Seeking Alpha

July's Monthly Dividends From 89 U.S. Equities And 80 Funds

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Includes: AETUF, AGNC, AHOTF, AMJL, AMZA, BRG, CEFL, CLNC, CPTA, DVHL, DVVDF, DX, EFC, GECC, GNL, JMP, LMLP, MORL, MRRL, ORC, OXLC, OXSQ, PFLT, PRT, PSEC, PVL, REML, ROYT, SCM, SJT, SMHD, SUNS, TAHO, VET, WSR
by: Fredrik Arnold
Summary

July's U.S. monthly-paid (MoPay) dividends, upsides, and net gains: 1. Stocks by yield >.5% (89); 2. Stocks by price-upside (30); 3. Closed-end investments, exchange-traded funds & notes (CEICs/ETFs/ETNs) by yield >7% (80).

July U.S. MoPay equities expanded in neither number nor gains. Canadian MoPays are omitted. CEICs/ETFs/ETNs are combined and limited to yields over 7.28%.

Items: 1. Top MoPay stock gains; 2. Overall best MoPay gainers; 3. Funds vs. Equities; 4. Fund risks/rewards. All per prices as of 6/25/19.

Analyst annual targets revealed that investing $5k in the lowest priced five of ten top yield MoPay U.S. exchange equities produced 42.55% LESS gain than $5k invested in all ten.

Actionable Conclusions (1-10): Brokers Estimated Top Ten MoPay Equities To Net 14.44% To 66.11% Gains By July 2020

Four of the ten top-yield MoPay stocks (shaded in the chart below) 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 broker 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:

Source: YCharts

ARC Resources Ltd (OTCPK:AETUF) netted $661.09 based on a mean target estimate from fifteen analysts, plus estimated annual dividends less broker fees. The Beta number showed this estimate subject to risk 12% more than the market as a whole.

Colony Credit Real Estate (CLNC) netted $422.98 based on a median of target price estimates from two analysts, plus dividends less broker fees. A Beta number was not available for CLNC.

Vermilion Energy Inc (VET) netted $383.90 based on dividends plus the median of annual price estimates from twenty-nine analysts less broker fees. The Beta number showed this estimate subject to risk 50% less than the market as a whole.

PermRock Royalty Trust (PRT) netted $379.84, based on dividend plus the median of target price estimates from three analysts less broker fees. A Beta number was not available for PRT.

PennantPark Floating Rate (PFLT) netted $284.96 based on a median of target price estimates from six analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk 22% less than the market as a whole.

Dynex Capital Inc (DX) was forecast to net $254.01 based on mean target price estimates from four analysts plus dividends less broker fees. The Beta number showed this estimate subject to risk 35% less than the market as a whole.

Solar Senior Capital (SUNS) netted $226.56, based on dividend, plus the median of target prices estimated by three analysts, less broker fees. The Beta number showed this estimate subject to risks 38% less than the market as a whole.

AGNC Investment Corp. (AGNC) netted $160.35 based on a median of target price estimates from eight analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk 88% less than the market as a whole.

Stellus Capital Investment (SCM) netted $145.35 based on dividends plus the median of annual price estimates from five analysts less broker fees. The Beta number showed this estimate subject to risk 27% less than the market as a whole.

Ellington Financial Inc. (EFC) netted $144.41 based on a median target price estimates from seven analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk 55% less than the market as a whole.

Average net gain in dividend and price was 30.63% on $1k invested in each of these ten MoPay stocks. This gain estimate was subject to average risk 38% less than the market as a whole.

Actionable Conclusion (11): (Bear Alert) Analysts Anticipated One MoPay Dog To Lose 12.99% By July 2020

The probable losing trade revealed by YCharts was:

Source: YCharts

Prospect Capital Corp. (PSEC) cast a loss of $129.97 based on dividend and a projected target price estimate based on the median of projected target price estimates from two analysts, including $10 of broker fees. The Beta number showed this estimate subject to volatility 6% less than the market as a whole.

Source: wagwalking.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".

July Monthly Pay Dividend Data

Three lists produced numerous actionable conclusions and several more unnumbered results. To draw these conclusions and results, June 25 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. Note: YCharts data policy retains monthly pay status on its lists for one year after termination.

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."

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, to $0.09 in March, and to $0.08 for September 2018.

Upon inspection, this month's YCharts equity list was pared down by removing four former MoPay members: JMP Group (JMP), San Juan Basin Royalty Trust (SJT), Dividend Select 15 Corp. (OTCPK:DVVDF), and Global Net Lease (GNL).

The U.S. MoPay segment is volatile, transitive, and shrinking. More over-the-counter trades in monthly pay equities are available from Canadian firms, many of which are picking up U.S. OTC authorization.

List One: 89 U.S. Monthly Pay Dividend Equities by Yield

Source: YCharts

Top ten of these U.S. exchange listed monthly pay dividend equities showing the best yields into June represented three of the eleven Morningstar market sectors, with representative firms split 3 to 5 to 2 between the energy, real estate, and financial services sectors.

The first of three energy equities took the top slot, Pacific Coast Oil Trust (ROYT) [1]. The other two energy equities placed third and sixth, Permianville Royalty Trust (PVL) [3] and PermRock Royalty Trust (PRT) [6].

Next for July was the first of five real estate sector representatives, Orchid Island Capital Inc. [2]. The other four real estate dogs placed fourth and seventh through ninth: Dynex Capital Inc. (DX) [4], American Hotel Income Properties REIT LP (OTC:AHOTF) [7], AGNC Investment Corp., Colony Credit Real Estate Inc. (CLNC).

The two financial services representatives placed fifth and tenth, Oxford Square Capital Corp. (OXSQ) [5], and Great Elm Capital Corp. (GECC) [10]. These completed the July MoPay top ten 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 June 25 were compared with analyst median target prices one year out. The ten top stocks displayed 8.52% to 75.96% price upsides for the next year based on analyst 1 yr. targets.

Source: YCharts

Three of the ten (tinted) on this price upside list were members of the top ten list by yield. In the first five places on this upside list were ARC Resources Ltd. [1], Colony Credit Real Estate Inc. [2], Vermilion Energy Inc. [3], PermRock Royalty Trust [4], and PennantPark Floating Rate Capital [5]. The lower level five were, Solar Senior Capital [6], Dynex Capital Inc. [7], Whitestone REIT (WSR) [8], Ellington Financial Inc. [9], and Stellus Capital Investment Corp. [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.

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 below were culled from nearly 800 candidates. Yields greater than 12.9% calculated as of June 25 determined the top ten.

source: YCharts

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

Source: YCharts

Uncollateralized debt instruments (ETNs) captured the first, through fourth, sixth, seventh, ninth, and tenth positions: ETRACS Monthly Pay 2xLeveraged Mortgage REIT ETN Series B (MRRL) [1]; Credit Suisse X-Links Monthly Pay 2xLeveraged Mortgage REIT ETN (REML) [2]; ETRACS Monthly Pay 2xLeveraged U.S. Small Cap High Dividend ETN (SMHD) [3]; UBS ETRACS Monthly Pay 2x Leveraged Mortgage REIT ETN (MORL) [4]; Credit Suisse X-Links Monthly Pay 2xLeveraged Alerian MLP Index ETN (AMJL) [6]; UBS ETRACS Monthly Pay 2xLeveraged Closed - End Fund ETN (CEFL) [7]; UBS ETRACS Monthly Pay 2xLeveraged Diversified High Income ETN (DVHL) [9]; UBS ETRACS Monthly Pay 2xLeveraged Wells Fargo MLP Ex-Energy ETN (LMLP) [10].

One ETF placed fifth on this list, InfraCap MLP ETF (AMZA) [7]. Finally, one closed-end investment company placed eighth, Oxford Lane Capital (OXLC) [8]. This completed the top ten exchange-traded notes, exchange-traded funds, and closed-end investment companies list for July 2019.

Compare Equity To Fund Performance

Source: YCharts

Note that the top ten equity dividends are now priced lower than those of the top ten funds. This is a new variation for 2019 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. The difference is in the management fees collected in the fund world.

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.

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. Now we have a new year of 2019 articles in January, February, March, April, May, and June, 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.

Yield Metrics Found No Advantage In Five Lowest Priced Of Ten High Yield MoPay Equities

Source: YCharts

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

Actionable Conclusions: Analysts Estimated 5 Lowest Priced of Top Ten High Yield MoPay Dividend Stocks (12) Would Produce 10.63% Vs. (13) 18.51% Net Gains from All Ten by July 2020

Source: YCharts

$5,000 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 1-year targets to deliver 42.55% LESS net gain than $5,000 invested as $.5k in all ten. The eighth lowest priced MoPay dividend dog, Colony Credit Real Estate, was predicted to deliver the best net gain of 42.3%.

Source: YCharts

Lowest priced five MoPay dividend stocks estimated June 25 were: Pacific Coast Oil Trust; Permianville Royalty Trust; American Hotel Income Properties REIT LP; Oxford Square Capital Corp.; Orchid Island Capital Inc., with prices ranging from $2.13 to $6.35.

Higher priced five MoPay dividend equities estimated May 3 were: PermRock Royalty Trust; Great Elm Capital Corp.; Dynex Capital Inc.; Colony Credit Real Estate; AGNC Investment, whose prices ranged from $8.18 to $16.86.

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 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.

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: wagwalking.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.