Dogcatcher's 23 'Safer' Monthly Pay U.S. December Dividend Equities

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Includes: AGNC, APLE, BRG, BTBIF, ERF, FRHLF, GHIFF, HRUFF, ORC, PMULF, SJT, STAG, SUUIF, TAHO, WPTIF
by: Fredrik Arnold
Summary

23 of 86 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 of12/12/18.

Top ten MoPay broker-estimated 1 yr. gains ranged 5.25%-68.5% net from GHIFF, FRHLF, BTBIF, SJT, AGNC, ORC, STAG, WPTIF, APLE, & ERF, averaging 18% net.

"Safer" MoPay stocks also reported payout ratios, total annual returns, dividend growth, and p/e ratios as of 12/12/18 to reinforce their dividend backing. There were 28 of 86 companies disqualified.

Top 10 'safer' December dividend MoPay yields ranged 6.16%-14.66% from PMULF; HRUFF; SUUIF; GHIF; FRHLF; APLE; BTBIF;  SJT; AGNC; ORC. Their free cash flow yields ranged 6.77%-40.43%.

Analyst one-year targets revealed that $5k invested in the lowest priced five of ten top "safer" U.S. MoPay stocks projected 16.36% less gain than from $5K invested in all ten. The big, high price MoPays have December dominance!

source: YCharts

Actionable Conclusion (1-10): Analysts Alleged Top Ten U.S. 'Safer' Dividend MoPay Stocks Could Net 5.25% to 68.5% Gains By December, 2019

Seven 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 70% 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 December 12, 2019 were:

Enerplus Corp (ERF) netted $685.11 based on a median target price estimate from sixteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 54% more than the market as a whole.

Apple Hospitality REIT (APLE) netted $264.52 based on dividends plus a median target price estimate from five analysts less broker fees. The Beta number showed this estimate subject to volatility 32% less than the market as a whole.

WPT Industrial Real Estate (OTCQX:WPTIF) was said to net $200.73, based on a median target price estimate from nine analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 13% below the market as a whole.

Stag Industrial REIT (STAG) netted $160.812 based on a median target price estimate from thirteen analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 2% more than the market as a whole.

Orchid Island Capital (ORC) netted $126.56 based on no target price from analysts, just projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 62% less than the market as a whole.

AGNC Investment (AGNC) netted $105.78 based on dividends and a median target price estimate from nine analysts less broker fees. The Beta number showed this estimate subject to volatility 13% less than the market as a whole.

San Juan Basin Royalty Trust (SJT) net 76.327 based on no target price estimate from analysts, just dividends less broker fees. The Beta number showed this estimate subject to volatility 12% opposite the market as a whole

BTB REIT (OTC:BTBIF) netted $73.83 based on dividends alone less broker fees. The Beta number showed this estimate subject to volatility 9% over the market as a whole.

Freehold Royalties Ltd (OTCPK:FRHLF) netted $55.03 based just on dividends less broker fees. The Beta number showed this estimate subject to volatility 13% less than the market as a whole.

Gamehost Inc (OTCPK:GHIFF) projected a $52.49 net gain based on just dividends less broker fees. The Beta number showed this estimate subject to volatility 23% under the market as a whole.

Average net gain in dividend and price was 18% on $10k invested as $1k in each of these ten "Safer" U.S. MoPay dogs. This gain estimate was subject to average volatility 11% less than the market as a whole.

source: thejizn.com

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 86 December All-Cap US Exchange MoPay Dividend Stocks Showed Positive Returns And Free Cash Flow Yields Above Their Dividend Yields

source: YCharts

Periodic Safety Inspection

A previous article discussed the attributes of these 86 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".

source: YCharts

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 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 year Tahoe Resources (TAHO) skipped its monthly and even quarterly payouts..

Finally. Orchid Island Capital (ORC) has scaled down dividends four times 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, to $0.09 in March, and to $0.08 come September.

Five Business Sectors Showed "Safer" Monthly Dividends For December

Five of eleven Morningstar sectors were represented by the twenty-four equities with "safer" October dividends. Those were from: real estate (16); energy (3); consumer cyclical (2); utilities (2); basic materials (1); communication services (0); consumer defensive (0); financial services (0); healthcare (0); industrials (0); technology (0).

The first four sectors named on the above list provided the top ten by yield.

Yield Metrics Uncovered The Bargain MoPay "Safer" Stocks

Ten "Safe" top All-Cap U.S. MoPay dividend stocks per December 12 YCharts data ranked themselves by yield as follows:

source: YCharts

Actionable Conclusions: Analysts Estimated 5 Lowest Priced of Ten Monthly Pay Dividend Stocks (12) To Deliver 7.47% VS. (13) 8.93% Net Gains from All Ten By December, 2019

source: YCharts

$5000 invested as $1k in each of the five lowest priced stocks in the "safe" ten U.S. MoPay kennel by yield was destined for 16.36% LESS net gain than $5,000 invested as $.5k in all ten. The eighth lowest priced "safer" MoPay equity, Apple Hospitality REIT Inc (APLE), was projected to deliver the best net gain of 26.45%.

source: YCharts

Lowest priced five "safe" MoPay dividend dogs as of December 12 were: BTB REIT (OTC:BTBIF); San Juan Basin Royalty Trust (SJT); Pure Multi-Family REIT LP (OTCQX:PMULF); Freehold Royalties Ltd (OTCPK:FRHLF); Orchid Island Capital (ORC), with prices ranging from $3.37 to $6.55.

Higher priced five "safe" all-cap MoPay dogs for December 12 were: Gamehost Inc (OTCPK:GHIFF); Superior Plus Corp (OTCPK:SUUIF); Apple Hospitality REIT (APLE); H&R REIT (OTCPK:HRUFF); AGNC Investment (AGNC), whose prices ranged from $7.17 to $17.73.

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.

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" DollarDog photo from:thejizn.com

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.

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.