Safe Monthly Pay SML Dividend Dogs: Canada Up 40 To Five As Of October 14

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Includes: AGNC, CJREF, CLDT, GAIN, PSEC
by: Fredrik Arnold

Summary

121 equities pay dividends monthly (MoPay). US exchanges list 51; Canadian exchanges list 70. Of 121, 45 were called "safe" payers because their free cash flow yield exceeded dividend yield.

Regardless of listed stock exchange locations, just five of the of 45 "safe" MoPays are US-based. Top 10 safe MoPays include three US firms: PSEC; AGNC; GAIN.

Seven of top 10 are Canadian MoPays by yield: ONR-UN.TO; KWH-UN.TO; TF.TO; AX-UN.TO; CJREF; CJR-B.TO; NBZ.TO. Top 10 yields ranged 8.34-12.94%. while cash-flow yields were 5.84-46.24% as of October 14.

Broker targets revealed 10 top yield safe monthly paid dividend stocks promised 15.44% LESS gain from $5k invested in the lowest priced five than from $5K invested in all 10.

The Dividend Dogs Rule

The "dog" moniker was earned by stocks 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."

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45 MoPay Dogs Have Cash Margins Greater Than Dividends

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Periodic Safety Inspection

A previous article discussed the attributes of 121 US & Canadian MoPay stocks from which these 45 were sorted. You see below the lists that passed the dividend "stress" test. These 45 monthly pay dividend dogs report sufficient annual cash flow yield to cover their anticipated annual dividend yield. The margin of excess is shown in the last column.

Financial guarantees, however, are easily over-ruled by a cranky board of directors or company policy canceling or varying the payout of dividends to shareholders. For example, on the US list below, Prospect Capital (NASDAQ:PSEC) reduced its dividend from $.111 To $.083 as of January 2015. Also, American Capital Agency (NASDAQ:AGNC) announced July 27 a reduction of its $.20 monthly shareholder payout to $.18 as of September. The Canadian equities, Northern Blizzard (OTC:NBZZF) (NBZ.TO) cut its dividend in half in July 2015; Crius Energy (OTC:CRIUF) (KWH-UN.TO) cut its payout 30% in 2014; Gamehost (OTC:GHIFF) (GH.TO) reduced its dividend 20% in June, to name three.

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Five Of Safe 45 MoPay Dogs Are Headquartered in the USA. The Other 40 Are Canadian.

The 45 Safe MoPay equities posting cash margins greater than their announced annual dividends are ranked by yield in the chart above. The column between the stock name and ticker shows a two-letter abbreviation for the province or state where each company is headquartered.

Five are located in one US state each [by yield, these are Prospect Capital in NY, AGNC Investment in MD, Gladstone Investment (NASDAQ:GAIN) in VA, Chatham Lodging (NYSE:CLDT) in FL, and CI Financial (OTCPK:CIFAF) (CIX.TO) in TX].

The majority 40 are located in four Canadian provinces (by yield, they are AB, ON, MB, and BC). If the US were a Province of Canada, it would have the third fewest safe monthly pay corporate locations. Only Manitoba with three has fewer safe MoPay corporate headquarter locations than the US's five.

What Business Sectors Paying Monthly Dividends Show Up With "Safe" Equities?

Five of 11 Morningstar sectors are represented by 10 MoPay equities by yield posting cash margins greater than their announced annual dividends. These came from the energy (1) financial services (3), real estate (3), consumer cyclical (2), utilities (1).

Eight of the 11 sectors are represented in the whole list of 45. These are energy (9); financial services (6); real estate (11); consumer cyclical (8); utilities (1); industrials (5); basic materials (1); healthcare (3).

Dog Metrics Looked For Bargain US & Canadian MoPay "Safe" Stocks

10 "Safest" top MoPay USA/CAN revenue stocks showing the biggest yields per October 14 YCharts data ranked themselves by yield as follows:

Actionable Conclusions: (1) Analysts Predicted Five Lowest Priced of USA/CAN 10 Monthly Pay Dividend Dogs To Deliver 7.78% VS. (2) 8.70% Net Gains from All 10 by Come October, 2017

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$5,000 invested as $1k in each of the five lowest priced stocks in the "safe" 10 USA/CAN MoPay kennel by yield were determined by analyst one-year targets to deliver 15.44% LESS net gain than $5,000 invested as $.5k in all 10. The sixth lowest priced safe MoPay dog, Corus Entertainment (OTCPK:CJREF), was projected to deliver the best net gain of 21.55%.

Lowest priced five "safe" USA/CAN MoPay dogs as of October 14 were: OneREIT (ONR-UN.TO); Northern Blizzard; Prospect Capital; Timbercreek Financial (TF.TO); Crius Energy, with prices ranging from $3.50 to $8.70.

Higher priced five Safe MoPay dogs for October 14 were: Corus Entertainment; Gladstone Investment; Corus Entertainment (CJR-B.TO); Artis REIT (AR-UN.TO); American Capital Agency, whose prices ranged from $8.79 to $19.28.

This distinction between five low-priced dividend dogs and the general field of 10 reflects the "basic method" Michael B. O'Higgins employed for beating the Dow. 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.

The net gain estimates mentioned 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

Stocks listed above were suggested only as possible starting points for your safest MoPay dog dividend stock purchase research process. These were not recommendations.

Three of these monthly paying dividend pups qualify as valuable catches! They are listed with the 52 Dogs Of The Week (DOTW) found on The Dividend Dog Catcher premium site. Click here to subscribe or get more information.

Top-performing DOTW dogs for the first through third quarters have been named. A fourth quarterly winner will be announced November 16.

Root for the Underdog at the free for all first annual dividend dog of the year award webinar on shindig. November 16 at 11 AM to Noon EST. Go here to reserve your seat.

For a free copy of the monthly top dog list, including updates on the Q1, Q2, and the Q3 picks, send your e-mail address, ticker symbol for your favorite dividend stock, and name of your favorite team of any sport or activity to: fredrika120@gmail.com. Remember: E-mail, ticker, team!

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 ycharts.com; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance. Canada Dog photo from: 3milliondogs.com.

Disclosure: I am/we are long FSC, ARR.

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.