23 of 89 Monthly Paying (MoPay) U.S. dividend stocks were tagged "safer" by showing positive annual returns, and free cash flow yields greater than their dividend yields as of 6/29/18.
Top ten MoPay broker-estimated 1 yr. gains ranged 3.9%-20.8% net from CIFAF, HRUFF, ARESF, BTBIF, O, ARR, AGNC, ORC, APLE, & CJREF, averaging 9.9% net.
"Safer" MoPay stocks also reported payout ratios, total annual returns, dividend growth, and p/e ratios as of 6/29/18 to reinforce their dividend backing. 31/89 listed were disqualified for negative annual-returns.
Top 10 'safer' July dividend MoPay yields ranged 5.72%-20.8% from CWYUF; CIFAF; APLE; HRUFF; ARESF; BTBIF; ARR; AGNC; ORC; CJREF. Their free cash flow yields ranged 7.35%-32.8%.
Analyst one-year targets revealed that $5k invested in the lowest priced five of ten top "safer" U.S. MoPay stocks projected 5.87% more gain than from $5K invested in all ten. Small low price MoPays have clout!
Actionable Conclusion (1-10): Analysts Aleged Top Ten U.S. 'Safer' Dividend MoPay Stocks Could Net 3.99% to 20.8% Gains By July, 2019
Nine of ten top-gain 'safe' dividend MoPay stocks (tinted gray in the chart above) were verified as being among the ten highest yielders for the coming year, based on analyst 1 year targets. Thus the yield-based selection strategy for this group, as graded by analyst estimates, proved 90% accurate.
Projections based on estimated dividend returns from $1000 invested in each of the the thirty highest yielding stocks and their aggregate one year analyst median target prices, as reported by YCharts, created the 2018-19 data points. Note: one year target prices by lone analysts were not applied. Ten probable profit-generating trades projected to June 29, 2019 were:
Corus Entertainment (OTCPK:CJREF) netted $207.98 based on dividends alone less broker fees. The Beta number showed this estimate subject to volatility 43% less than the market as a whole.
Apple Hospitality REIT (APLE) netted $154.50 based on dividends plus a median target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 33% less than the market as a whole.
Orchid Island Capital (ORC) netted $123.62 based on no target price from analysts, just projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 65% less than the market as a whole.
AGNC Investment (AGNC) netted $102.11 based on dividends and a median target price estimate from eight analysts less broker fees. The Beta number showed this estimate subject to volatility 4% opposite the market as a whole.
ARMOUR Residential REIT (ARR) netted $101.44 based on a median target price estimate from four analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 43% less than the market as a whole.
Realty Income (O) projected a $77.23 net gain based on a median target price estimate from eighteen analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 83% less than the market as a whole.
BTB REIT (OTC:BTBIF) netted $69.55 based on dividends alone less broker fees. The Beta number showed this estimate subject to volatility equal to the market as a whole.
Artis REIT (OTCPK:ARESF) netted $61.14 based only on dividends less broker fees. The Beta number showed this estimate subject to volatility 7% less than the market as a whole.
H&R REIT (OTCPK:HRUFF) net 49.60 based on dividends less broker fees. The Beta number showed this estimate subject to volatility 14% less than the market as a whole
CI Financial (OTCPK:CIFAF) was said to net $39.85, based on a median target price estimate from nine analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 26% below the market as a whole.
Average net gain in dividend and price was 3.99% on $10k invested as $1k in each of these ten "Safer" U.S. MoPay dogs. This gain estimate was subject to average volatility 36% less than the market as a whole.
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".
23 of 89 June All-Cap US Exchange MoPay Dividend Stocks Showed Positive Returns And Cash Flow Yields Beyond Their Dividend Yields
Periodic Safety Inspection
A previous article discussed the attributes of these 89 all-cap MoPay stocks from which 23 "safer" ones were sorted. You see below the list that passed the dividend "stress" test. Those 23 all-cap monthly-pay dividend stocks report positive returns and sufficient annual cash flow yield to cover anticipated annual dividend yield. The margin of excess is shown in the bold face column labeled "SafeMargin".
Cash flow, however, is easily manipulated by a board of directors managing company policy cancelling or varying the payout of dividends to shareholders. For example, Prospect Capital (PSEC) reduced its dividend from $.111 To $.083 as of January 2015. Also, American Capital Agency (AGNC) announced July 27, 2015 a reduction of its $.20 monthly shareholder payout to $.18 as of September.
Having departed the list, Fifth Street Finance (FSC), trimmed its $0.06 monthly dividend per share to $0.02 as of March, 2017 and then descended to a $0.02 Quarterly dividend in June 2017. Allied firm, Fifth Street Senior Floating Rate Capital (FSFR) also departed the MoPay convention in March. Also past listee, Blue Bluerock Residential (BRG) in December announced its retreat to quarterly dividend payments "in keeping with industry tradition."
In the past three quarters Tahoe Resources (TAHO) skipped its monthly and even quarterly payouts.
One more recent example was the dividend reductions by Capitala Finance (CPTA) from $0.207 per month in December 2015 to $0.157 in January 2016, a further reduction to $0.13 per month in October 2016, and a cut to $.085 per month in October, 2017.
Finally. Orchid Island Capital (ORC) has scaled down dividends thrice in the time period discussed. In July, 2015 their monthly payout was slashed from $0.18 to $0.14, and then cut down to $0.11 as of January, 2018, then to $0.09 in March.
Four Business Sectors Showed "Safer" Equities Paying Monthly Dividends For July
Four of eleven Morningstar sectors were represented by the twenty-three equities with "safer" June dividends. Those were from: consumer cyclical (2); real estate (16); financial services (2); energy (3); Basic Materials (0); Communication Services (0); Consumer Defensive (0); healthcare (0); Industrials (0); Technology (0).
The first three sectors named on the above list constituted the top ten by yield.
Yield Metrics Uncovered Bargain MoPay "Safer" Stocks
Ten "Safe" top All-Cap U.S. MoPay dividend stocks per June 29 YCharts data ranked themselves by yield as follows:
Actionable Conclusions: Analysts Estimated 5 Lowest Priced of Ten Monthly Pay Dividend Stocks (12) To Deliver 10.24% VS. (13) 9.67% Net Gains from All Ten By July, 2019
$5000 invested as $1k in each of the five lowest priced stocks in the "safe" ten U.S. MoPay kennel by yield were determined by analyst 1 year targets to deliver 5.87% more net gain than $5,000 invested as $.5k in all ten. The second lowest priced "safer" MoPay equity, Corus Entertainment (OTCPK:CJREF), was projected to deliver the best net gain of 20.8%.
Lowest priced five "safe" MoPay dividend dogs as of June 29 were: BTB REIT (OTC:BTBIF); Corus Entertainment (OTCPK:CJREF); Orchid Island Capital (ORC); Artis REIT (OTCPK:ARESF); H&R REIT (OTCPK:HRUFF), with prices ranging from $3.52 to $15.28.
Higher priced five "safe" all-cap MoPay dogs for June 29 were: CI Financial (OTCPK:CIFAF); Apple Hospitality REIT (APLE); AGNC Investment (AGNC); ARMOUR Residential REIT (ARR); SmartCentres Real Estate Investment Trust (OTCPK:CWYUF), whose prices ranged from $17.77 to $22.95.
This distinction between five low priced dividend stocks 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, this glossary instablog to interpret my abbreviated headings, 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.
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. "Safer" Cozy Dog photo from: restate.co
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Make investing gains again. Catch your underdog on Facebook!
At 8:45 AM (ET) nearly every NYSE trading day on Facebook/Dividend Dog Catcher, Fredrik Arnold makes a quick live video summary of one of five stocks of the week contending for a single slot on his Safari To Sweet Success portfolio.
Go to Facebook/Dividend Dog Catcher at 8:45 PM (ET) most tradedays and watch, 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.
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.
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