20 Safe Monthly Pay SML Dividend Dogs - Nov. 18

by: Fredrik Arnold


52 SML equities pay dividends monthly (MoPay) per US exchanges. Of those 52, there were 20 "safe" payers with free cash flow yield exceeding dividend yield as of November 18.

9 of the of 20 "safe" MoPays are US based, by headquarters location. Top ten safe MoPays include 8 US firms: ORC; PSEC; AGNC; GNL; GAIN; SUNS; IRT; CLDT.

The remaining 2 in the top ten by yield are Canadian MoPays: CJREF; ARESF. Top 10 yields ranged 6.87%-15.57%, while cash-flow yields were 8.64%-104.04%.

Broker targets revealed ten top yield safe monthly paid dividend stocks showing 4.79% LESS gain from $5k invested in the lowest priced five than from $5K invested in all ten.

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."

Click to enlarge

20 of 50 MoPay Dogs Have Cash Margins Greater Than Their Dividends Payable

Click to enlarge

Periodic Safety Inspection

A previous article discussed the attributes of 50 SML MoPay stocks from which the 20 were sorted. You see below the list that passed the dividend "stress" test. These 20 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.

Click to enlarge

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, from the US list, Prospect Capital (NASDAQ:PSEC) reduced its dividend from $.111 To $.083 as of January 2015. Also, AGNC Investment (NASDAQ:AGNC) announced, July 27, a reduction of its $.20 monthly shareholder payout to $.18 as of September.

9 Of Safe 20 MoPay Dogs Are Headquartered in the USA. The Other 11 Are Canadian.

Nine are located in five US states. In order by yield they are: FL (2); NY (3), MD, VA, PA. MP (1 each).

The majority eleven are located in four Canadian provinces (by yield, they are AB, ON, MB, and BC).

What Business Sectors Paying Monthly Dividends Showed Up With "Safe" Equities in November?

Six of eleven Morningstar sectors were represented by twenty MoPay equities by yield posting cash margins greater than their announced annual dividends. These came from the real estate (10); financial services (3); consumer cyclical (2); healthcare (1); industrials (1); energy (3).

Three of the eleven sectors are represented in the top ten. These are real estate (6); financial services (3); consumer cyclical (1).

Dog Metrics Dug For Bargain MoPay "Safe" Stocks

Ten "Safest" top MoPay dividend stocks showing the biggest yields per November 18 YCharts data ranked themselves by yield as follows:

Actionable Conclusions: (1) Analysts Estimated 5 Lowest Priced of Ten Monthly Pay Dividend Dogs To Deliver 10.86% VS. (2) 11.40% Net Gains from All Ten by Come November, 2017

Click to enlarge

$5000 invested as $1k in each of the five lowest priced stocks in the "safe" ten MoPay kennel by yield were determined by analyst 1 year targets to deliver 4.79% LESS net gain than $5,000 invested as $.5k in all ten. The fifth lowest priced safe MoPay dog, Corus Entertainment (OTCPK:CJREF), was projected to deliver the best net gain of 21.68%.

Lowest priced five "safe" MoPay dividend dogs as of November 18 were: Global Net Lease (NYSE:GNL); Prospect Capital ; Gladstone Investment (NASDAQ:GAIN); Artis REIT (OTCPK:ARESF); Corus Entertainment, with prices ranging from $7.66 to $8.61.

Higher priced five Safe MoPay dogs for November 18 were: Independence Realty Trust (NYSEMKT:IRT); Orchid Island Capital (NYSE:ORC); Solar Senior Capital (NASDAQ:SUNS); AGNC Investment; Chatham Lodging (NYSE:CLDT), whose prices ranged from $8.77 to $19.22.

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. 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.

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 and this instablog to aid your safe investing. --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.

It's time to make investing fun again. 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; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance. Dog photo from: lazada.sg

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.