Top 50 Russell Stocks Yield 7.4% To 17.5% In October

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Includes: AGNC, AJX, CHMI, CIM, DX, GMRE, GOV, MITT, NRZ, NYMT, ORC, PEGI, SIR, SNH, STWD, VGR, WMC
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 October top-ten 'safer' net-gains ranged 18.22%-45.59% from CHMI, STWD, SNH, NRZ, GMRE, PEGI, DX, AJX, GOV, and were topped by SIR.

50 Top Russell 3000 index stocks ranged from 7.4% to 17.5% in estimated annual yield. Top ten, CIM, NRZ, MITT, AGNC, DX, VGR, WMC, NYMT, ORC, & GOV, averaged 12.73%.

10 Top Broker Price Upsides ranged from 9.3%-36.67% from, SFL, NRZ, SNH, STWD, DX, GMRE, PEGI, AJX, GOV, & SIR averaged 16.11% estimated upside.$5k invested in the lowest-priced five October top-yield Russell 3000 dividend stocks showed 15.75% more net-gain than from $5k invested in all ten.  Little (low-priced) issues dominated the Russell 3000 top ten.

Actionable Conclusions (1-10): Analysts Forecast 18.2% To 45.59% Net Gains For Ten Russell 3000 Come October, 2019

Three 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 30% accurate.

Projections based on estimated dividend returns from $1000 invested in each of the 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 October 4, 2019 were:

Select Income REIT (SIR) was projected to net $455.88, based on a median target estimates from four analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 25% less than the market as a whole.

Government Properties (GOV) was projected to net $369.80, based on dividends, plus a mean target price estimate from seven analysts, less broker fees. The Beta number showed this estimate subject to volatility 25% more than the market as a whole.

Great Ajax (AJX) was projected to net $267.88, based on a median target price estimate from five analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 36% less than the market as a whole.

Dynex Capital (DX) was projected to net $225.03, based on dividends, plus a mean target price estimate from four analysts, less broker fees. The Beta number showed this estimate subject to volatility 45% less than the market as a whole.

Pattern Energy Group (PEGI) netted $214.33 based on a median target price estimate from fourteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 3% less than the market as a whole.

Global Medical REIT (GMRE) was projected to net $198.16, 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 1550% opposite the market as a whole.

New Residential Investment (NRZ) was projected to net $198.13, based on dividends, plus a mean target price estimate from eight analysts, less broker fees. The Beta number showed this gain estimate subject to volatility 7% over the market as a whole

Senior Housing Properties (SNH) was projected to net $189.70, based on a median target price estimate from ten analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 55% less than the market as a whole.

Starwood Property Trust (STWD) was projected to net $189.21 based on dividends, plus a median target estimate from eight analysts, less broker fees. The Beta number showed this estimate subject to volatility 67% less than the market as a whole.

Cherry Hill Mortgage (CHMI) was projected to net $182.24, based on target price estimates from three analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to volatility 77% less than the market as a whole.

The average net gain in dividend and price was estimated at 24.9% on $10k invested as $1k in each of these ten dogs. This gain estimate was subject to average volatility 94% opposite the market as a whole (thanks to GMRE's huge beta that way).

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 Yield

Actionable Conclusions (11-20): Ten Top Russell 3000 Dividend Stocks Ranged 11.31%-17.55% By Yield

Top ten Russell 3000 all cap stocks selected 10/4/18 by yield represented just two of eleven Morningstar sectors.

Nine top yielding stocks were real estate firms. They were, Government Properties Income Trust (GOV) [1]; Orchid Island Capital (ORC) [2]; New York Mortgage Trust Inc (NYMT) [3]; Western Asset Mortgage Capital Corp (WMC) [4]; Dynex Capital (DX) [6]; AGNC Investment Corp (AGNC) [7]; AG Mortgage Investment Trust Inc. (MITT) [8]; New Residential Investment (NRZ) [9]; Chimera Investment Corp (CIM) [10].

One consumer defensive stock placed fifth on this top ten yield list, Vector Group Ltd (VGR) [5] to complete the Russell 3000 top ten for October

Actionable Conclusions: (21-30) Top Ten Russell 3000 Upsides Showed 9.26% To 36.66% Price Improvements To October, 2019; (31) Four Downsides Ranged -.06% To -1.05%.

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.

Brokers Predict A 15.75% Advantage For 5 Highest Yield, Lowest Priced Russell 3000 Dividend Stocks By October, 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 just include firms with over 5% dividends, price above $5, with net returns greater than -15%.

As noted above, top ten Russell 3000 dividend dogs selected 10/4/18 showing the highest dividend yields represented just two of eleven sectors in the Morningstar scheme.

Actionable Conclusions: Analysts Projected 5 Lowest-Priced of the Top Stocks (32) Delivering 17.19% Vs. (33) 19.89% Net Gains by All Ten Come October, 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 15.75% more gain than $5,000 invested as $.5k in all ten. The fourth lowest priced Russell 3000 top yield stock, Government Properties Income Trust (GOV), was projected to deliver the best net gain of 36.98%.

The five lowest-priced top yield Russell 3000 dividend dogs for October 4 were: New York Mortgage Trust Inc (NYMT); Dynex Capital (DX); Orchid Island Capital (ORC); Government Properties Income Trust (GOV); Western Asset Mortgage Capital Corp (WMC), with prices ranging from $5.96 to $9.86.

Five higher-priced Russell 3000 dividend dogs, as calculated October 4, were: Vector Group Ltd (VGR); AG Mortgage Investment Trust Inc (MITT); New Residential Investment (NRZ); Chimera Investment Corp (CIM); AGNC Investment Corp (AGNC), whose prices ranged from $13.12 to $18.28.

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.

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Always remember: Root for the Underdog.

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.

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.