Actionable Conclusions (1-10): Analysts Forecast Top Ten U.S. MoPay Equities to Net 9% to 89.4% Gains To January 2019
Seven of the ten top yield MoPay stocks (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 yield strategy for this MoPay group as graded by analyst estimates for January proved 70% accurate.
Ten probable profit generating trades were illustrated by YCharts analytics:
Five Oaks Investment (OAKS) netted $894.36 based on a median target estimate from two analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 32% more than the market as a whole.
Capitala Finance (CPTA) was cast as netting $612.87 based on mean target price estimates from eight analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 1% less than to the market as a whole.
Harvest Capital Credit (HCAP) netted $256.23 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 35% less than the market as a whole.
Great Elm Capital (GECC) netted $249.14 based on the median of target price estimates from two analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 117% mofre than the market as a whole.
Stellus Capital Investment (SCM) netted $183.82 based on dividends alone plus annual price estimates from six analysts, less broker fees. The Beta number showed this estimate subject to volatility 43% less than the market as a whole.
Orchid Island Capital (ORC) netted $165.84 based on no target estimate from analysts, just dividends less broker fees. The Beta number showed this estimate subject to volatility 52% less than the market as a whole.
PennantPark Floating Rate (PFLT) netted $160.28, based on dividend, plus a median target price estimate from six analysts less broker fees. The Beta number showed this estimate subject to volatility 42% less than the market as a whole.
Pacific Coast Oil Trust (ROYT) netted $137.88, based on based on no target estimate from analysts, just dividends less broker fees. The Beta number showed this estimate subject to volatility 114% more than the market as a whole.
AGNC Investment (AGNC) netted $114.56 based on the median of target estimates from ten analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 87% under the market as a whole.
Whitestone (WSR) was forecast to net $90.03 based on a median target price estimate from seven analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 5% more than the market as a whole.
Average net gain in dividend and price was 28.65% on $1k invested in each of these ten MoPay dog stocks. This gain estimate was subject to average volatility 1% more than the market as a whole.
Actionable Conclusions (11): (Bear Alert) Analysts Found One MoPay Dividend Stock Losing 13.2% By January, 2019
The probable losing trade revealed by Y-Charts for 2018 was:
Prospect Capital (PSEC) projected an estimated loss of $132.70 based on dividend and a median target price estimate from five analysts including $20 of broker fees. The Beta number showed this estimate subject to volatility 9% 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".
January 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, January 3 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 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, former MoPay top ten regular by yield. Blue Bluerock Residential (BRG) announced in December it is retreating to quarterly dividend payments "in keeping with industry tradition." In August, September, October, November, December, and January 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 and shrinking with more over-the-counter trades available from Canadian firms.
"[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 January represented just three of the eleven Morningstar market sectors, with representative firms split 4 to 1 to 5 between the real estate, energy, and financial services sectors.
Top dog was one of the four
real estate representatives, Orchid Island Capital (ORC) , a stalwart in the MoPay kennel. Others placed third, sixth, and ten: Five Oaks Investment (OAKS) ; AGNC Investment (AGNC) , and Global Net Lease (GNL) . The energy sector representative, placed second, Pacific Coast Oil Trust (ROYT) .
Financial sector dogs filled in slots four, five, and seven though nine. They were, Capitala Finance (CPTA) ; Harvest Capital Credit (HCAP) ; American Capital (OTC:ACSF) ; Horizon Tech Finance (HRZN) , and Stellus Capital Investment (SCM) , to complete the January MoPay top ten 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 January 3 were compared with analyst mean target prices one year out. Ten top stocks displayed 1.5% to 76.32% price upsides for the coming year based on analyst 1 yr. targets.
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 Exchange Traded Funds, and Notes, by Yield
Eighty top monthly dividend paying (MoPay) Exchange Traded Funds and Notes listed below were culled from nearly 600 candidates. Yields greater than 11.5% calculated as of December 1 determined the top ten.
The top ten monthly paying dividend investment companies, funds, & notes showing the biggest yields for December by YChart & YahooFinance data featured nine exchange traded notes [ETNs] and one exchange traded fund [ETF].
Exchange traded notes captured the top eight positions and tenth:
Credit Suisse X-Links MP2xLvgAlrnMLP ETN (AMJL) ; Credit Suisse X-LinksMP2xLvgMortREIT ETN (REML) ; UBS ETRACS M Py 2xLvg MortgREIT ETN SerB (MRRL) ; UBS ETRACS Mthly Py 2xLvg Mortg REIT ETN (MORL) ; UBS ETRACS M Py 2xLvg US Sm Cp HiDiv ETN (SMHD) ; UBS ETRACS Mthly Py 2xLvg Closed-End ETN (CEFL) ; UBS ETRACS M Py 2xLvg Divers Hi Inc ETN (DVHL) ; UBS ETRACS M Py 2xLvg WF MLP Ex-Engy ETN (LMLP) ; UBS ETRACS M Py 2xLvg US HiDivLowVol ETN (HDLV) .
One ETF placed ninth: PowerShares KBW High Div Yld Fincl ETF (KBWD) . This completed the top ten Exchange Traded Funds and Notes list for January, 2018.
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.
Again this month, the 2018 articles continue to compare and contrast MoPay equity upside potential to high yield (and higher risk) buy and hold Exchange Traded Funds and Notes constituents.
Yield Metrics Revealed A Huge Gain From Five Lowest Priced Higher Yield US MoPay Equities
Ranked by yield, the results, verified by YCharts and YahooFinance, produced the following charts.
Actionable Conclusions: Analysts Estimated (15) 5 Lowest Priced of Top Ten Highest Yield MoPay Dividend Stocks Would Produce 37.99% VS. (16) 25.73% Net Gains from All Ten by January, 2019
$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 47.69% more net gain than $5,000 invested as $.5k in all ten. The second lowest priced MoPay dividend dog, Five Oaks Investment (OAKS), was predicted to deliver the best net gain of 89.44%.
Lowest priced five MoPay dividend dogs estimated January 3 were: Pacific Coast Oil Trust (ROYT); Five Oaks Investment (OAKS); Capitala Finance (CPTA); Orchid Island Capital (ORC); American Capital (OTC:ACSF), with prices ranging from $2.11 to $10.70
Higher priced five MoPay dividend dogs estimated January 3 were: Harvest Capital Credit (HCAP); Horizon Technology Finance (HRZN); Stellus Capital Investment (SCM); AGNC Investment (AGNC); Global Net Lease (GNL), whose prices ranged from $11.15 to $20.46.
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.
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: snoozerpetproducts.com
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Make investing pay again. Catch your underdog on Facebook!
At 2 PM (ET) every NYSE trading day on Facebook/Dividend Dog Catcher, Fredrik Arnold does a quick live video summary of one of five stocks of the week contending for a slot in his Safari To Sweet Success portfolio.
Just go to Facebook/Dividend Dog Catcher at 2 PM (ET) tradedays and watch, comment and share, Remember: Root for the Underdog.
Disclosure: I am/we are long GHIFF, MFCSF. 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 covers one or more microcap stocks. Please be aware of the risks associated with these stocks.