50 Russell Index Stocks Yield 5.7% To 12% For August

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Includes: AHT, AJX, CHMI, DX, GEO, GNL, JCAP, KDP, LB, NRZ, ORC, OUT, SFL, SIR, STWD, TUP, TWO, VGR
by: Fredrik Arnold

Summary

"All Russell US Indexes are subsets of the Russell 3000 Index, [namely] large-cap Russell 1000 & small-cap Russell 2000 Indexes. These Indexes are. building blocks of financial-products [and] performance-benchmarks."---ftserussell.com.

Broker target-estimated August Russell 3000 top-ten net-gains ranged 15.7%-26.8%, topped by JCAP. The master-list of 114 was pre-screened for yields over 4%; price over $5; net returns above -15%; +0.71%.

50 Top Russell 3000 index stocks ranged from 5.72% to 12.06% in estimated annual yield. Top ten, SFL, SIR, KDP, GNL, TWO, VGR, CHMI, NRZ, DX, & ORC, averaged 10.42%.

50 Top Broker Price Target selections ranged from 10.5%-70.67% upsides. Top ten, NRE, IVZ, SWM, GM, REIS, BLX, CLNY, BGCP, CPA, & VGR averaged 37.96% estimated upside.

$5k invested in the lowest-priced five July top-yield Russell 3000 dividend stocks showed 18.84% LESS net-gain than from $5k invested in all ten.  Big (high-priced) issues dominated the Russell 3000 top ten.

Actionable Conclusions (1-10): Analysts Forecast 15.7% To 26.8% Net Gains For Ten Russell 3000 Come August, 2019

Two of ten top Russell 3000 dividend stocks by yield were verified as being among the top ten gainers for the coming year based on analyst 1-year target prices. (They are tinted gray in the chart above). So, the yield-based forecast for Russell 3000 stocks as graded by Wall St. wizards was 20% accurate.

Projections based on estimated dividend returns from $1000 invested in each of 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 August 24, 2019 were:

Jernigan Capital (JCAP) netted $267.92 based on a median target price estimate from five analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 51% less than the market as a whole.

Ashford Hospitality Trust (AHT) was projected to net $263.72, based on dividends, plus the median target price from estimates by six analysts, less broker fees. The Beta number showed this estimate subject to volatility 16% over the market as a whole.

Outfront Media Inc (OUT) was projected to net $249.62, based on dividends, plus a mean target price estimate from six analysts, less broker fees. The Beta number showed this gain estimate subject to volatility 15% over the market as a whole

Great Ajax (AJX) was projected to net $233.69, based on a median target price estimate from six analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 38% less than the market as a whole.

L Brands (LB) was projected to net $232.72, based on a median target price estimate from twenty-seven analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 42% less than the market as a whole.

The GEO Group Inc (GEO) was projected to net $225.21, based on dividends, plus a mean target price estimate from three analysts, less broker fees. The Beta number showed this estimate subject to volatility 38% more than the market as a whole.

Tupperware Brands Corp (TUP) was projected to net $222.91, based on target price estimates from five analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 41% more than the market as a whole.

Select Income REIT (SIR) was projected to net $162.25, based on a median target estimates from five analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 85% less than the market as a whole.

Starwood Property Trust (STWD) was projected to net $158.67 based on dividends, plus a median target estimate from eight analysts, less broker fees. The Beta number showed this estimate subject to volatility 66% less than the market as a whole.

Dynex Capital (DX) was projected to net $156.84, based on dividends, plus a mean target price estimate from four analysts, less broker fees. The Beta number showed this estimate subject to volatility 36% less than the market as a whole.

The average net gain in dividend and price was estimated at 21.74% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 14% under 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 precisely, these are, in fact, best called, "underdogs".

50 Top Russell 3000 Dividend Equities By Analyst Target Gains

50 Top Russell 3000 Dividend Equities By Yield

Actionable Conclusions (11-20): Ten Top Russell 3000 Dividend Stocks Ranged 9.52%-12.06% By Yield

Top ten Russell 3000 all cap stocks selected 8/24/18 by yield represented just three of eleven Morningstar sectors.

Seven top yielding stocks were real estate firms. They were, Orchid Island Capital (ORC) [1]; Dynex Capital (DX) [2]; New Residential Investment (NRZ) [3]; (CHMI) [4]; Two Harbors Investment Corp (TWO) [6]; Global Net Lease (GNL) [7]; Select Income REIT (SIR) [9].

Two consumer defensive stocks placed fifth and eight on this top ten yield list, Vector Group Ltd (VGR)[5], and Keurig Dr Pepper Inc (KDP) [8].

A single Industrials representative placed tenth, Ship Finance International Ltd (SFL) [10] to complete the Russell 3000 top ten for August.

Actionable Conclusions: (21-30) Top Ten Russell 3000 Upsides Showed 8.71% To 21.34% Price Improvements To August, 2019; (31) No Downsides Were Selected.

To quantify top dog rankings, analyst mean price target estimates provide a "market sentiment" gauge of upside potential. Added to the simple high-yield "dog" metrics, analyst mean price target estimates became another tool to dig out bargains.

Broker Analysts Predict A 9.13% Disadvantage For 5 Highest Yield, Lowest Priced Russell 3000 Dividend Stocks By August, 2019

Ten top Russell 3000 dividend dogs were culled by yield for their monthly update. Yield (dividend / price) results verified by YCharts did the ranking. The master list was prescreened to only include firms with over 4% dividends, price above $4, with net returns greater than -15%, and broker target upsides over 0.71%

As noted above, top ten Russell 3000 dividend dogs selected 8/24/18 showing the highest dividend yields represented just three of eleven sectors in the Morningstar scheme.

Actionable Conclusions: Analysts Projected 5 Lowest-Priced of the Top Stocks (32) Delivering 11.29% Vs. (33) 12.42% Net Gains by All Ten Come August, 2019

$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Dividend Russell 3000 kennel by yield were predicted to produce 9.13% LESS gain than $5,000 invested as $.5k in all ten. The eighth lowest priced Russell 3000 top yield stock, Select Income REIT (SIR), was projected to deliver the best net gain of 16.22%.

The five lowest-priced top yield Russell 3000 dividend dogs for August 24 were: Dynex Capital (DX); Orchid Island Capital (ORC); Ship Finance International Ltd (SFL); Two Harbors Investment Corp (TWO); Vector Group Ltd (VGR), with prices ranging from $6.39 to $15.82.

Five higher-priced Russell 3000 dividend dogs, as calculated July 13, were: New Residential Investement (NRZ); Cherry Hill Mortgage Investent (CHMI); Select Income REIT (SIR); Global Net Lease (GNL); Keurig Dr Pepper Inc (KDP), whose prices ranged from $18.34 to $23.39.

The distinction between five low-priced dividend dogs and the general field of ten reflected Michael B. O'Higgins' "basic method" for beating the Dow. The scale of projected gains based on analyst targets added 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. Caution is advised, since analysts are historically only 20% to 80% accurate on the direction of change and just 0% to 20% accurate on the degree of 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

The net gain/loss estimates 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.

Stocks listed above were suggested only as possible reference points for your Russell 3000 dog 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.indexarb.com; YCharts.com; finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo. Russell Dog photo: pinterest.com

Disclosure: I am/we are long T.

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.