Foreword
All but nine equities and all of the funds listed in this May collection of monthly-paying dividend dogs live up to the ideal of annual dividends from $1K invested exceeding their single share price. Here in the MoPay collection lie affordable yet volatile and risky bargains. One metric ($1k Invested income>1 share price) fits all!
After the 2020 Ides of March dip, and before other pull-backs yet to come, the time to buy top yield MoPay dogs may now be at hand.
Actionable Conclusions (1-10): Brokers Estimated Top Ten MoPay Equities Could Net 7.6% to 62.68% Gains By May 2022
Six 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 Dogcatcher yield-based strategy for this MoPay group, as graded by broker estimates this month, proved 60% accurate.
Estimated dividend amounts from $1000 invested in each of the ten highest-yielding stocks plus analysts median 1yr target prices for those stocks, as reported by YCharts, produced the data points. Note: target prices from lone analysts were not applied (n/a). Ten probable profit-generating trades to May 2022 were:
Source: YCharts
Telefonica Brasil SA (VIV) netted $626.60 based on the median of target estimates from four analysts, plus estimated annual dividends less broker fees. A Beta number was not available for VIV. VIV may not be a permanent monthly payor, YCharts (the list source) has detected only three consecutive months of dividend outlays by VIV.
Orchid Island Capital Inc (ORC) netted $214.83 based on dividends alone, less broker fees. The Beta number showed this estimate subject to risk/volatility 37% over the market as a whole.
San Juan Basin Royalty Trust (SJT) netted $150.70, based on dividends alone less broker fees. The Beta number showed this estimate subject to risk/volatility 21% less than the market as a whole.
SLR Senior Investment Corp. (SUNS) netted $122.26 based on the median of target estimates from three analysts, plus estimated annual dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 41% over the market as a whole.
PennantPark Floating Rate Capital LTD (PFLT) netted $109.00 based on the median of annual price estimates from five analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 104% more than the market as a whole.
Gladstone Commercial Corp. (GOOD) netted $113.18 based on the median of target price estimates from six analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 1% over the market as a whole.
Dividend Select 15 Corp. (OTCPK:DVVDF) was forecast to net $83.10 based just on dividends less broker fees. A Beta number was not available for DVVDF.
Ellington Financial Inc. (EFC) netted $82.76 based on the median of annual price estimates from eight analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 120% more than the market as a whole.
Stellus Capital Investment (SCM) netted $81.45 based on the median of annual price estimates from four analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 38% more than the market as a whole.
Slate Grocery REIT (OTC:SRRTF) netted $76.00 based on dividends alone minus broker fees. The Beta number showed this estimate subject to risk/volatility 73% over the market as a whole.
Average net gain in dividend and price was 16.31% on $1k invested in each of these ten MoPay stocks. This gain estimate was subject to average risk/volatility 49% greater than the market as a whole.
Actionable Conclusion (11): (Bear Alert) Analysts Predicted Three MoPay Equities To Show -3.69% to -20.36% Losses to May 2022
The probable losing trades revealed by Y-Charts to 2022 were:
Source: YCharts.com
Pembina Pipeline Corp. (PBA) projected a loss of $36.87 based on its dividend and the median of target price estimates from eighteen analysts including broker fees. The Beta number showed this estimate subject to risk/volatility 50% greater than the market as a whole.
Horizon Technology Finance (HRZN) projected a loss of $56.48 based on its dividend and the median of target price estimates from five analysts, including broker fees. The Beta number showed this estimate subject to risk/volatility 10% more than the market as a whole.
Prospect Capital Corp. (PSEC) projected a loss of $203.57 based on its dividend and the median of target price estimates from two analysts, including broker fees. The Beta number showed this estimate subject to risk/volatility 3% less than the market as a whole.
The average net loss in dividend and price was 9.9% on $3k invested as $1k in each of these three MoPay stocks. This loss estimate was subject to average risk/volatility 19% greater than the market as a whole.
Source: Photo by Anna Nesterova on Unsplash
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".
May Monthly Pay Dividend Data
Three lists produce numerous actionable conclusions and several more un-numbered results. To draw these conclusions and results, April 1 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. Numerous prominent MoPay firms declared dividend cuts between December 2016 and May 2020. Those reducing or curtailing dividends in May and June 2020, included: Oxford Square Capital Corp.; Partners Real Estate Investment Trust; Orchid Island Capital Inc; Cross Timbers Royalty Trust; H&R Real Estate Investment Trust; BTB Real Estate Investment Trust; American Finance Trust Inc.; Mesa Royalty Trust; Solar Senior Capital Ltd; Ellington Financial Inc.; Dividend Select 15 Corp.; Chesswood Group Ltd.; Sabine Royalty Trust; TORC Oil & Gas Ltd.; Freehold Royalties Ltd.; ARC Resources Ltd.; Inter Pipeline Ltd.; San Juan Basin Royalty Trust; Ag Growth International Inc.
Former MoPay top ten regular by yield. Bluerock Residential (BRG) announced December 2019 it was retreating to quarterly dividend payments "in keeping with industry tradition." That tradition continued with ARMOUR Residential REIT (ARR) and Stellus Capital Investment Corp. (SCM) both transitioned to QPay in June, 2020. Now, both SCM and ARR have returned to MoPay mode.
Capitala Finance Corp. (CPTA) cut its monthly payout from $0.13 to $0.0833 as of October 30, 2017, then suspended it as of May 3, 2020. Oxford Square Capital (OXSQ), however, issued this nebulous statement regarding its pending monthly payments: "While no decision has yet been made with regard to the Company’s common stock distributions for July, August and September, we believe that the Company’s Board of Directors will likely elect to reduce or suspend the Company’s distributions for those months." On June 2, 2020, the company declared $0.035 monthly distributions for July August and September, which have persisted.
Top yield stock for July 2018, 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, to $0.08 in September 2018, and to $0.055 for May 2020. However, in August 2020, ORC monthly dividend increased from $0.06 to $0.065 for September, October, and into 2021.
The U.S. exchange MoPay segment is volatile, transitive, and recovering. More trades in monthly pay equities are available from Canadian firms, many of which are listed on U.S. OTC exchanges. Active listed MoPays priced over $3 were up from 71 in October to 73 in February 2021, and now in April 2021 at the full strength of 75 active last seen back in May/June 2020, though 75 are counted here, including VIV as a three-month veteran on this MoPay list.
List One:
US Exchange Traded Monthly Pay Dividend Equities by Yield
Source: YCharts
Top ten of these US exchange listed monthly pay dividend equities showing the best yields for May represented four of the eleven Morningstar market sectors, with representative firms split 1, 5, 1, and 3 between the energy, real estate, communication services, and financial services sectors.
First place went to the single energy representative, San Juan Royalty Trust [1]. Second place belonged to the first of those five real estate equities, EPR Properties (EPR) [2].
The remaining four real estate representatives placed third, fourth, ninth and tenth, Orchid Island Capital [3], ARMOUR Residential REIT Inc [4], Slate Grocery REIT [9],and AGNC Investment Corp. (AGNC) [10].
Thereafter, the top ten collection was centered by the new MoPay communication services entity, Telefonica Brasil SA [5]. Then, three financial services sector representatives placed fourth, sixth, through eighth: PennantPark Floating Rate Capital Ltd. (PFLT) [6]; Prospect Capital Corp. [7]; Dividend Select 15 Corp. [8], which completed the incoming May MoPay top ten equities 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 May 3 were compared with the median of analyst target prices one year out. The ten top stocks displayed 0% to 54.04% price upsides for the next year based on those analysts' 1 yr. targets.
Source: YCharts
Seven (tinted) of ten on this price upside list were members of the top ten list by yield. The first five places on this upside list went to: Telefonica Brasil SA [1], Orchid Island Capital [2], SLR Senior Investment Corp. [3], PennantPark Floating Rate Capital Ltd [4], and Gladstone Commercial Corp. [5].
The lower level five (the last of which showed no upside) were Ellington Financial Inc. [6], Stellus Capital [7], Dynex Capital Inc (DX) [8], AGNC Investment Corp [9], San Juan Basin Royalty Trust [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 nine MoPay stocks showing the highest upside price potential to May 2022 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 of 10.15% or greater calculated as of May 3 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 three uncollateralized debt instruments [ETNs], four closed-ended investment company [CEICs], and three open-ended investment companies [ETFs].
Source: YCharts
Two uncollateralized debt instrument companies (ETNs) placed first, second, and fifth: Credit Suisse X-Links Silver Covered Call ETN (SLVO) [1]; Credit Suisse X-Links Gold Covered Call ETN (GLDI) [2], and Credit Suisse X-Links Monthly Pay 2x Leveraged Mortgage REIT ETN (REML) [5].
Four closed end investment companies (CEICs) placed third, fourth, ninth and tenth, Oxford Lane Capital (OXLC) [3], Highland Global Allocation Fund (HGLB) [5], RiverNorth/ DoubleLine Strategic Opportunities Fund (OPP) [9], and First Trust Senior FR income II (FCT) [10].
Finally, three open ended investment companies[ETFs] placed fifth, seventh, and eighth, Global X NASDAQ 100 Covered Call ETF (QYLD) [5] Global X Russell 2000 Covered Call ETF (RYLD) [7], and InfraCap MLP ETF (AMZA) [8] to complete the top ten Exchange Traded Notes, Exchange Traded Funds, and Closed End Investment Companies list for May 2021-22.
Compare Equity To Fund Performance
Source: YCharts
Note that the May 2021 top ten equity dividends are now priced 2% higher than those of the top ten funds. In March, equities were 1% lower, and February saw equities 1% higher than the funds. In January, they were equal; October to December, they were 1% lower, and August and September had them 1% higher. Those previous two months were the first time equities showed prices higher than funds in over a year. Equities were equal to the funds in July, 1% lower in June, 3% lower in March, April and early May. They were 2% apart in December and November 2019, but in October, they were 1% less. For September 2019, equities were 2% under funds, but last August, they were equal. The price differences are likely found in management fees collected in the fund world and the price of risk/volatility.
Background and Actionable Conclusions
Since June 2012, readers suggested to include these 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.
Now, we have a new decade of 2020 that began last January, and continued in February, March, April, early May, and mid-May, June, July, August, September, October, November, December. The progression continued in 2021 in January, February, March, April and now May. We can compare and contrast MoPay equity upside potential to the yield (and higher risk/volatility) should one be tempted to buy and hold Closed End Investments or Exchange Traded Funds and Notes.
Yield Metrics Found A 53.16% Advantage To The 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 (11) Would Produce 17.43% Vs. (12) 11.38% Net Gains from All Ten by May 2022
Source: YCharts
$5000 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 53.16% more net gain than $5,000 invested as $0.5k in all ten. The fourth lowest-priced MoPay dividend dog, Telefonica Brasil SA, was predicted to deliver the best net gain of 62.66%.
Source: YCharts
Lowest priced five MoPay dividend stocks estimated as of April 1 were: San Juan Basin Royalty Trust; Orchid Island Capital Inc.; Dividend Select 15 Corp.; Telefonica Brasil SA; Prospect Capital Corp., with prices ranging from $5.08 to $8.14.
Higher priced five MoPay dividend equities estimated as of April 1 were: Slate Grocery REIT; ARMOUR Residential REIT Inc.; PennantPark Floating Rate Capital Ltd.; AGNC Investment Corp.; EPR Properties, whose prices ranged from $10.22 to $47.88.
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 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.
Afterword
If somehow you missed the suggestion of the stocks ripe for picking at the start of this article, here is a reprise of the list at the end:
May MoPay Equities List
(Alphabetical by Ticker)
Source: YCharts
All but nine equities and all of the funds listed in this May collection of monthly-paying dividend dogs live up to the ideal of annual dividends from $1K invested exceeding their single share price. Here in the MoPay collection lie affordable yet volatile and risky bargains.
After the past 2020 Ides of March dip, and before other pull-backs yet to come, the time to buy top yield MoPay dogs may now be at hand.
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 www.ycharts.com; www.dividend.com; finance.yahoo.com; analyst mean target price by YCharts. Dog Photo: Photo by Anna Nesterova on Unsplash
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