33 'Safe' All-Cap MoPay Dividend Equities Scorn The Ides Of March

by: Fredrik Arnold


69 All Cap equities pay monthly dividends (MoPay). Of 69, nearly half scored "safe" because their free cash flow yield as of March 1 (Beware) exceeded dividend yield.

Top 10 "safe" March All-Cap MoPay Dog annual yields ranged 9.57% to 15.89% from GECC; ACSF; BTBIF; GLAD; HCAP; HRZN; PSEC; AGNC; CPTA; ORC. Their cash flow yields ranged 11.63%-38.51%.

Besides safety margin, "Safe" MoPay dogs also reported payout ratios (lower is better), total annual returns, and dividend growth, as of 3/1/17 to further distinguish their strength.

Broker targets predicted lowest priced five of ten top yield "safe" MoPay dividend dogs produced 15.99% LESS gains from $5k invested than did a $5k investment 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 dividend yielding stocks in any collection became known as "dogs." More precisely, these are, in fact, best termed, "underdogs", even in March.

33 of 69 March All-Cap MoPay Dividend Dogs Show Cash Margins Greater Than Their Dividends Payable

Periodic Safety Inspection

A previous article discussed the attributes of 69 SML MoPay stocks from which the 33 were sorted. You see below the list that passed the dividend "stress" test. These 33 all-cap 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 bold face column labeled "SafeMargin".

Financial guarantees however are easily over-ruled by a cranky board of directors or company policy cancelling or varying the payout of dividends to shareholders. For example, from the US list, Prospect Capital (PSEC) reduced its dividend from $.111 To $.083 as of January 2015. Also, American Capital Agency (AGNC) announced July 27 a reduction of its $.20 monthly shareholder payout to $.18 as of September. A more recent example is dividend reductions by Capitala Finance (CPTA) from $0.207 per month in December 2015 to $0.157 in January 2016 and a further reduction to $0.13 per month in October 2016. Lower down the 27 list, Fifth Street Finance (FSC), just announced the trimming of i's $0.06 monthly dividend per share to $0.02 as of March, 2017 and descend to a $0.02 Quarterly dividend in June 2017 but increase that quarterly payment to $0.125 in September. Allied firm, Fifth Street Senior Floating Rate Capital (FSFR) has announced its intention to depart the MoPay convention in March.

As Business Development Companies, Capitala and Fifth Street dividend payouts are tied to profits. Finally, on the "unsafe" list, Wheeler Realty Investment Trust (WHLR) has announced an 8/1 reverse split culminating in retreating to a Q-Pay mode for their shareholder disbursements come April.

What Business Sectors Paying Monthly Dividends Showed Up As Represented By "Safe" Equities For March?

Six of eleven Morningstar sectors were represented by the thirty-three with "safe" March cash margins greater than their announced annual dividends. These came from: real estate (14); financial services (12) energy (4); healthcare (1); industrials (1); consumer cyclical (1) .

Only two of the eleven sectors are represented in the top ten. Those were the first two named on the list above.

Dog Metrics Dug For Bargain MoPay "Safe" Stocks

Ten "Safe" top All-Cap MoPay dividend stocks March 1 YCharts data ranked themselves by yield as follows:

Actionable Conclusions: (1) Analysts Estimated 5 Lowest Priced of Ten Monthly Pay Dividend Dogs To Deliver 6.18% VS. (2) 7.35% Net Gains from All Ten By March, 2018

$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 15.99% LESS net gain than $5,000 invested as $.5k in all ten. The fourth lowest priced "safe "MoPay dog, Orchid Island Capital (ORC), was projected to deliver the best net gain of 29.67%.

Lowest priced five "safe" MoPay dividend dogs as of March 1 were: BTB REIT (OTC:BTBIF); Gladstone Capital (GLAD); Prospect Capital (PSEC); Orchid Island Capital; Great Elm Capital (GECC), with prices ranging from $3.52 to $11.27.

Higher priced five "safe" all- cap MoPay dogs for March 1 were: Horizon Tech Finance (HRZN); American Capital (ACSF); Capitala Finance; Harvest Capital Credit (HCAP); AGNC Investment (AGNC), whose prices ranged from $11.40 to $19.63.

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! Find them among the now 52 Dogs of the Week (DOTW)I plus 29 DOTWII 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 and runner-up underdog from the 52 Dogs of the Week (DOTW) I portfolio, plus a glimpse at the top dogs in DOTW II, 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 www.ycharts. com; www.finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance. Presidential Dog photo from: logan.ws

Disclosure: I am/we are long CSCO, VZ, PFE, GE, FSC.

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.

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