SML Monthly Pay Dogs: Financials Tops For Yield, REITs Tops For Gains, November 18

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Includes: AGNC, APLE, ARESF, ARR, AVAL, BOXC, BRG, CEFL, CJREF, CLM, DMO, EDF, EHI, EPR, FSC, FSFR, GAIN, IRT, MORL, NCV, NCZ, NHF, ORC, PG, PHK, PSEC, STB, WSR
by: Fredrik Arnold

Summary

52 monthly paying dividend (MoPay) Small, Mid, & Large cap (SML) equity yields ranged 0.83%-15.57%. Fifty SML Fund yields were 8.40%-22.74% November 18.

Ten US Equities charged modestly as did Canadian MoPays, averaging 11.15% & 9.97% yields, respectively. Ten MoPay Funds mixed-up averaging 15.67%, and ten Dow Dogs retreated bearishly, averaging 3.75% yield.

Analyst 1yr. targets showed 30 MoPay equities averaging 5.63% upsides but posting 12.5% net gains. Funds, though not targeted by analysts, averaged 12.26% top yield 30 gains.

Top yield equities: GAIN; GNL; ARESF; FSFR; CJREF; AGNC; ARR; FSC; PSEC; FSC; had ORC leading. Top Funds: EHI; NCV; NCZ; DMO; NHF; PHK; EDF; CEFL; MORL; showed CLM leading.

Ten top yield SML equities projected 6.68% LESS gain from $5k invested in the lowest priced five than from $5K in all ten.

Late-Mid-November SML MoPays

Yield (dividend / price) results from here verified by Yahoo Finance for 52 monthly dividend paying Small, Mid, & Large cap (MoPaySML) equities as of market closing prices 11/18/16 revealed 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 total assets under management.

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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."

MoPays Of November 18

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 Uncovered Bargains

52 small, mid, and large cap monthly dividend paying equities were pulled from 1080 equities of all sizes for this article. Closed End Funds, ETFs and ETNs were excluded here and preferred shares are no longer showing up. Real Estate Investment Trusts [REITs], Master Limited Partnerships [MLPS], Royalty Trusts [RTs], and Business Development Companies [BDCS] populated the equity list along with common shares.

The equity list is no longer split between USA exchanges and Canadian stock exchanges. However a top ten list from Canadian exchanges is shown for comparison purposes

Again, real estate and financial firms dominated the top 10 list and loaded the master list of fifty-two with twenty-five REITs, and nine financial service firms, along with eight energy issues, two consumer cyclical, two industrials, one utility, one healthcare, two communication services, one basic materials, and one consumer defensive firm represented. Only the technology sector was missing from the monthly dividend equity SML payor list.

The Top Ten Equity Lists

Ten top monthly pay SML Cap dividend stocks this week by yield included five real estate firms, four financial services, and one consumer cyclical firm to cover three of the eleven Morningstar business sectors.

After November 11, top ten MoPay dogs charged mildly as dividend fell and price rose, and the Canadian top ten MoPaySML dogs did likewise.

Actionable Conclusion: (1) Top 10 Equities Charged Bullishly

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Top Ten MoPay dividend fell 8.25%, while aggregate single share price of the ten gained 0.6%.

A diversified REIT led the top ten list by yield again, Orchid Island Capital (NYSE:ORC) [1]. Four other real estate entities followed in fourth, fifth, eighth and ninth places, ARMOUR Residential REIT (NYSE:ARR) [4], American Capital Agency (NASDAQ:AGNC) [5], Artis REIT (OTCPK:ARESF) [8], and Global Net Lease [9].

Four financial services representatives put themselves in second, third, seventh, and tenth places: Fifth Street Finance (NASDAQ:FSC) [2]; Prospect Capital Corporation (NASDAQ:PSEC) [3]; Fifth Street Senior Floating Rate Corp. (NASDAQ:FSFR) [7]; Gladstone Investment (NASDAQ:GAIN) [10].

Finally, the lone consumer cyclical member placed sixth, Corus Entertainment (OTCPK:CJREF) [6] to complete the November 18 MoPay SML top yield ten dog list.

Canada Top Ten MoPay Equities

This week's ten top Canadian exchange monthly pay SML Cap dividend stocks by yield included one energy firm, one financial service firm, six real estate firms, one consumer cyclical, and one utility to cover five of the eleven Morningstar business sectors.

Actionable Conclusion: (2) CAN 10 SML Charged Modestly;

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Canadian equities mildly charged. Dividend fell 2.3%, while aggregate single share price of the ten rose 3.3%. In Canada, too, real estate firms dominated the top 10 list

A lone energy firm led the top ten CAN list by yield, Northern Blizzard (NBZ.TO) [1]. A lone financial service firm placed second, Dividend 15 Split Corp (DFN.TO) [2]. The lone consumer cyclical member placed fourth, Corus Entertainment (CJR-B.TO) [4], and the lone utility was seventh, Crius Energy (KWH-UN,TO) [7] to complete the Canadian single service MoPay dogs.

The first of six REITs led their procession from the third spot, Cominar REIT (CUF-UN.TO) [3]. Another placed fifth, Slate Office REIT (SOT-UN.TO)[5], and in sixth was Artis REIT (AX-UN.TO) [6]. The three remaining real estate entities made up the last of the CAN top ten list. Dream Industrial REIT (DIR-UN.TO) [8], Dream Global REIT (DRG-UN.TO) [9], and Dream Office REIT (D-UN.TO) [10], to complete the Canadian exchanges November 18th MoPay SML top yield ten dog list.

MoPay SML Funds by Yield

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45 small closed end funds [CEFs], plus two mid cap CEFs, two small ETNs and one small ETF were culled from nearly 800 monthly dividend paying (MoPay) funds, trusts and partnerships by yields calculated as of November 18 to determine the top ten.

Actionable Conclusion (3) SML Funds Mixed Up

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The SML MoPay Fund top ten dogs Mixed up seriously after November 11, dividend from $10K invested as $1k in each Fund dog rose 6.8%, while aggregate single share price of those ten equities increased 24%.

Ten monthly SML Funds showing the biggest yields (revealed by YCharts.com and verified using Yahoo Finance data) this week consisted of eight closed-end funds, and two ETNs.

In the top spot was leader of the CEFs, Cornerstone Strategic Value Fund, Inc. (NYSEMKT:CLM) [1]. Second dog was UBS E-TRACS Mthly Pay 2x Mortg REIT ETN (NYSEARCA:MORL) [2] and third place went to UBS ETRACS Mthly Py 2xLvg Closed-End ETN (NYSEARCA:CEFL) [3].

Fourth through tenth belonged to the remaining seven CEFs: Stone Harbor Emerging Mkts Income (NYSE:EDF) [4]; PIMCO High Income (NYSE:PHK) [5]; NexPoint Credit Strategies Fund (NYSE:NHF) [6]; Western Asset Mortgage Defined Opp (NYSE:DMO) [7]; AllianzGI Convertible & Income II (NYSE:NCZ) [8]; AllianzGI Convertible & Income (NYSE:NCV) [9]; Western Asset Global High (NYSE:EHI)[10], to round out this late-mid-November all Funds top ten list.

Actionable Conclusion(4) Dow Dogs Retreated Bearishly

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Dow dogs rested after pushing for another record overbought gap, not seen since September. After November 11, aggregate single share price for the ten Dow dogs tumbled 4%, from near its highest level of the year, while annual dividend rose 0.477% according to IndexArb.

As a result, the Dow dogs overbought condition (in which aggregate single share price of the ten being greater than projected annual dividend) narrowed their gap, somewhat.

Actionable Conclusion (5): How The Dow Overbought Gap Waxes and Wanes

In January, 2016 the gap was $246 or 57%. In February, the gap grew to $265 or 65%. Then, through March, grew to $400 or 104% for April.

May moved the price over dividend gap down to $350 or 91%. June put the gap back up to $386 or 104%. The gap rose to $414 or 114% in July. August gapped to $446 or 125%. September exceeded that mark, pushing the gap to $483 or 132%. October pushed it down to $369 or 97%. November 11 put it up to $488, or 131% just one point below the September record, but Procter and Gamble (NYSE:PG) replaced high priced McDonald's in the Dow top ten as of November 18 to lower the margin of price over dividend to $451 or 120%.

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 November 18 was $27.35.

Actionable Conclusion (4): MoPay Price Advantage Goes To All Funds

MoPay dog charts for either stocks or Funds show those dogs to be volatile, high risk, and potentially more rewarding than those of the Dow. The November 18 SML MoPay equity top ten average price per dollar of annual Universal dividend was $8.83. Canada was $10.30

The opportunity gaps, and price per dividend dollar, point to an advantage for funds, trusts and preferred stocks in the MoPay universe. The MoPay SML Funds top ten average price per dollar of annual dividend was $6.23. That $2.60 to $4.07 difference below equity share dividend cost of the MoPay equities is likely due to the trust and fund ability to return capital to investors in addition to dividends.

Actionable Conclusion (5) One Industrial Dog on MoPay Upside Lists Is joined by Consumer, and a Financial Services Firm to Challenge Seven REITs For Gains

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Actionable Conclusion (6) Wall St. Analysts Assert A 14.98% Average 1 yr. Upside for Top 10 MoPaySML Dogs Come November 18, 2017

One-year median target price set by brokerage analysts multiplied by the number of shares in a $1k investment revealed ten stocks that showed the greatest upside price potential into 2017 out of 30 selected by yield in 2016.

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Actionable Conclusion (7) Yields Averaged 15.67% Annually For November 18 MoPay SML Funds Top 10 List

Top ten closed end funds, ETFs, & ETNs paying monthly dividends showed yields ranging from 12.41% to 22.74% promising investors strong returns, not counting price appreciation.

Actionable Conclusions: Wall St. Brokers Forecast (8) A 5.63% Average 1 yr. Upside With (9) A 12.5% Average Net Gain for Top 30 MoPay SML Stocks As Of November 18, 2017

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Top 30 dogs on the MoPay stock list graphed above show relative strengths by dividend and price as of November 18, 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.

Yahoo reported Thomson/First Call analyst survey numbers predicting little change in dividend and price in MoPay equities for the coming year. They expected a 4.6% lower dividend from $10K invested as $1k in the average ten of this group, with aggregate single share price of those ten estimated to increase 6.4% 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 have the better track record for predicting upsides. 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. Note the no Canadian equities provided analyst upside estimates. The result is a list of all US Exchange stocks.

Actionable Conclusion (10): Wall St. Brokers Estimate 20.23% Average Net Gains For Top 10 MoPaySML MoPay Dogs As Of November 18, 2017

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This period, one 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 10% accurate.

A real estate equity led the ten probable profit generating trades revealed by Thomson/First Call in Yahoo Finance for November 18, 2017:

Whitestone REIT (NYSEMKT:WSR) was projected to net $302.34 based on the median target estimate from five analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 5% more than the market as a whole.

Corus Entertainment was projected to net $216.80 based on dividend plus the 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.

EPR Properties (NYSE:EPR) was projected to net $211.85 based on the median target price estimate from nine analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 38% less than the market as a whole.

Brookfield Canada Office (NYSE:BOXC) was projected to net $208.65 based on the median target price estimate from two analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 24% more than the market as a whole.

Bluerock Residential (NYSEMKT:BRG) was projected to net $203.32 based on dividends plus the median of annual price estimates from eight analysts less broker fees. A Beta number was not available for BRG.

Independence Realty Trust (NYSEMKT:IRT) was projected to net $202.35 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 17% more than the market as a whole.

Grupo Aval Acciones (NYSE:AVAL) was projected to net $196.97 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 63% less than the market as a whole.

Apple Hospitality REIT (NYSE:APLE) was projected to net $171.68 based on the median target price estimate from five analysts plus dividends less broker fees. A Beta number was not available for APLE.

Student Transportation (NASDAQ:STB) was projected to net $167.84 based on a median target price estimate from four analysts combined with its projected annual dividend less broker fee. The Beta number showed this estimate subject to volatility 23% less than the market as a whole.

Stag Industrial was projected to net $142.04 based on the median target price estimate from twelve analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 28% more than the market as a whole.

The average net gain in dividend and price was 20.23% on $10k invested as $1k in each of these ten MoPay dogs. The averaged Beta number showed this estimate subject to volatility 11% less than the market as a whole.

Analyst Estimated Downside MoPay Equity Surpassed The Highest Upside Equity Price Gains Over The Past 6 Months

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Year to date price performance of Whitestone REIT versus Prospect Capital, the two extreme ends of Monthly Pay upside results this week, show a slightly more positive path for the red-lined "low dog" PSEC and a barely positive trend for the analyst-favored WSR in blue June 20, 2016 to November 18, 2016

These historical projections contradict analyst expectations for a decline in the fortunes for Prospect Capital.

Dog Metrics Found 6.66% LESS Gain In Lowest Price Highest Yield MoPay Dividend Dogs

Ten top monthly pay SML Cap dividend stocks this week by yield included four real estate firms, one communications services entity, four financial service firms, and one consumer cyclical company, covering four of the eleven Morningstar business sectors. As of market close, November 18, MoPay leaders by yield were as follows:

Actionable Conclusion (12): Analysts Alleged 5 Lowest Priced of Top Ten High Yield MoPay SMLs Would Deliver 12.26% VS. (13) 13.14% Net Gains from All Ten

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$10,000 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 6.66% LESS net gain than $1k invested in each of all ten. The ninth lowest priced MoPaySML dog, AGNC Investment , was projected to deliver the best net gain of 21.68%.

Lowest priced five MoPaySML dogs as of November 18 were: Fifth Street Finance; Global Net Lease; Prospect Capital; Gladstone Investment; Artis REIT, whose prices ranged from $5.70 to $8.59.

The higher priced five MoPaySML dogs for November 18 were: Corus Entertainment; Fifth Street Senior; Orchid Island Capital; AGNC Investment; Armour Residential REIT, whose prices ranged from $8.61 to $22.18.

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 mostly works well for teasing low price bargains out of this list of top yielding MoPay equities, unlike what you see this week.

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.

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.

Annual Analyst Accuracy

You see below the one year result of ten analyst target estimates for Dow stocks per Yahoo from this article from Seeking Alpha of November 25, 2015. These were applied to the "basic method" Michael B. O'Higgins employed for beating the Dow. The key shows: losses in a reddish tint; poor results tinted yellow; gains tinted green; no tint means no difference.

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The "basic method" top ten annual analyst accuracy score for The Top Ten Monthly Pay Stocks by yield between November 25, 2015 and November 18, 2016, was seven losses, and three gains. All three gainers were high price dogs for the year. This group of MoPays showed a 30% positive result for the year. These 2015 MoPays failed to perform any where near analyst expectations. This set of MoPays verify that troubled sectors rise in yield as their bubbles inflate, until they burst and disappear or dissipate.

Stocks listed above were suggested only as decent starting points for a MoPay dog dividend stock investment research process into late-mid-November, 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 and this instablog to aid your safe investing. --Fredrik Arnold

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

For a free copy of the monthly top dogs, the quarterly reports, and the dog of the year winner, 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; dividend.com; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance. Dog photo: guesswhatididtoday.wordpress.com

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.

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.