Your Monthly-Paid Dividends From 82 All-Cap U.S. Equities And 80 Funds For January

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Includes: AGNC, AHOTF, AMZA, ARR, AVH, BRG, CEFL, CPG, CPTA, DMO, ECC, EDF, GAIN, GECC, GNL, HCAP, LMLP, MORL, MRRL, ORC, OXLC, PEYUF, PFLT, PSEC, PVL, REML, SMHD, SUNS, TAHO, VET
by: Fredrik Arnold
Summary

January's U.S. Exchange monthly-paid dividends, upsides, and net-gains: 1. Stocks by yield >0.05% (82); 2. Stocks by price-upside (30); 3. Closed-End Investment Companies, Exchange-Traded Funds & Notes (CEICs/ETFs/ETNs) by yield (80).

U.S. MoPay equities contracted a little in numbers (and gains). Canadian MoPays have a separate write-up. CEICs/ETFs/ETNs are combined and limited to yields over 7.84%.

Items: 1. Top MoPay stock gains; 2. Overall best MoPay gainers; 3. Funds vs. Equities; 4. Fund risks/rewards. All per prices as of 1/11/19.

Analyst annual targets revealed that investing $5k in the lowest priced five of ten top yield MoPay US exchange equities produced 25.33% LESS gains than $5k invested in all ten.

Source: YCharts

Actionable Conclusions (1-10): Analysts Predicted Top Ten MoPay Equities to Net 12.44% to 108.3% Gains By January 2020

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 one-year target prices. Thus, the yield-based strategy for this MoPay group as graded by analyst estimates for this month proved 40% accurate.

Projections based on estimated dividend amounts from $1,000 invested in each of the ten highest yielding stocks and the one-year analyst median target prices for those stocks, as reported by YCharts, made the data points. Note: one-year target prices from one analyst were not applied (n/a). Ten probable profit-generating trades to 2020 were:

Peyto Exploration & Development Corp. (OTCPK:PEYUF) netted $1,083.12 based on a median of target price estimates from sixteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 36% less than the market as a whole.

Avianca Holdings SA (AVH) was forecast to net $635.22 based on mean target price estimates from six analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 14% less than the market as a whole.

Great Elm Capital Corp. (GECC) netted $555.79 based on a median target price estimates from three analysts plus dividends less broker fees. A beta number was not available for GECC.

Capitala Finance Corp. (CPTA) netted $485.18 based on dividend plus a median target price estimate from seven analysts less broker fees. The Beta number showed this estimate subject to volatility 6% less than the market as a whole.

Vermilion Energy Inc. (VET) was forecast to net $384.13 based a median target estimate from fifteen analysts plus estimated annual dividends less broker fees. The Beta number showed this estimate subject to volatility 10% less than the market as a whole.

Global Net Lease Inc. (GNL) netted $362.07 based on dividend plus mean target price estimates from three analysts less broker fees. The Beta number showed this estimate subject to volatility 35% less than the market as a whole.

PennantPark Floating Rate Capital Ltd (PFLT) netted $213.12 based on dividends plus the median of annual price estimates from six analysts less broker fees. The Beta number showed this estimate subject to volatility 41% less than the market as a whole.

Crescent Point Energy Corp. (CPG) netted $208.38 based on a median target estimate from seventeen analysts plus estimated annual dividends less broker fees. The Beta number showed this estimate subject to volatility 7% more than the market as a whole.

Solar Senior Capital (SUNS) netted $200.43 based on the median target estimate from three analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 49% less than the market as a whole.

Harvest Capital Credit Corp. (HCAP) netted $124.43 based on a mean target estimate from twenty-one analysts plus estimated annual dividends less broker fees. The Beta number showed this estimate subject to volatility 72% less than the market as a whole.

Average net gain in dividend and price was 42.52% on $1k invested in each of these ten MoPay stocks. This gain estimate was subject to average volatility 36% less than the market as a whole.

Source: 3milliondogs.com

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".

January Monthly Pay Dividend Data

Three lists produced numerous actionable conclusions and several more un-numbered results. To draw these conclusions and results, January 11 closing prices and estimated annual dividends were referenced from 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 Pay 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. Three prominent MoPay firms declared dividend cuts between December 2016 and March 2017.

Former MoPay top ten regular by yield. Bluerock Residential (BRG) announced in December it is retreating to quarterly dividend payments "in keeping with industry tradition."

Third, Capitala Finance Corp. cut its monthly payout from $0.13 to $0.0833 as of October 30, 2017.

For the past year, Tahoe Resources (TAHO) has skipped its monthly payouts and dropped as a MoPay resource.

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." ORC directors proceeded to back-up their words with actions cutting the dividend from $0.14 to $0.11 in February 2018, to $0.09 in March, and to $0.08 for September.

The U.S. MoPay segment is volatile, transitive, and shrinking. More over-the-counter trades in monthly pay equities are available from Canadian firms.

Readers said:

[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: 82 US Monthly Pay Dividend Equities by Yield

Source: YCharts

Top ten of these US exchange listed monthly pay dividend equities showing the best yields into January represented four of the eleven Morningstar market sectors, with representative firms split 1 to 1 to 5 to 3 between the energy, industrials, real estate, and financial services sectors.

Tops for January was one struggling energy equities, Permianville Royalty Trust (PVL) [1]. No other energy dogs made the top ten.

In second place was the lone industrial sector representative, Avianca Holdings SA [3]. The first of five real estate representatives placed third, Orchid Island Capital [3], a stalwart but challenged player in the MoPay kennel. The other four RE firms placed sixth through eighth, and tenth: AGNC Investment Corp. (AGNC) [6]; American Hotel Income Properties REIT LP (OTC:AHOTF) [7]; Global Net Lease Inc. [8]; and ARMOUR Residential REIT Inc. (ARR) [10].

Finally, three financial sector representatives placed fourth, fifth, and ninth: Capitala Finance Corp. [4], Great Elm Capital Corp. [5], and Prospect Capital Corp. (PSEC) [9], to complete the January MoPay top ten list by yield.

List Two: Monthly Pay Dividend Equities by Price Upside

Source: YCharts

The results shown below from YCharts for MoPay dividend stocks as of market closing price January 11 were paired with analyst mean target prices one year out. Ten top stocks displayed 6.18% to 101.3% price upsides for the next year based on analyst one-year targets.

Four of the ten (tinted) on this price upside list were members of the top ten list by yield. In first place on this upside list was Peyto Exploration & Development Corp [1]. Following were, Avianca Holdings SA [2], Great Elm Capital Corp. [3], Capitala Finance Corp. [4], Vermilion Energy Inc. [5], Global Net Lease Inc. [6], Crescent Point Energy Corp. [7], PennantPark Floating Rate Capital Ltd [8], Solar Senior Capital Ltd [9], and Gladstone Investment Corp. (GAIN) [10].

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 2020 were gleaned from 30 selected by yield. Three to nine analysts have historically provided the most accurate median target price estimates.

Source: YCharts

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 above were culled from nearly 800 candidates. Yields greater than 16.19% calculated as of January 11 determined the top ten.

The top ten monthly paying dividend investment companies, funds, & notes showing the biggest yields for per YChart & Yahoo Finance data featured six uncollateralized debt instruments [ETNs], one open-ended investment company [ETF], and three closed-ended investment companies [CEICs].

Source: YCharts

Exchange-traded notes captured the first, through third, fifth, sixth and ninth positions: UBS ETRACS M Py 2xLvg MortgREIT ETN SerB (MRRL) [1]; Credit Suisse X-LinksMP2xLvgMortREIT ETN (REML) [2]; UBS ETRACS Mthly Py 2xLvg Mortg REIT ETN (MORL) [3]; UBS ETRACS Mthly Py 2xLvg Closed-End ETN (CEFL) [5]; UBS ETRACS M Py 2xLvg US Sm Cp HiDiv ETN (SMHD) [6];UBS ETRACS M Py 2xLvg WF MLP Ex-Engy ETN (LMLP) [9].

One ETF placed fourth on this list, InfraCap MLP ETF (AMZA) [4].

Three CEICs placed seventh, eighth, and tenth, Stone Harbor Emerging Mkts Income (EDF) [7]; Western Asset Mortgage Defined Opp Fund (DMO) [8]; and Eagle Point Credit Co LLC (ECC) [10]. This completed the top ten Closed-End Investment Companies, Exchange-Traded Funds and Notes list for January 2019.

Compare Equity To Fund Performance

Source: YCharts

Note that the top ten equity dividends are now equally priced with those of the top ten funds. This is a new variation in the dividend dog kennel. Still, it makes sense, the funds have no accountability for the dividends collected from investments or the money generated from trading. They report only cash flow and returns generated. Dividend equities, however, give you a monthly comparative report of price value versus dividends paid.

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 an upside vs. buy & hold in November. Another list factored December 2012 reader comments.

In January, February, March, April, May, June, July, August, September, October, November, and December 2013 readers contributed.

Reader suggestions continued in 2014 following the January, February, March, April, May, June, July, August, September, October, November, and December articles.

2015 continued with readers contributing in January, February, March, April, May, June, July, August, September, October, November, and December.

The 2016 articles in January, February, March, April, May, June, July, August, September, October, November, and December.

The 2017 articles of January, February, March, April, May, June, July, August, September, October, November, and December.

Again last year, the 2018 articles in January, February, March, April, May, June, July, August, September, and October/November, and December, continued to compare and contrast MoPay equity upside potential to the now lower yield (but higher risk) buy and hold Exchange Traded Funds and Notes constituents.

Source: YCharts

Yield Metrics Found No Advantage From Five Lowest Priced High Yield MoPay Equities

Ten monthly pay stock equities were ranked by yield. Those results, verified by YCharts and Yahoo Finance, produced the following charts.

Source: YCharts

Actionable Conclusions: Analysts Estimated (12) 5 Lowest Priced of Top Ten High Yield MoPay Dividend Stocks Would Produce 18.47% VS. (14) 24.74% Net Gains from All Ten by January 2020

$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 one-year targets to deliver 25.33% less net gain than $5,000 invested as $.5k in all ten. The second lowest priced MoPay dividend dog, Avianca Holdings SA, was predicted to deliver the best net gain of 63.52%.

Source: YCharts

Lowest priced five MoPay dividend stocks estimated January 11 were: Permianville Royalty Trust; Avianca Holdings SA; American Hotel Income Properties REIT LP; Prospect Capital Corp.; Orchid Island Capital Inc., with prices ranging from $2.45 to $6.75.

Higher priced five MoPay dividend equities estimated January 11 were: Capitala Finance Corp.; Great Elm Capital Corp.; AGNC Investment; Global Net Lease Inc.; and ARMOUR Residential REIT Inc., whose prices ranged from $7.64 to $21.35.

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. It's 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.

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.

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.dividend.com; finance.yahoo.com; and analyst mean target price by Thomson/First Call in Yahoo Finance. Dog Photo: 3milliondogs.com

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.