- May forecasts for U.S. monthly-paid dividends, upsides, and net-gains: 1. Stocks/yield (94); 2. Stocks/price-upside (30); 3. Closed-End Investment Companies, Exchange-Traded Funds & Notes (CEICs/ETFs/ETNs)/yield (80).
- U.S. MoPay equities continue to shrink in quantity. Expanded Canadian MoPays for May have a separate write-up. CEICs/ETFs/ETNs are combined and limited to yields over 7.43%.
- Items: 1. Top MoPay stock gains; 2. Overall best MoPay gainers; 3. Funds vs.Equities; 4. Fund risks/rewards. All per prices as of 5/1/18.
- Analyst annual targets revealed that investing $5k in the lowest priced five of ten top yield MoPay US exchange equities produced 6.9% more gains than $5k invested in all ten.
Actionable Conclusions (1-10): Analysts Forecast Top Ten MoPay Equities to Net 17% to 83% Gains By May 2019
Four 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-based strategy for this MoPay group as graded by analyst estimates for May proved 40% accurate.
Projections based on estimated dividend amounts from $1000 invested in the ten highest yielding stocks and aggregate one year analyst mean target prices as reported by YCharts created the data points. Note: one year target prices from one analyst were not applied (n/a).Ten probable profit-generating trades to 2019 were:
Five Oaks Investment (OAKS) netted $831.59 based on the median of target estimates from two analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 6% more than the market as a whole.
Global Net Lease (GNL) netted $460.53 based on a target price estimate from two analysts plus dividends less broker fees. No Beta number was available for GNL.
Capitala Finance (CPTA) was forecast to net $451.65 based on mean target price estimates from seven analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 9% less than the market as a whole.
Great Elm Capital (GECC) netted $377.86, based on dividend, plus a median target price estimate from three analysts less broker fees. The Beta number showed this estimate subject to volatility 112% more than the market as a whole.
American Capital (OTC:ACSF) netted $271.43 based on no target price estimates from two analysts, just dividends less broker fees. The Beta number showed this estimate subject to volatility 9% more than the market as a whole.
Harvest Capital Credit (HCAP) netted $232.66, based on dividend plus mean target price estimates from three analysts less broker fees. The Beta number showed this estimate subject to volatility 27% less than the market as a whole.
Gladstone Commercial (GOOD) netted $222.87 based on a median target estimate from five analysts combined with projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 32% less than the market as a whole.
Whitestone (WSR) netted $210.91 based on dividends plus the median of annual price estimates from five analysts less broker fees. The Beta number showed this estimate subject to volatility 2% more than the market as a whole.
Stellus Capital Investment (SCM) netted 189.42 based on a mean target estimate from five analysts, plus estimated annual dividends less broker fees. The Beta number showed this estimate subject to volatility 50% less than the market as a whole.
Enduro Royalty Trust (NDRO) was forecast to net $170.65 based on dividends plus median target price estimate from ten analysts less broker fees. The Beta number showed this estimate subject to volatility 66% less than the market as a whole.
Average net gain in dividend and price was 30.39% on $1k invested in each of these ten MoPay stocks. This gain estimate was subject to average volatility 1% more 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".
May Monthly Pay Dividend Dog Data
Three buy and hold lists produced numerous actionable conclusions and several more un-numbered results. To draw these conclusions and results, May 1 closing prices and estimated annual dividends were referenced in YCharts. 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 Paid 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 2018.
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."
Third, Capitala Finance Corp (CPTA) cut its monthly payout from $0.13 to $0.0833 as of October 30, 2017.
For nine months, Tahoe Resources (TAHO) skipped its monthly payouts and has been dropped as a MoPay resource. Finally, Orchid Island Capital cut its monthly dividend from $0.14 to $0.11 in February 2018, then slashed it to $0.09 in March.
Top yield stock 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. More over-the-counter trades in monthly pay equities is 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 April represented just four of the eleven Morningstar market sectors, with representative firms split 2 to 1 to 3 to 4 between the energy, consumer cyclical, real estate, and financial services sectors.
The single consumer cyclical equity, placed second, Corus Entertainment (OTCPK:CJREF) .
In third place was one of the three real estate representatives, Orchid Island Capital (ORC) , a stalwart in the MoPay kennel. The other RE firms placed seventh, and ninth: AGNC Investment (AGNC) , and Global Net Lease (NYSE:GNL) .
Finally, four financial sector representatives placed fourth, sixth, eighth, and tenth: Capitala Finance (CPTA) ; Horizon Tech Finance (NASDAQ:HRZN) ; AGNC Investment (AGNC) ; Global Net Lease (GNL) , to complete the May MoPay top ten list by yield.
List Two: Monthly Pay Dividend Equities by Price Upside
The results shown below from YCharts for MoPay dividend stocks as of market closing price May 1 were paired with analyst mean target prices one year out. Ten top stocks displayed 8.3% to 76.7% price upsides for the next year based on analyst 1 yr. targets.
Three (tinted) stocks on this price upside list were members of the top ten list by yield. In first place on this upside list was Five Oaks Investment (OAKS) . Those following this estimated leader were, Capitala Finance (CPTA) , Great Elm Capital (GECC) , Whitestone (WSR) , Medical Facilities (OTCPK:MFCSF) , Stellus Capital Investment (SCM) , Harvest Capital Credit (HCAP) , PennantPark Floating Rate (PFLT) , Corus Entertainment (OTCPK:CJREF) , and Orchid Island Capital (ORC).
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 800 candidates. Yields greater than 14.49% calculated as of May 1 determined the top ten.
The top ten monthly paying dividend investment companies, funds, & notes showing the biggest yields for April by YChart & YahooFinance data featured seven uncollateralized debt instruments [ETNs], and three closed-ended investment companies [CEICs].
Exchange traded notes captured the top seven positions: edit Suisse X-Links MP2xLvgAlrnMLP ETN (AMJL) ; Credit Suisse X-LinksMP2xLvgMortREIT ETN (REML) ; UBS ETRACS M Py 2xLvg MortgREIT ETN SerB (MRRL) ; UBS ETRACS M Py 2xLvg US Sm Cp HiDiv ETN (SMHD) ; UBS ETRACS Mthly Py 2xLvg Mortg REIT ETN (MORL) ; UBS ETRACS M Py 2xLvg WF MLP Ex-Engy ETN (LMLP) ; UBS ETRACS Mthly Py 2xLvg Closed-End ETN (CEFL) .
Three CEICs placed eighth, through tenth: Eagle Point Credit (ECC) , Oxford Lane Capital (OXLC) ; Stone Harbor Emerging Mkts Income (EDF) . This completed the top ten Closed End Investment Companies, Exchange Traded Funds and Notes list for May, 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 year, the 2018 articles in January, February, March, April, and herein May, continued 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 Found 33.84% Lower Gains From Five Lowest Priced High Yield MoPay Equities
Ten monthly pay stock equities were ranked by yield. Those results, verified by YCharts and YahooFinance, produced the following charts.
Actionable Conclusions: Analysts Estimated (12) 5 Lowest Priced of Top Ten Highest Yield MoPay Dividend Stocks Would Produce 13.25% VS. (14) 20.03% Net Gains from All Ten by May, 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 33.84% LESS net gain than $5,000 invested as $.5k in all ten. The sixth lowest priced MoPay dividend dog, Capitala Finance (CPTA), was predicted to deliver the best net gain of 45.16%.
Lowest priced five MoPay dividend stocks estimated May 1 were: Pacific Coast Oil Trust (ROYT); Enduro Royalty Trust (NDRO); Corus Entertainment (OTCPK:CJREF); Prospect Capital (PSEC); Orchid Island Capital Inc. (ORC), with prices ranging from $2.15 to $7.04.
Higher priced five MoPay dividend equities estimated April 3 were: Capitala Finance (CPTA); Harvest Capital Credit (HCAP); Horizon Technology Finance (HRZN); AGNC Investment (AGNC); Global Net Lease (GNL), whose prices ranged from $7.95 to $19.00.
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.
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.dividend.com; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance. Dog Photo: reddit.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.
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Make investing gains again. Catch an underdog on Facebook!
At 8:45 AM nearly every NYSE trading day on Facebook/ Dividend Dog Catcher Fredrik Arnold does a quick live video summary of one of four or five stocks contending for the next weekly slot in his Safari To Sweet Success portfolio.
Go to Facebook/Dividend Dog Catcher at 8:45 AM most trading days and watch, like, comment and share a live episode. Of course you're welcome to view all the replays, too, anytime.
Yet always remember: Root for the Underdog.
Disclaimer: This article is for informational and
This article was written by
Fredrik Arnold is a retired quality service analyst sharing investment ideas with a primary focus on dividend yields by utilizing free cash flow and one-year total returns as trading indicators.He is the leader of the investing group The Dividend Dog Catcher, where he shares a minimum of one new dividend stock idea per week with focus on yield or extraordinary financial circumstances. All ideas are archived and available after weekly announcement. Learn more.
Analyst’s Disclosure: I am/we are long 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.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.