Broker Favored U.S. MoPay Dividend Dogs Are Capitala, In Equities; Credit Suisse And UBS ETRACS Funds, For November

Summary

• November's U.S. Exchange monthly-paid dividends, upsides, and net-gains: 1. Stocks by yield (59); 2. Stocks by price-upside (30); 3. Closed-End Investment Companies, Exchange-Traded Funds & Notes (CEICs/ETFs/ETNs) by yield (80).
• U.S. MoPay equities show growth. Canadian MoPays for November have a separate write-up. CEICs/ETFs/ETNs are included here limited to yields over 5.2%.
• Items: 1. Top MoPay stock gains; 2. Overall best MoPay gainers; 3. Funds vs.Equities; 4. Fund risks/rewards. All per prices as of 11/2/17.
• Analyst annual targets discovered investing $5k in the lowest priced five of ten top yield MoPay US exchange equities produced 35.16% more gains than $5k put in all ten.

Actionable Conclusions (1-10): Analysts Forecast Top Ten U.S. MoPay Dog Equities to Net 10.9% to 74.5% Gains To November 2018

Six of the ten top yield 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 for November proved 60% accurate.

Ten probable profit generating trades were illustrated by YCharts analytics:

Capitala Finance (CPTA) was cast as netting $744.70 based on mean target price estimates from eight analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 9% more than to the market as a whole.

JMP Group (JMP) netted $346.30 based on a mean target estimate from three analysts, plus estimated annual dividends less broker fees. The Beta number showed this estimate subject to volatility 19% less than the market as a whole.

American Capital (OTC:ACSF) netted $320.84 based on dividends alone, less broker fees, with no annual price estimates from any analysts. The Beta number showed this estimate subject to volatility 37% more than the market as a whole.

Prospect Capital (PSEC) netted $233.60 based on the median of target estimates from five analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 12% under the market as a whole.

Bluerock Residential (BRG) netted $228.78 based on a median target estimate from seven analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 30% less than the market as a whole.

Student Transportation (STB) netted $209.21 based on the median of target price estimates from six analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 22% less than the market as a whole.

Orchid Island Capital (ORC) netted $165.79 based on a target estimate from two analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 49% less than the market as a whole.

PennantPark Floating Rate (PFLT) netted $132.57, based on dividend, plus a median target price estimate from six analysts less broker fees. The Beta number showed this estimate subject to volatility 43% less than the market as a whole.

Gladstone Commercial (GOOD) was forecast to net $111.32 based on a median target price estimate from four analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 14% less than the market as a whole.

AGNC Investment (AGNC) netted $108.97, based on dividend plus mean target price estimates from nine analysts less broker fees. The Beta number showed this estimate subject to volatility 80% less than the market as a whole.

Average net gain in dividend and price was 26% on $1k invested in each of these ten MoPay dog stocks. This gain estimate was subject to average volatility 22% less than the market as a whole.

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, best called "underdogs".

November MoPay Dividend Dog Data

Three buy and hold lists produced numerous actionable conclusions and several more un-numbered results. To draw these conclusions and results, November 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 CEICs/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. Recently three prominent MoPay firms declared dividend cuttings between December 2016 and March 2017.

First, Five Oaks Investment Corp (OAKS) declared a cut from $.06 to $.05 per month December 27.

Second, February 9, Fifth Street Finance Corporation (FSC) declared a decrease from $0.06 to $0.02 in March, and thereafter paying $0.02 Quarterly. Simultaneously, sister firm, Fifth Street Floating Rate Corp. (FSFR) declared a cut from $0.075 per month dow to $0.04 for March and thereafter paying $0.19 quarterly beginning in June, both to be managed by OakTree Funds

In August and September Tahoe Resources (TAHO) skipped its monthly payouts.

Top yield dog for October, 2016, Orchid Island Capital (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." The U.S. MoPay segment is volatile but expanding with more over-the-counter trades available from Canadian firms.

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

List One US Monthly Pay Dividend Equities by Yield

Top ten of these US exchange listed monthly pay dividend equities showing the best yields into November represented just three of the eleven Morningstar market sectors, with representative firms split 3 to 6 to 1 between the real estate, financial services, and energy sectors.

Top dog for November was one of the three

real estate representatives, Orchid Island Capital (ORC) [1], a stalwart in the MoPay kennel. Others placed sixth, and ninth; AGNC Investment (AGNC) [6], and Bluerock Residential (BRG) [9].

Financial sector dogs filled in slots two, three, seven, eight, and ten. They were, Prospect Capital Corporation (PSEC) [2]; Capitala Finance (CPTA) [3]; Horizon Tech Finance (HRZN) [5]; American Capital (OTC:ACSF) [7]; Canoe EIT Income Fund (OTC:ENDTF) [8]; Stellus Capital Investment (SCM) [10].

Energy sector dog, San Juan Basin Royalty Trust (SJT) [4], completed the November MoPay top ten dog list by yield.

List Two: Monthly Pay Dividend Stocks by Price Upside

The following results from YCharts for MoPay dividend stocks as of market closing price November 2 were compared with analyst mean target prices one year out. Ten top stocks displayed 3.4% to 64% price upsides for the next year based on analyst 1 yr. targets.

Four stocks of ten (highlighed) on this price upside list were members of the top ten list by yield. Performers by yield placed first, third, fifth, and sixth on this upside list: Capitala Finance (CPTA) [1]; American Capital (OTC:ACSF) [3]; Bluerock Residential (BRG) [5]; Prospect Capital (PSEC) [6].

Six firms outside the top ten by yield placed elsewhere by price upsides: JMP Group (JMP) [2]; Student Transportation (STB) [4]; PennantPark Floating Rate Stellus Capital Inv (SCM) [6]; Gladstone Commercial (GOOD) [8]; Independence Realty Trust (IRT) [9]; ARMOUR Residential REIT (ARR) [10].

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

Those ten MoPay stocks showing the highest upside price potential into 2018 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 Investment Companies, 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 600 candidates. Yields greater than 5.2% calculated as of November 2 determined the top ten.

The top ten monthly paying dividend investment companies, funds, & notes showing the biggest yields for October by YChart & YahooFinance data featured six exchange traded notes [ETNs], and four closed-end investment companies [CEICs].

Exchange traded notes captured the top five positions and seventh, also: Credit Suisse X-LinksMP2xLvgMortREIT ETN (REML) [1]; UBS ETRACS Mthly Py 2xLvg Mortg REIT ETN (MORL) [2]; UBS ETRACS M Py 2xLvg US Sm Cp HiDiv ETN (SMHD) [3]; UBS ETRACS Mthly Py 2xLvg Closed-End ETN (CEFL) [4]; UBS ETRACS M Py 2xLvg Divers Hi Inc ETN (DVHL) [5].

The remaining ETN showed up in seventh place, UBS ETRACS M Py 2xLvg WF MLP Ex-Engy ETN (LMLP) [7].

Four CEICs placed sixth and eighth through tenth: PIMCO Dynamic Income (PDI) [6]; Stone Harbor Emerging Mkts Income (EDF) [8]; PCM Fund (PCM) [9]; PIMCO Dynamic Credit and Mortgage (PCI) [10]. This completed the top ten Closed End Investment Companies, Exchange Traded Funds and Notes list for November, 2017.

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 December.

In January, February, March, April, May, June, July, August, September, October, and again this month, the 2017 articles continue to compare and contrast MoPay equity upside potential to high yield (and higher risk) buy and hold Closed End Investment Companies, as well as Exchange Traded Funds and Notes constituents.

Actionable Conclusions: Wall St. Analysts Estimated (11) A 5.48% 1 yr. Average Upside and (12) 13.49% Net Gain For Top 30 November MoPay Stocks

Top dogs on the U.S. MoPay stock list were graphed above to compare relative strengths by dividend and price as of November 2, 2017 with those projected by analyst mean price target estimates to the same date in 2018.

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 applied to 2017.

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 2018 data points in blue for dividend and green for price. One year target prices from single analysts were not applied (n/a).

Analysts projected a 4.5% lower dividend from $10K invested as $1k in the top ten November MoPay dogs while aggregate single share price was projected to increase by 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 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.

Dog Metrics Dug Out Nice Gains From Five Lowest Priced High Yield US MoPay Equities

Ten monthly pay stock equities were ranked by yield. The results, verified by YCharts and YahooFinance, produced the following charts.

Actionable Conclusions: Analysts Estimated (13) 5 Lowest Priced of Top Ten Highest Yield MoPay Dividend Stocks Would Produce 26.5% VS. (14) 21.57% Net Gains from All Ten by November, 2018

$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 22.97% more net gain than $5,000 invested as $.5k in all ten. The third lowest priced MoPay dividend dog, Capitala Finance (CPTA), was predicted to deliver the best net gain of 74.47%.

Lowest priced five MoPay dividend dogs estimated November 2 were: Prospect Capital (PSEC); San Juan Basin Royalty Trust (SJT); Capitala Finance (CPTA); Canoe EIT Income Fund (OTCPK:ENDTF); Orchid Island Capital (ORC), with prices ranging from $5.56 to $9.85

Higher priced five MoPay dividend dogs estimated November 2 were: American Capital (OTC:ACSF); Horizon Technology Finance (HRZN); Bluerock Residential (BRG);Stellus Capital Investment (SCM); AGNC Investment (AGNC), whose prices ranged from $10.75 to $19.85.

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.

See my instablog for specific instructions about how to best apply the dividend dog data featured in this article, this glossary instablog to interpret my abbreviated headings, 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! Find them among the now 52 Dogs of the Week (DOTW)I or among 52 DOTWII now accumulating on The Dividend Dog Catcher premium site. A Dogs of the Week III (DC Safari to Success) portfolio launched September 8. Click here to subscribe or get more information.

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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; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance. Dog Photo: flickr.com

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.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.