.50, based on dividends plus the median of annual price estimates from four analysts less broker fees. The Beta number showed this estimate subject to volatility 13% less than the market as a whole.
PennantPark Floating Rate Capital was projected to net $296.52, based on dividends plus median target price estimate from three analysts less broker fees. The Beta number showed this estimate subject to volatility 36% less than the market as a whole.
Chatham Lodging Trust (NYSE:CLDT) was projected to net $259.20, 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 9% less than the market as a whole.
New York REIT, Inc. (NYSE:NYRT) was projected to net $249.72, based on dividend plus the median target price estimate from three analysts less broker fees. A Beta number was not available for NYRT.
Pembina Pipeline Corp. (NYSE:PBA) was projected to net $248.76, based on the median target price estimate from four analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 18% less than the market as a whole.
Gladstone Investment was projected to net $231.79, based on the lowest target estimate from two analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 24% less than the market as a whole.
Vermillion Energy, Inc. (NYSE:VET) was projected to net $220.68, based on dividends plus the lowest target price estimate from three analysts less broker fees. The Beta number showed this estimate subject to volatility 37% less than the market as a whole.
The average net gain in dividend and price was 31.35% on $10k invested as $1k in each of these ten MoPay dogs. The averaged Beta number showed this estimate subject to volatility 42% less than the market as a whole.
Actionable Conclusion (11): (Bear Alert) Analysts Projected 1 MoPay SML to Show a Net Loss of 6.99% by 2017
One probable losing trade revealed by Thomson/First Call in Yahoo Finance in 2017 was:
Realty Income Corp. (NYSE:O) was projected to lose $69.98, based on dividend and a median target price estimate from fifteen analysts, including $20 of broker fees. The Beta number showed this estimate subject to volatility 90% 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 nine financial firms and one service entity, covering just two of a possible nine business sectors. As of market close on March 25, the MoPay leaders by yield were as follows:
Actionable Conclusions: Analysts Alleged (12) 5 Lowest-Priced of the Top Ten Highest-Yield MoPay SMLs Deliver 33.9% Vs. (13) 25.10% Net Gains from all Ten as of March 25, 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 35.09% more net gain. The fifth-lowest priced MoPaySML dog, Bluerock Residential Growth REIT, Inc., was projected to deliver the greatest net gain of 44.8%.
The five lowest-priced MoPaySML dogs as of March 25 were Fifth Street Finance, Independence Realty Trust, Inc., Gladstone Investment, Prospect Capital, and Bluerock Residential Growth REIT, Inc., whose prices ranged from $5.00 to $10.33.
Five higher-priced MoPaySML dogs for March 25 were Corus Entertainment Inc., PennantPark Floating Rate Capital, Gladstone Commercial, American Capital Agency, and Armour Residential REIT, whose prices ranged from $10.67 to $21.10.
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 20-80% accurate on the direction of change and about 0-20% 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 March 2016. These were not recommendations.
The 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.
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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 dividend.com; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance.
Disclosure: I am/we are long ARR, CSCO, FSC, 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.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.