Monthly Paid Dividend Dog December Trifecta Lists

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Includes: AGNC, ARR, CEFL, CJREF, CPTA, DVHL, EDF, EDI, GLAD, GLDI, GORO, HCAP, HCFT, HGT, IRT, MORL, MRRL, MTR, OCSL, ORC, PHK, PSEC, SCM, SLVO, SMHD, UDF, VNR, WHLR, WSR
by: Fredrik Arnold

Summary

December Monthly Pay (MoPay) lists: 1. Stocks by yield (10/75); 2. Stocks by price upside (10/30); 3. Closed End & Exchange Traded Funds & Notes (CEFs/ETFs/ETN) by yield (10/80).

December found new MoPay members. Canadian MoPays have a separate article. CEFs/ETFs/ETNs are all combined from larger lists. Monthly dividend stock collecting grows despite excluding stocks priced below $1.

Items: 1. MoPay vs. Dow; 2. Top MoPay stock gains; 3. Overall best MoPay gainers; 4. Funds vs. Equities; 5. Fund risks/rewards.

Investing $5k in the lowest priced five of ten top yield MoPay equities earned 17.43% more returns than $5k put in all ten based on analyst annual targets.

Annual analyst accuracy from the week of 12/4/15 showed a 20% average (again) for analyst price predictions one year out. Two of the ten firms are no longer listed.

The Dividend Dogs Rule

Stocks earned the "dog" moniker by 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." More specifically, these are, in fact, "underdogs".

December MoPay Dividend Dog Data

Three buy and hold lists produced ten actionable conclusions and several more un-numbered. To draw these conclusions, December 2 closing prices and estimated annual dividends were referenced. Monthly pay (MoPay) equity (1) yield and (2) upside potential lists were compared and contrasted against (3) a high yield (and higher risk) MoPay CEFs/ETFs/ETNs list.

Monthly Pay Dividend Qualities

Quarterly, Semi-Annual and Annual dividend investors anxiously await announcements from a firm, fund, or brokerage to learn if their next dividend will be higher, lower, or paid at all. Monthly pay stocks, funds, trusts, and partnerships inform the holder every four and one third weeks by check and/or statement. If the entity reduces or suspends a payment, the holder can sell out of the investment immediately to cut future losses.

This advantage has been curtailed when companies suddenly cut monthly dividends to save cash. Some 2016 examples were: Gold Resource Corp. (NYSEMKT:GORO) cut dividends 80% from $.01 to $.002 per month January 6, 2016 then to $.0016 February 6; also Hugoton Royalty Trust (NYSE:HGT) declared no cash dividends January 19 and February 19; NASDAQ suspended trading of United Development Funding (NASDAQ:UDF) February 18, 2016 (after an FBI raid of UDF offices). In April, Vanguard Resources (NYSE:VNR) and Full Circle Capital Corporation (FULL) suspended their monthly payouts, while,newcomer to this list, Black Diamond Group (BDI.TO) cut its payout in half. July 27 venerable AGNC Investments (NASDAQ:AGNC) announced a reduction to its MoPay dividend from $.20 to $.18. Top yield dog for October, Orchid Island Capital (NYSE:ORC) released this cautionary note with its monthly dividend announcements, "The Company has not established a minimum distribution payment level and is not assured of its ability to make distributions to stockholders in the future." Thus , the segment is volatile.

Readers said:

"[A] problem with this analysis is you are comparing companies of VERY different varieties. REITs pay no taxes and their distributions are classified as ordinary income and thus not subject to the 15% or 20% tax rate. MLPs also pay little no taxes at the corporate level, but instead have "distributions"... Comparing REITs, MLPs and regular corporations thus requires a financial analysis...not include[d]." --arbtrdr

"[Y]ou list a few issues here whose distributions are rife with RETURN OF CAPTAL [ROC] at its most destructive form, funds that pay you back your own money each and every month in their distributions with no regard to what they truly earn...- these should not be included in any list containing the word "dividend". --NYer1

"I can enter or exit a position and still reap dividends for at least 2/3s of the quarter. They also smooth the income stream so I have cash at any given time to make a purchase at dips." --Ed Invests

"Dividend dog investing really works well for income in my experience. I have been seriously invested in dogs the more unloved the better." --Urbannek

"...Nice to see another contrarian strategy. This one seems to take a lot of attention in comparison [to Dow dogs], but I like the monthly rebalance." --colodude

"At this level of risk, I'm only buying monthly dividend payers. Dividend if cut only [sits] for a month and not a quarter." --Sinjjn Smythe

"...love those monthly payers." --Hardog

"Some of us are comfortable investing in Dog stocks because we feel the reward is worth the risk. As long as [my sin stock] continues to pay and raise the dividend like it has for 16 years now, it will have a spot in my portfolio." --Miz Magic DiviDogs

"One thing to point out: These stocks are not buy & hold. If you buy any of these stocks, set a price where you will sell... trailing stops work real good & with mopays you can get out & get back in without losing a whole quarter of dividends..." --drking

"I don't know how many times I've kicked myself for not investing in a beaten down group only to find it spring back up months later." --User 13258352

Dividend Dog Data

For this article seventy-five dividend equities plus eighty funds, trusts and partnership shares were culled from nearly 900 entities (listed here) paying monthly returns. All were ranked as of December 2, 2016 using two key dog performance metrics: (1) stock price; (2) annual dividend. Dividing the annual dividend by the price declared the percentage yield by which each dividend dog stock was ranked.

List One: Monthly Pay Dividend Equities by Yield

Top ten of these monthly pay dividend equities showing the best yields into December represented just two of the eleven Morningstar market sectors, real estate, and financial services. Top dog for December was one of five real estate pups, Orchid Island Capital (ORC) [1].

The remaining four YChart data revealed from the real estate sector placed second, fourth, seventh, and eighth: Five Oaks Investment Corp. (OAKS) [2]; Wheeler Real Estate IT (NASDAQ:WHLR)[4]; ARMOUR Residential REIT (NYSE:ARR) [7]; AGNC Investment [8].

Financial sector stocks filled the remaining five slots, third, fifth, sixth, ninth, and tenth, to complete the December MoPay top ten dog list by yield: Fifth Street Finance (FSC) [3]; Capitala Finance (NASDAQ:CPTA) [5]; Prospect Capital Corporation (NASDAQ:PSEC) [6]; Mesa Royalty (NYSE:MTR) [9]; Stellus Capital Investment Corporation (NYSE:SCM) [10].

List Two: Monthly Pay Dividend Stocks by Price Upside

Results from YCharts for monthly paying (MoPay) dividend stocks as of market closing price December 2 were compared with analyst mean target prices one year out as reported by YahooFinance. Ten top stocks displayed 7.96% to 64.2% price upsides for the coming year based on analyst 1 yr. targets.

Four stocks of ten on the price upside list were not on the top ten list by yield. One of those upside performers from outside the top ten by yield was a lone consumer cyclical pushed onto the upside list in first place, Corus Entertainment (OTCPK:CJREF) [1]. Two were from the real estate sector in fifth and sixth place, Whitestone (NYSEMKT:WSR) [5], and Independence Realty Trust (NYSEMKT:IRT) [6]. An outsider from financial placed ninth, by price upsides, Harvest Capital Credit (NASDAQ:HCAP) [9].

Top ten real estate firms placed second, third, and eighth: Wheeler Real Estate IT [2]; Five Oaks Investment Corp. [3]; AGNC Investment [8]. Three financial yield top ten, by analyst upside estimates, placed fourth, seventh, and tenth: Capitala Finance [4]; Fifth Street Finance [7]; Stellus Capital Investment [10].

Price upside, of course, is defined as the discrepancy between the current price and analyst target one-year median price for each stock.

Those ten MoPay stocks showing the highest upside price potential into 2017 were gleaned from 30 selected by yield. Three to nine analysts have historically provided the most accurate mean target price estimates.

List Three: Monthly Pay Dividend Closed End Funds, Exchange Traded Funds and Notes by Yield

Eighty top monthly dividend paying (MoPay) Closed End Funds, Exchange Traded Funds and Notes listed below were culled from nearly 1200 candidates by yields calculated as of December 2 to determine the top ten.

Ten monthly dividend funds, trusts & partnerships showing the biggest yields for December by YChart & YahooFinance data featured seven exchange traded notes [ETNs], and three closed-end funds [CEFs].

Exchange traded notes captured the first through fifth positions: UBS ETRACS M Py 2xLvg MortgREIT ETN SerB (NYSEARCA:MRRL) [1]; UBS E-TRACS Mthly Pay 2x Mortg REIT ETN (NYSEARCA:MORL) [2]; Credit Suisse X-Links Silver CovCall ETN (NASDAQ:SLVO) [3]; UBS E-TRACS Mthly Pay 2xLvg Closed-End ETN (NYSEARCA:CEFL) [4]; Credit Suisse X-Links Gold CovCall ETN (NASDAQ:GLDI) [5]. Two more ETNs placed seventh and eighth: UBS E-TRACS Mthly Pay 2x Divs Hi Inc ETN (NYSEARCA:DVHL) [7]; UBS ETRACS M Py 2xLvg US Sm Cp HiDiv ETN (NYSEARCA:SMHD) [8].

The three CEFs placed sixth, ninth, and tenth: Stone Harbor Emerging Mkts Income Fund (NYSE:EDF) [6]; Stone Harbor Emg Mkts Total Income Fund (NYSE:EDI) [9]; PIMCO High Income Fund (NYSE:PHK) [10]. These rounded out the top ten Closed End Funds, Exchange Traded Funds and Notes list in December.

Background and Actionable Conclusions

Since June 2012 reader suggestions to include funds, trusts, and partnerships, a list of MoPay equities to buy and hold in September 2012 resulted from those reader suggestions supplemented with a high yield collection from here. That list was supplemented by an upside potential article in October and a upside vs. buy & hold in November. Another list factored December 2012 reader comments.

In January, February, March, April, May, June, July, August, September, October, November, and December 2013 readers contributed.

Reader suggestions continued in 2014 following the January, February, March, April, May, June, July, August, September, October, November, and December articles.

2015 continued with readers contributing in January, February, March, April, May, June, July, August, September, October, November, and December.

The 2016 articles in January, February, March, April, May, June, July, August, September, October, November, and again this month continue to compare and contrast MoPay stock upside potential against high yield (and higher risk) buy and hold Closed End Funds, and Exchange Traded Funds and Notes constituents.

MoPay Stock Dividend vs. Price Compared to Dow

Ten top MoPay dividend dog stocks by yield were graphed below as of December 2, 2016 and compared to those of the Dow. Annual dividend history from $1000 invested in each of the ten highest yielding stocks and their aggregate single share price created the data points shown in green for price and blue for dividends.

Actionable Conclusions: (1) MoPay, and (2) Dow Dogs Charged Into December

Ten top MoPay dogs dropped in dividend as price popped up after November to set the charge. Aggregate dividend from $10k invested as $1k in each of the top ten stocks fell 5.6% while total single share price of those ten inclined 54% for the period.

Meanwhile, Dow dogs charged further toward a higher level of overbought. The Dow 10 showed slightly lower annual dividend from $10k invested as $1K in each of the top ten, down 2.2% after November, while aggregate single share price increased 8.6%.

As a result, the Dow dogs overbought condition (where aggregate single share price of the ten exceeded projected annual dividend from $10k invested as $1k in each) inclined to a higher level.

The Overbought Dow

As of January 8, 2016, the overbought gap was $224 or 56%. In February it grew to $246 or 59%. March put the gap up to $293 or 73%. April made triple digits rising to $400 or 104%. May brought the gap down to $350 or 91% and June put it at $342 or 90%.

July put the gap at $401 or 109%. August found the overbought condition measured at $423 or 116%. September grew that gap again to $465 or 126%. October found the gap settled at $389 or 105%. November recorded a $338 or 89% mere double digit gap between high price and low dividends. December put the number s back in triple digits at $408 or $110%.

The Dow Dogs remain overbought and overpriced. Meaning, these are low risk and low opportunity Dow dogs. The Dow top ten average price per dollar of annual dividend was $27.59 December 2.

In marked contrast to the Dow, MoPay Stock dividend dog top ten average price per dollar of annual dividend was a low $7.90 as of October 28. That's nearly 3.5 times less than the price of a dollar of Dow annual dividends.

To quantify top dog rankings, analyst mean price target estimates provide a "market sentiment" gauge of upside potential. Added to the simple high yield "dog" metric, analyst mean price target estimates provided another tool to dig out bargains.

Actionable Conclusion (3): Wall St. Wizards Envisioned A 18.65% 1 yr. Average Net Gain For Top 30 December MoPay Stocks

Top dogs on the MoPay stock list were graphed above to compare relative strengths by dividend and price as of December 2, 2016 with those projected by analyst mean price target estimates to the same date in 2017.

Historic prices and actual dividends paid from $10,000 invested as $1K in each of the ten highest yielding stocks and the aggregate single share prices of those ten stocks created the data points for 2016. Projections based on estimated increases in dividend amounts from $1000 invested in the ten highest yielding stocks and aggregate one year analyst mean target prices as reported by Yahoo Finance created the 2017 data points in blue for dividend and green for price. Note: one year target prices from one analyst were not applied (n/a).

Analysts projected an 8% lower dividend from $10K invested as $1k in the top ten December MoPay dogs while aggregate single share price was projected to increase by 6.8% 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 above chart. Three to nine analysts were considered optimal for a valid projection 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. 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 (6): Analysts Cast Top Ten MoPay Dog Stocks to Net 17.63% to 71.58% Gains To December, 2017

Six of the ten top dividend MoPay dogs (shaded in the chart above) were verified as being among the Top ten gainers for the coming year based on analyst 1 year target prices. Thus the dog strategy for this MoPay group as graded by analyst estimates in December proved 60% accurate.

Ten probable profit generating trades were illustrated by YCharts analytics for 2017:

Corus Entertainment netted $715.79 based on a mean target price estimates from five analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 36% less than to the market as a whole.

Wheeler Real Estate IT netted $652.84 based on estimates from two analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 26% more than the market as a whole.

Five Oaks Investment Corp. netted $479.03 based on estimates from two analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 23% more than the market as a whole.

Capitala Finance netted $385.27 based on mean target price estimates from ten analysts plus dividends less broker fees. A Beta number was not available for CPTA.

Whitestone netted $281.44 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 5% less than to the market as a whole.

Independence Realty Trust netted $257.71, based on dividend plus mean target 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.

Fifth Street Finance netted $245.54 based on dividends plus median target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 93% less than the market as a whole.

AGNC Investment netted $218.68 based on median target estimates from thirteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 83% less than the market as a whole.

Orchid Island Capital netted $190.03, based entirely on dividend, based on a median target price estimate from two analysts less broker fees. The Beta number showed this estimate subject to volatility 40% less than the market as a whole.

Harvest Capital Credit netted $176.32 based on a mean target price estimate from two analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 26% less than the market as a whole.

Average net gain in dividend and price was 36% on $1k invested in each of these ten MoPay dog stocks. This gain estimate was subject to average volatility 24% less than the market as a whole.

Top Ten Dividend & Price Results For Closed End Funds, Exchange Traded Funds and Notes by Yield vs. MoPay Equities

Below relative strengths for the top ten MoPay FTP Dogs by yield was graphed as of December 2, 2016 and compared to those of the ten top stocks. Twelve periods of projected annual dividend history from $10,000 invested as $1k in each of the ten highest yielding equities and the total single share prices of those ten equities created the data points for each period (shown in blue for dividend and green for price).

Actionable Conclusion (7): MoPay Top Ten DiviDog Closed End Funds, Exchange Traded Funds and Notes Retreated Deeper Into December

The chart above shows MoPay Closed End Funds, and Exchange Traded Funds and Notes increased in dividend as price fell to continue a hasty retreat after October. Projected dividend from $10k invested as $1k in each of the top ten funds and trusts increased 6.5% while aggregate single share price of the top ten over the same period dropped 5.6%.

As of December 2, the top Closed End Funds, and Exchange Traded Funds and Notes dogs showed $406 or 31.4% more dividend at a $37 or 35% higher aggregate single share price than the MoPay equity top ten.

In further contrast to the Dow, Ten top MoPay Closed End Funds, and Exchange Traded Funds and Notes dividend dog average price per dollar of annual dividend was the lowest of the three at $6.69 as of September 30. That's more than 4 times less than a Dow dollar of dividend.

Actionable Conclusion (8): Buy and Hold Monthly Dividend Paying Closed End Funds, Exchange Traded Funds and Notes, If You Dare and the Deviation from NAV is OK.

Stock analysts don't hazard guesses as to when or how much Closed End Funds, and Exchange Traded Funds and Notes prices will rise or fall. They are paid to gauge individual stocks, and a few funds and partnerships. Hence this monthly pay dog diligence only revealed a list of Funds and Note to buy and hold based on yield, if you choose to go there. As a consolation, the lists below in the Footnotes section show deviations up or down from net asset value for the suspicious Closed End Funds, and Exchange Traded Funds and Notes.

How Does The Lowest Loser MoPay Stock Compare to The Highest Yield Fund In Price History In the Most Recent Quarter?

Price performance of UBS ETRACS M Py 2xLvg MortgREIT ETN SerB versus Gladstone Capital (NASDAQ:GLAD), the two extreme ends of Monthly Pay yield results, show a positive path for the red-lined "low dog" GLAD and a lesser positive track for the highest yield fund, MRRL in blue in the most recent 6 month period (June 2 to December 2).

This comparison casts doubt on the relative merits of analyst forecasts relative to recent real price moves.

Dog Metrics Revealed Better Returns From Five Lowest Priced Highest Yield Monthly Pay Stocks

Ten monthly pay stock equities were culled by yield. These results, verified by YCharts and YahooFinance, produced the following rankings.

Actionable Conclusions: (9) Analysts Estimate 5 Lowest Priced of Top Ten Highest Yield MoPay Dividend Stocks Will Produce 31.78% VS. (10) 27.06% Net Gains from All Ten by December, 2017

$5000 invested as $1k in each of the five Lowest priced stocks of the top ten MoPay dividend dog kennel by yield were predicted by analyst 1 year targets to deliver 17.43% more net gain than $5,000 invested as $.5k in all ten. The very lowest priced MoPay dividend dog, Wheeler Real Estate Investment Trust , was predicted to deliver the best net gain of 65.28%.

Lowest priced five MoPay dividend dogs estimated as of December 2 were: Wheeler Real Estate Investment Trust; Five Oaks Investment; Fifth Street Finance; Prospect Capital; Mesa Royalty Trust , with prices ranging from $1.62 to $10.50.

Higher priced five MoPay dividend dogs estimated December 2 were: Orchid Island Capital Inc; Stellus Capital Investment; Capitala Finance; AGNC Investment; ARMOUR Residential REIT, whose prices ranged from $10.57 to $21.85.

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 same technique, you now see, can also be used to find some rewarding dogs in the MoPay Stock kennel.

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 MoPay stocks from this article in December, 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.

The "basic method" top ten annual analyst accuracy score for early October 2015 was eight price losses, against two gains over a one year period. The one year buy and hold strategy proved just 20% positive for this MoPay collection of ten. For reference, no low price MoPay Dogs were gainers. Two higher priced dogs gained.

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

Gains/declines as reported do not factor-in any tax problems resulting from dividend, profit, or return of capital distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.

Stocks listed above were suggested only as decent starting points for your MoPay dividend stock purchase or sale research process. These were not recommendations.

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

It's about 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 from the 52 Dogs of the Week, 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!

Root for the Underdog.

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: petlynxinfostream.blogspot.com reestockphotos.name

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