SML Cap Monthly Pay Dividend Dogs Results As Of April 8

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Includes: AGNC, ARR, BBD, BDCS, BRG, CEN, CLDT, CLM, EHI, FSC, GAIN, GGN, GOF, GOOD, IGD, INF, IRT, MLPS, MORL, NYRT, O, PBA, PFLT, PHK, PSEC, VET
by: Fredrik Arnold

Summary

35 monthly pay dividend (MoPay) Small, Mid, & Large capitalized (SML) dogs yields ranged 0.7% to 14.92%; 50 SML Funds, Notes & Preferreds (FTPs) bridged 8.67% to 36.21% April 8.

Top ten yield MoPay dividend dogs charged averaging 11.58% yield. Ten MoPay FTPs mixed down averaging 18.52% while Dow Dogs also mixed down averaging 3.83%.

Analyst 1yr. targets found thirty MoPay stocks averaging 8.9% upsides and 13.9% net gains. FTPs are not tracked by analysts but their top 30 gains calculated by yield averaged 13.73%.

SML gainers were: PBA; GAIN; NYRT; PFLT; CLDT; VET; WSR; FSC; BRG, with IRT leading. Top FTPs were: INF; GOF; EHI; CEN; IGD; PHK; GGN; MORL; CLM; with BBEPP leading.

Ten top yield SML stocks projected 37.19% more net gain from $5k invested in the lowest priced five than from $5K in all ten.

Thirty-five MoPay SML Stocks Hit 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 4/8/16 revealed the 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-five 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 (NYSEARCA:MLPS), Royalty Trusts (RTs), and Business Development Companies (NYSEARCA: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 is sparse for preferred shares , funds, trusts, and notes but more vigorous for common stocks.

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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 representing the basic materials sector fell lower or dropped out by yield.

ARMOUR Residential REIT (NYSE:ARR)[1] led the list and eight other financial representatives. The other financials placed second through seventh, ninth, and tenth: Fifth Street Finance (NASDAQ:FSC) [2]; Prospect Capital Corporation (NASDAQ:PSEC) [3]; American Capital Agency (NASDAQ:AGNC) [4]; Gladstone Investment (NASDAQ:GAIN) [5]; Bluerock Residential Growth REIT, Inc. [6]; Independence Realty Trust, Inc. (NYSEMKT:IRT) [7]; PennantPark Floating Rate Capital (NASDAQ:PFLT) [9]; Gladstone Commercial (NASDAQ:GOOD) [10].

Finally, a lone service dog in the top ten placed eighth, Corus Entertainment Inc. (CJR-B.TO) [8], and completed the April 8th MoPay SML top yield ten dog list.

Monthly Pay Dividend Funds, Trusts, & 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 April 8 to determine the top ten.

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Ten monthly dividend funds, trusts & preferreds showing the biggest yields (revealed by dividends.com and verified using Yahoo Finance data) this week featured one preferred stock [PREF], seven closed-end funds [CEFs], one exchange traded note [ETN], and one exchange traded fund [ETF].

The lone preferred stock placed first, Breitburn Energy Partners LP Preferred (BBEPP) [1]. The leader of the seven CEFs placed second, Cornerstone Strategic Value Fund, Inc. (NYSEMKT:CLM) [2].

The remaining six CEFs placed fourth, through ninth: Gabelli Global Gold Natural Resources & Income Trust (NYSEMKT:GGN) [4]; Pimco High Income Fund Com Shs (NYSE:PHK) [5]; ING Global Equity Dividend & Premium Opportunity Fund (NYSE:IGD) [6]; Center Coast MLP & Infrastructure Fund (NYSE:CEN) [7]; Western Asset Global High Income Fund Inc (NYSE:EHI) [8]; Claymore/Guggenheim Strategic Opportunities Fund (NYSE:GOF) [9].

The lone ETN, placed third this week: ETRACS Monthly Pay 2X Leveraged Mortgage REIT ETN (NYSEARCA:MORL) [3]. Finally, the lone ETF placed tenth, Brookfeld Global Listed Infrastructure Trust (NYSE:INF) [10] to round out this FTP top ten list.

Actionable Conclusions: (1) MoPay SML Dogs Charged Bullishly; (2) Funds, Trusts, & Notes Mixed Down; (3) Dow Dogs Mixed Down, Remaining Overbought

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After April 1, MoPaySML top ten dogs fell in dividend but rose in price to charge boldly. Dividend dropped 23%, while aggregate single share price of those ten equities increased 32%.

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At the same time, MoPay Funds, Trusts & Preferred top ten dogs dropped in dividend and in price to mix down. Dividend fell 16%, while aggregate single share price of those ten equities tumbled 16.6%.

Dow dogs also mixed down with aggregate single share price for the ten falling 3.4% during the days from April 1 to 8, while annual dividend from $10k invested as $1K in each of those ten dogs dropped 0.07% for the period according to IndexArb. The mix down was encouraged by JPMorgan Chase replacing Procter & Gamble in the top ten.

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) shrank somewhat.

Actionable Conclusion (3): Dow Dogs Remain Overbought

The overhang in May was $320 or 90%. June saw the gap leap to $392 or 106%. The July market dropped the gap to $237 or 63%. August was up slightly, then 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 with its dividend dollar replaced Procter & Gamble's $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 and Boeing to move the gap to $400 or 104% as of 4/1/16. The April 8 JPMorgan move into the top ten lowered the overbought metric to $374 or 98%.

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 $26.18.

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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 $8.54.

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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 $5.39 which is likely so much lower due to trusts and funds ability to return capital to investors in addition to dividends.

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Actionable Conclusion (5) Financial Sector Equities Still Top Basic Materials 8 To 2 on Upside and Net Gain Lists

Notice, also, that the two basic materials dogs no longer flaunt greater returns as their bubbles have deflated.

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Actionable Conclusion (6) Wall St. Analysts Projected a 23.08% Average 1 yr. Upside for Top 10 MoPaySML Dogs Come April 8, 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

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Actionable Conclusion (7) Closed End Funds & Exchange Traded Entities Exceed Preferred Stocks By 7 To 3 On April 8 MoPay Top 10 FT&P List

Top ten funds, trusts, and preferreds paying monthly dividends showed yields ranging from 12.5% to 36.21% promising investors strong returns not counting price appreciation.

Actionable Conclusions: Wall St. Wizards Wished (8) A 8.9% Average 1 yr. Upside and (9) A 13.9% Average Gain for Top 30 SML Stocks As Of April 8, 2017

Top 30 dogs on the MoPay stock list graphed below show relative strengths by dividend and price as of April 8, 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.

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.

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Yahoo reported Thomson/First Call analyst survey numbers that predicted a 8.2% 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 6% 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 price movement opposed to market direction.

Actionable Conclusion (10): Wall St. Wizards Wanted 20.5% to 38.26% Net Gains By Top 10 MoPaySML Dogs As Of April 8, 2017

This week, four 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 40% accurate.

Ten probable profit generating trades revealed by Thomson/First Call in Yahoo Finance for April 8, 2017 were:

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Independence Realty Trust, Inc. was projected to net $382.60 based on a median target price estimate from six analysts combined with its projected annual dividend less broker fee. A Beta number was not available for IRT.

Bluerock Residential Growth REIT (NYSEMKT:BRG) was projected to net $363.58 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.

Fifth Street Finance was projected to net $343.99 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.

Whites4850 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 equal to the market as a whole.

Vermillion Energy, Inc. (NYSE:VET) was projected to net $304.47 based on dividends plus the lowest target price estimate from one of three analysts less broker fees. The Beta number showed this estimate subject to volatility 30% less than the market as a whole.

Chatham Lodging Trust (NYSE:CLDT) was projected to net $292.03 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.

PennantPark Floating Rate Capital was projected to net $265.23 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.

New York REIT, Inc. (NYSE:NYRT) was projected to net $253.62 based on dividend plus the median target price estimate from three analysts less broker fees. A Beta number was not available for NYRT.

Gladstone Investment was projected to net $231.79 based on the median 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.

Pembina Pipeline Corp. (NYSE:PBA) was projected to net $205.38 based on the median target price estimate from four analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 20% less than the market as a whole.

The average net gain in dividend and price was 29.85% on $10k invested as $1k in each of these ten MoPay dogs. The averaged Beta number showed this estimate subject to volatility 40% less than the market as a whole.

Actionable Conclusion (11): (Bear Alert) Analysts Projected Two MoPay SML To Show A Net Losses Of 7.4% & 9.3% By 2017

Probable losing trade revealed by Thomson/First Call in Yahoo Finance in 2017 were:

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Banco Bradesco S.A (NYSE:BBD) was projected to lose $74.30 based on dividend and a median target price estimate from five analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 117% more than the market as a whole.

Realty Income Corp (NYSE:O) was projected to lose $98.21 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 80% less than the market as a whole.

The average net loss in dividend and price was 8.37% on $2k invested as $1k in each of these two MoPay dogs. The averaged Beta number showed this estimate subject to volatility 19% more 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. Financial firms loaded the top 10. As of market close, April 8, MoPay leaders by yield were as follows:

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Actionable Conclusions: Analysts Alleged (12) 5 Lowest Priced of Top Ten Highest Yield MoPay SMLs Deliver 30.7% VS. (13) 21.92% Net Gains from All Ten As Of April 8, 2017

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$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 37.19% more net gain. The second lowest priced MoPaySML dog, Independence Realty Trust, Inc. , was projected to deliver the greatest net gain of 38.26%.

Lowest price five MoPaySML dogs as of April 8 were: Fifth Street Finance; Independence Realty Trust, Inc.; Gladstone Investment; Prospect Capital; Bluerock Residential Growth REIT, Inc, whose prices ranged from $5.11 to $10.96.

The higher priced five MoPaySML dogs for April 8 were: Corus Entertainment Inc. (CJR-B.TO); PennantPark Floating Rate Capital; Gladstone Commercial; American Capital Agency; Armour Residential REIT (ARR), whose prices ranged from $11.73 to $21.72.

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 equities, 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. Its 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 mid-April, 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.--Fredrik Arnold

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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 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, 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.