Actionable Conclusions (1-10): Analysts Predicted Top 10 MoPay Equities to Net 11.28% to 49.1% Gains By February 2020
Six of the 10 top-yield MoPay stocks (shaded in the chart above) were verified as being among the Top 10 gainers for the coming year based on analyst 1 year target prices. Thus the yield-based strategy for this MoPay group as graded by analyst estimates for this month proved 60% accurate.
Projections based on estimated dividend amounts from $1000 invested in each of the 10 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:
Great Elm Capital Corp (GECC) netted $491.00 based on a median target price estimates from three analysts, plus dividends less broker fees. A beta number was not available for GECC.
Global Net Lease Inc (GNL) netted $403.40, based on dividend plus mean target price estimates from three analysts less broker fees. The Beta number showed this estimate subject to volatility 26% less than the market as a whole.
Vermilion Energy Inc (VET) was forecast to net $366.01 based a median target estimate from fifteen analysts, plus estimated annual dividends less broker fees. less broker fees. The Beta number showed this estimate subject to volatility 2% more than the market as a whole.
Capitala Finance Corp (CPTA) netted $317.94, based on dividend, plus a median target price estimate from seven analysts less broker fees. The Beta number showed this estimate subject to volatility 12% more than the market as a whole.
Solar Senior Capital (SUNS) netted $153.91 based on the median of target estimates from three analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 40% less than the market as a whole.
PennantPark Floating Rate Capital Ltd (PFLT) netted $150.99 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 28% less than the market as a whole.
Apple Hospitality REIT Inc (APLE) netted $141.37 based on a median of target price estimates from five analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 39% less than the market as a whole.
Dynex Capital Inc (DX) was forecast to net $136.51 based on mean target price estimates from three analysts plus dividends less broker fees. A Beta number was not available for DX
Orchid Island Capital Inc (ORC) netted $115.79 based on just estimated annual dividends less broker fees. The Beta number showed this estimate subject to volatility 56% less than the market as a whole.
AGNC Investment Corp (AGNC) netted $112.80 based on a mean target estimate from nine analysts, plus estimated annual dividends less broker fees. The Beta number showed this estimate subject to volatility 80% less than the market as a whole.
Average net gain in dividend and price was 23.89% on $1k invested in each of these 10 MoPay stocks. This gain estimate was subject to average volatility 37% less than the market as a whole.
Actionable Conclusions (11-13): (Bear Alerts) Analysts Anticipated Three MoPay Dogs To Lose 9.72% To 14.67% By February, 2020
The three probable losing trade revealed by YCharts were:
Prospect Capital Corp. (PSEC) projected a loss of $97.15 based on dividend and a projected target price estimate fro three analysts, including $10 of broker fees. The Beta number showed this estimate subject to volatility 35% less than the market as a whole.
Horizon Technology Finance (HRZN) cast a loss of $100.19 based on dividend and the median of projected target price estimates from six analysts, including $10 of broker fees. The Beta number showed this estimate subject to volatility 23% less than the market as a whole.
Prospect Capital Corp (PSEC) cast a loss of of $146.72 based on dividend and a projected target price estimate based on the median of projected target price estimates fromthre analysts, including $10 of broker fees. The Beta number showed this estimate subject to volatility 24% more than the market as a whole.
Average net loss in dividend and price was estimated at 14.72% on $3k invested as $1k in each of these three stocks. This gain estimate was subject to average volatility 19% 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 specifically, these are, in fact, best called "underdogs".
February Monthly Pay Dividend Data
Three lists produced numerous actionable conclusions and several more un-numbered results. To draw these conclusions and results, February 15 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 10 regular by yield. Blue Bluerock Residential (BRG) announced in December it is retreating to quarterly dividend payments "in keeping with industry tradition."
Third, Capitala Finance Corp (CPTA) 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.
"[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: 84 US Monthly Pay Dividend Equities by Yield
Top 10 of these US exchange listed monthly pay dividend equities showing the best yields into February represented three of the eleven Morningstar market sectors, with representative firms split 6 to 1 to 3 between the real estate, energy, and financial services sectors.
Tops for February was the first of six rocking real-estate equities, Orchid Island Capital Inc (ORC) . The other five real estate dogs placed third. fifth, seventh, eighth, and 10th in the top 10: AGNC Investment Corp (AGNC) ; Dynex Capital Inc (DX) ; American Hotel Income Properties REIT LP (AHOT) ; Global Net Lease Inc. (GNL) ; ARMOUR Residential REIT Inc (ARR) .
In second place was the lone energy sector representative, Permianville Royalty Trust (PVL) . The first of four financial services representatives placed fourth, Great Elm Capital Corp (GECC) l. The other two Financial firms placed sixth, and ninth: Capitala Finance Corp (CPTA) , and Prospect Capital Corp (PSEC) , to complete the February MoPay top 10 list by yield.
List Two: Monthly Pay Dividend Equities by Price Upside
The results shown below from YCharts for MoPay dividend stocks as of market closing price February 15 were paired with analyst mean target prices one year out. Ten top stocks displayed 1.02% to 39.06% price upsides for the next year based on analyst 1 yr. targets.
Six of the 10 (tinted) on this price upside list were members of the top 10 list by yield. In first place on this upside list was Great Elm Capital Corp (GECC) , Global Net Lease Inc (GNL) , Vermilion Energy Inc (VET) , Capitala Finance Corp (CPTA) , Solar Senior Capital Ltd (SUNS) . Following were, Apple Hospitality REIT Inc (APLE) , PennantPark Floating Rate Capital Ltd (PFLT) , Dynex Capital Inc (DX) , Harvest Capital Credit Corp (HCAP)  and AGNC Investment Corpp (AGNC).
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 10 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.
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 February 15 determined the top 10.
The top 10 monthly paying dividend investment companies, funds, & notes showing the biggest yields for per YChart & YahooFinance data featured six uncollateralized debt instruments [ETNs], one open ended investment company [ETF], and three closed-ended investment companies [CEICs].
Exchange traded notes captured the first, through fifth, and 10th positions: UBS ETRACS M Py 2xLvg MortgREIT ETN SerB (MRRL) ; Credit Suisse X-LinksMP2xLvgMortREIT ETN (REML) ; UBS ETRACS Mthly Py 2xLvg Mortg REIT ETN (MORL) ; UBS ETRACS M Py 2xLvg US Sm Cp HiDiv ETN (SMHD) ; UBS ETRACS Mthly Py 2xLvg Closed-End ETN (CEFL) ; UBS ETRACS M Py 2xLvg Divers Hi Inc ETN (DVHL) .
Three CEICs placed sixth, eighth and ninth, Stone Harbor Emerging Mkts Income (EDF) ; Oxford Lane Capital (OXLC) , and Western Asset Mortgage Defined Opp Fund (DMO) ; Eagle Point Credit Co LLC (ECC) . One ETF placed seventh on this list, InfraCap MLP ETF (AMZA) .This completed the top 10 Closed End Investment Companies, Exchange Traded Funds and Notes list for February, 2019.
Compare Equity To Fund Performance
Note that the top 10 equity dividends are now equally priced with those of the top 10 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 a upside vs. buy & hold in November. Another list factored December 2012 reader comments.
Again last year, the 2018 articles in January, February, March, April, May, June, July, August, September, and October/November, and December. Now we have a new year of 2019 articles in January, continuing 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.
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 YahooFinance, produced the following charts.
Actionable Conclusions: Analysts Estimated (12) 5 Lowest Priced of Top 10 High Yield MoPay Dividend Stocks Would Produce 6.25% VS. (14) 16.52% Net Gains from All 10 by February, 2020
$5000 invested as $1k in each of the five Lowest priced stocks of the top 10 MoPay dividend dog kennel by yield were predicted by analyst 1 year targets to deliver 62.17% less net gain than $5,000 invested as $.5k in all 10. The sixth lowest priced MoPay dividend dog,Great Elm Capital Xoep (NASDAQ:GECC), was predicted to deliver the best net gain of 49.1%.
Lowest priced five MoPay dividend stocks estimated February 15 were: Permianville Royalty Trust (PVL); American Hotel Income Properties REIT LP (OTC:AHOTF); Dynex Capital Inc (DX); Prospect Capital Corp (PSEC); Orchid Island Capital Inc. (ORC), with prices ranging from $2.43 to $7.07.
Higher priced five MoPay dividend equities estimated February 15 were: Great Elm Capital Corp (GECC); Capitala Finance Corp (CPTA); AGNC Investment (AGNC); Global Net Lease Inc (GNL); ARMOUR Residential REIT Inc (ARR), whose prices ranged from $8.27 to $21.05.
This distinction between five low priced dividend dogs and the general field of 10 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. 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.
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; analyst mean target price by Thomson/First Call in Yahoo Finance. Dog Photo: reddit.com
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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 covers one or more microcap stocks. Please be aware of the risks associated with these stocks.