Dogcatcher's 10 'Safer' Monthly Paying U.S. Dividends For January

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Includes: APYRF, BRG, CDPYF, CPTA, EPR, GRP.U, LTC, MFCSF, O, ORC, PMULF, TAHO, WPTIF
by: Fredrik Arnold
Summary

10 of 82 monthly paying U.S. dividend stocks were tagged "safer" by showing positive annual returns and free-cash-flow yields greater than their dividend yields as of 1/11/19.

The ten MoPay broker-estimated one-year gains ranged from 0.83% to 48.52% net, averaging 11.3% net.

"Safer" MoPay stocks also reported payout ratios, total annual returns, dividend growth, and P/E ratios to reinforce their dividend-backing.

The ten 'safer' January dividend MoPay yields ranged from 2.88% to 13.08% from the same ten. Their free cash flow yields ranged from 3.64% to 14.48%.

Analyst one-year targets revealed that $5k invested in the lowest priced five of ten top "safer" U.S. MoPay stocks projected 64.2% more gains vs. $5K invested in all ten.

Source: YCharts

Actionable Conclusion (1-10): Analysts Alleged Ten U.S. 'Safer' Dividend MoPay Stocks Could Net 0.88% to 48.52% Gains By January 2020

Ten 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 100% accurate. It's a rare happening.

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 January 11, 2020 were:

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

WPT Industrial Real Estate (OTCQX:WPTIF) was said to net $207.38, based on a median target price estimate from nine analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 68% below the market as a whole.

Pure Multi-Family REIT LP (OTCQX:PMULF) netted $172.84 based on dividends plus a median target price estimate from nine analysts less broker fees. The Beta number showed this estimate subject to volatility 2% more than the market as a whole.

EPR Properties (EPR) netted $82.23 based on a median target price estimate from eleven analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 42% less than the market as a whole.

LTC Properties Inc (LTC) netted $52.21 based on a median of target price estimates from nine analysts, plus projected annual dividend less broker fees. The Beta number showed this estimate subject to volatility 68% less than the market as a whole.

Medical Facilities Corp (OTCPK:MFCSF) netted $48.04 based on dividends and a median target price estimate from nine analysts less broker fees. The Beta number showed this estimate subject to volatility 30% less than the market as a whole.

Realty Income Corp (O) netted $31.52 based on no target price estimate from analysts, just dividends less broker fees. The Beta number showed this estimate subject to volatility 92% below the market as a whole

Granite Real Estate (GRP.U) netted $27.51 based on dividends alone less broker fees. The Beta number showed this estimate subject to volatility 50% under the market as a whole.

Allied Properties REITrust (OTCPK:APYRF) projected a $14.51 net gain based on just dividends less broker fees. The Beta number showed this estimate subject to volatility 30% under the market as a whole.

Canadian Apartment Properties Real Estate Investment Trust (OTC:CDPYF) netted $8.34 based just on dividends less broker fees. The Beta number showed this estimate subject to volatility 65% less than the market as a whole.

Average net gain in dividend and price was 11.3% on $10k invested as $1k in each of these ten "Safer" U.S. MoPay dogs. This gain estimate was subject to average volatility 39% less than the market as a whole.

Source: alaska.org

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."

Just 10 of 82 January 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 82 all-cap MoPay stocks from which 10 "safer" ones were sorted. You see below the list that passed the dividend "stress" test. Just 10 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 Capitala Finance Corp (CPTA) announced October 3, 2017 a reduction of its $0.13 monthly shareholder payout to $0.833 as of October 30.

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 2018 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.

Three Business Sectors Showed "Safer" Monthly Dividends For January

Three of eleven Morningstar sectors were represented by the twenty-four equities with "safer" January dividends. Those were from: financial services (1); healthcare (1); real estate (8); basic materials (0); communication services (0); consumer cyclical (0); consumer defensive (0); energy (0); industrials (0); technology (0); utilities (0).

Yield Metrics Uncovered 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 18.56% VS. (13) 11.3% Net Gains from All Ten By January 2020

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 64.2% more net gain than $5,000 invested as $.5k in all ten. The second lowest priced "safer" MoPay equity, Capitala Finance Corp (CPTA), was projected to deliver the best net gain of 48.52%.

Source: YCharts

Lowest priced five "safe" MoPay dividend dogs as of January 11 were: Pure Multi-Family REIT LP (OTCQX:PMULF); Capitala Finance Corp (CPTA); Medical Facilities Corp (OTCPK:MFCSF); WPT Industrial Real Estate Investment Trust (OTCQX:WPTIF); Canadian Apartment Properties Real Estate Investment Trust (OTC:CDPYF), with prices ranging from $6.18 to $33.82.

Higher priced five "safe" all-cap MoPay dogs for January 11 were: Allied Properties Real Estate Investment Trust (OTCPK:APYRF); LTC Properties Inc (LTC); Granite Real Estate Investment Trust (GRP.U); Realty Income Corp (O); EPR Properties (EPR), whose prices ranged from $33.94 to $69.06.

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. It is 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 YCharts, Yahoo Finance; analyst mean target price by Thomson/First Call in Yahoo Finance. "Safer" Sled Dog photo from alaska.org.

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.

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.