Seeking Alpha

The Top Yield 89 MoPay Dividend Dogs And 80 Funds For September

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Includes: AETUF, AGNC, ARR, BRG, CEFL, CLNC, CLNY, CPTA, CRT, DVHL, DVVDF, DX, GECC, GNL, HIE, JMP, LMLP, MFCSF, MORL, MRRL, MTR, ORC, OXLC, OXSQ, PFLT, PRT, PVL, REML, ROYT, RSF, SJT, SMHD, TAHO, VET
by: Fredrik Arnold
Summary

September'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 investment companies, Exchange-traded funds and notes (CEICs/ETFs/ETNs) by yield >7% (80).

U.S. MoPay equities are neither bigger nor better. Canadian MoPays are omitted. But many are listed OTC here. CEICs/ETFs/ETNs are combined and limited to yields over 7.34%.

Items: 1. Top MoPay stock gains; 2. Overall best MoPay gainers; 3. Funds vs. Equities; 4. Fund risks/rewards. All per prices as of 8/26/19.

Analyst annual targets revealed that investing $5k in the lowest priced five of ten top yield MoPay US exchange equities produced 73.98% LESS gain than $5k invested in all ten.

Actionable Conclusions (1-10): Brokers Estimated Top Ten MoPay Equities To Net 19.47% to 113.2% Gains By September 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

Vermilion Energy Inc. (VET) netted $1,132.00 based on dividends plus the median of annual price estimates from fifteen analysts less broker fees. The Beta number showed this estimate subject to risk 10% more than the market as a whole.

ARC Resources Ltd. (OTCPK:AETUF) netted $968.99 based on the median of target estimates from fourteen analysts, plus estimated annual dividends less broker fees. The Beta number showed this estimate subject to risk 2% under the market as a whole.

PermRock Royalty Trust (PRT) netted $807.17, based on dividend plus the median of target price estimates from four analysts less broker fees. A Beta number was not available for PRT.

Colony Credit Real Estate (CLNC) netted $592.16 based on a median of target price estimates from two analysts, plus dividends less broker fees. A Beta number was not available for CLNC.

Capitala Finance Corp. (CPTA) netted $508.23 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 11% more than the market as a whole.

Great Elm Capital Corp. (GECC) netted $438.80 based on dividend, plus the median of target prices estimated by two analysts, less broker fees. A Beta number was not available for GECC.

Dynex Capital Inc. (DX) was forecast to net $320.17 based on mean target price estimates from four analysts plus dividends less broker fees. The Beta number showed this estimate subject to risk 38% less than the market as a whole.

AGNC Investment Corp. (AGNC) netted $238.90 based on a median target price estimates from eleven analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk 77% less than the market as a whole.

PennantPark Floating Rate (PFLT) netted $232.61 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 28% less than the market as a whole.

ARMOUR Residential REIT (ARR) netted $194.73 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 33% less than the market as a whole.

Average net gain in dividend and price was 54.34% on $1k invested in each of these ten MoPay stocks. This gain estimate was subject to average risk 12% 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

Oxford Square Capital (OXSQ) cast a loss of $72.35 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 54% less than the market as a whole.

Source: tailandfur.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".

September Monthly Pay Dividend Data

Three lists produced numerous actionable conclusions and several more un-numbered 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 frequency of 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."

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 has dropped out 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, last month's YCharts equity list was pared down by removing four former MoPay members: JMP Group (JMP); San Juan Trust (SJT); Dividend Select 15 Corp. (OTCPK:DVVDF); 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 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 September represented four of the eleven Morningstar market sectors, with representative firms split 2, 1, 5 to 2 between the real estate, healthcare, energy, and financial services sectors.

The first of two real estate sector representatives led the top ten by yield, Orchid Island Capital Inc. (ORC) [1]. The other real estate dog placed sixth: Colony Credit Real Estate Inc. (CLNC) [6].

The lone healthcare representative placed second, Medical Facilities Corp. (OTCPK:MFCSF) [2]. Then five energy equities took most of the middle slots, placing third through fifth, seventh and eighth: Vermilion Energy Inc. (VET) [3]; Mesa Royalty Trust (MTR) [4]; PermRock Royalty Trust (PRT) [5]; Pacific Coast Oil Trust (ROYT) [7]; Permianville Royalty Trust (PVL) [8].

Finally, in eighth and ninth places were the financial services representatives, Capitala Finance Corp. (CPTA) [9], and Oxford Square Capital Corp. (OXSQ) [10], to complete the September 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 August 26 were compared with analyst median target prices one year out. The ten top stocks displayed 12.5% to 99.43% price upsides for the next year based on analyst 1-year targets.

Source: YCharts

Four of the ten (tinted) on this price upside list were members of the top ten list by yield. The first five places on this upside list went to: Vermilion Energy Inc. (VET) [1], ARC Resources Ltd. (OTCPK:AETUF) [2], , PermRock Royalty Trust (PRT) [3], Colony Credit Real Estate Inc. (CLNC) [4], Capitala Finance Corp. (CPTA) [5]. The lower level five were Great Elm Capital Corp. (GECC) [6], Dynex Capital Inc. (DX) [7], Cross Timbers Royalty Trust (CRT) [8], PennantPark Floating Rate Capital Ltd. (PFLT) [9], and AGNC Investment Corp. (AGNC) [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 12.55% calculated as of August 26 determined the top ten.

Source: YCharts

The top ten monthly paying dividend investment companies, funds, and notes showing the biggest yields for per YCharts and Yahoo Finance data featured seven uncollateralized debt instruments [ETNs], and three closed-ended investment companies [CEICs].

Source: YCharts

Uncollateralized debt instruments (ETNs) captured the first, through fifth, seventh, and ninth positions: UBS ETRACS M Py 2xLvg US Sm Cp HiDiv ETN (SMHD) [1]; Credit Suisse X-LinksMP2xLvgMortREIT ETN (REML) [2]; UBS ETRACS M Py 2xLvg MortgREIT ETN SerB (MRRL) [3]; UBS ETRACS Mthly Py 2xLvg Mortg REIT ETN (MORL) [4]; UBS ETRACS Mthly Py 2xLvg Closed-End ETN (CEFL) [5]; UBS ETRACS M Py 2xLvg Divers Hi Inc ETN (DVHL) [7]; UBS ETRACS M Py 2xLvg WF MLP Ex-Engy ETN (LMLP) [9].

Finally, three closed-end investment companies placed sixth, eighth, and tenth, Oxford Lane Capital (OXLC) [6], Miller/Howard High Income Equity (HIE) [8], and RiverNorth Marketplace Lending Corp. (RSF) [10]. This completed the top ten exchange traded notes, exchange traded funds, and closed end investment companies list for September 2019.

Compare Equity To Fund Performance

Source: YCharts

Note that the top ten equity dividends are now priced 2% less those of the top ten funds. This is a new variation for September 2019 in the dividend dog kennel. Last month equities were equal to funds. The difference is likely found in 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, June, July, and August, 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 For 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 9.49% VS. (13) 36.45% Net Gains from All Ten by September 2020

Source: YCharts

$5,000 invested as $1k in each of the five lowest priced stocks in the top ten MoPay dividend dog kennel by yield were predicted by analyst 1 year targets to deliver 73.98% LESS net gain than $5,000 invested as $.5k in all ten. The tenth lowest priced MoPay dividend dog, Vermilion Energy Inc. (VET), was predicted to deliver the best net gain of 113.2%.

source: YCharts

Lowest priced five MoPay dividend stocks estimated as of August 26 were: Pacific Coast Oil Trust (ROYT); Permianville Royalty Trust (PVL); Medical Facilities Corp. (OTCPK:MFCSF); Orchid Island Capital Inc. (ORC); Oxford Square Capital Corp. (OXSQ), with prices ranging from $2.14 to $6.19.

Higher priced five MoPay dividend equities estimated as of August 25 were: PermRock Royalty Trust (PRT); Capitala Finance Corp. (CPTA); Mesa Colony Credit Real Estate Inc. (CLNY); Vermilion Energy Inc. (VET), whose prices ranged from $6.80 to $14.04.

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, may someday be usable to find 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.

Graphs and charts were compiled by Rydlun & Co., LLC from data derived from YCharts.com; dividend.com; Yahoo Finance; analyst mean target price by Thomson/First Call in Yahoo Finance. Dog Photo: tailandfur.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.

Additional disclosure: 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.