All but twelve equities and all of the funds listed in this August batch 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 be now.
Five 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 50% accurate.
Estimated dividend payouts 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 for the gains estimated below. Note: target prices from lone analysts were not applied (n/a). Ten probable profit-generating trades to August 2022 were:
Orchid Island Capital Inc (ORC) netted $368.01 based on the median of target price estimates from two analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 30% over the market as a whole.
Dynex Capital Inc (DX) netted $190.91 based on the median of target price estimates from five analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 24% over the market as a whole.
Stellus Capital Investment (SCM) netted $168.40 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 38% more than the market as a whole.
LTC Properties Inc (LTC) netted $163.22 based on the median of target estimates from nine analysts, plus estimated annual dividends less broker fees. The Beta number showed this estimate subject to risk /volatility 3% less than the market as a whole.
AGNC Investment Corp (AGNC) was forecast to net $159.03 based on the median of target price estimates from fifteen analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 2% greater than the market as a whole.
Ellington Financial Inc (EFC) netted $153.15, based on the median of target price estimates from eight analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 20% greater than the market as a whole.
SLR Senior Investment Corp Ltd (SUNS) netted $120.24 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 40% over the market as a whole.
Gladstone Commercial Corp (GOOD) netted $108.49 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 2% over the market as a whole.
PennantPark Floating Rate Capital LTD (PFLT) netted $99.90 based on the median of annual price estimates from six analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 104% greater than the market as a whole.
Oxford Square Capital Corp (OXSQ) netted $92.39 based on the median of annual price estimates from two analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 34% more than the market as a whole.
Average net gain in dividend and price was 16.24% on $1k invested in each of these ten MoPay stocks. This gain estimate was subject to average risk/volatility 74% greater than the market as a whole.
The probable losing trades revealed by Y-Charts to 2022 were:
Gladstone Capital (GLAD) projected a loss of $42.59 based on its dividend and the median of target price estimates from three analysts including broker fees. The Beta number showed this estimate subject to risk/volatility 45% greater than the market as a whole.
Pembina Pipeline Corp (PBA) projected a loss of $59.70 based on its dividend and the median of target price estimates from thirteen analysts including broker fees. The Beta number showed this estimate subject to risk/volatility 51% greater than the market as a whole.
Horizon Technology Finance (HRZN) projected a loss of $72.31 based on its dividend and the median of target price estimates from four analysts including broker fees. The Beta number showed this estimate subject to risk/volatility 9% more than the market as a whole.
Prospect Capital Corp (PSEC) projected a loss of $189.50 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 5% less than the market as a whole.
The average net loss in dividend and price was 9.10% on $4k invested as $1k in each of these four MoPay stocks. This loss estimate was subject to average risk/volatility 25% greater than the market as a whole.
Source: Open source dog art from dividenddogcatcher.com
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".
Three lists produce numerous actionable conclusions and several more un-numbered results. To draw these conclusions and results, August 9 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.
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. Within three months, however, both SCM and ARR returned to MoPay mode.
Capitala Finance 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, 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, 2020 which have persisted for the past year.
Top yield stock for July, 2018, and June 2021, Orchid Island Capital, 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, recovering, and adding members. More trades in monthly pay equities are available from Canadian firms, many of which are also listed on U.S. OTC exchanges. Active listed MoPays priced over $2 were up from 71 in October to 73 in February 2021, and now in August 2021 at the full strength of 89 active, not seen for years.
Top ten of these US exchange listed monthly pay dividend equities showing the best yields for August represented just four of the eleven Morningstar market sectors, with representative firms split 4, 3, 2 and 1 between the real estate, financial services, energy, and basic materials sectors.
First place went to the first of those four real estate equities, Orchid Island Capital .
The remaining three real estate representatives placed second, sixth and seventh, ARMOUR Residential REIT Inc , AGNC Investment Corp , and Dynex Capital Inc .
Thereafter the top ten collection was packed by three financial services sector representatives placing third, eighth, and tenth: Ellington Financial Inc ; Oxford Square Capital Corp ; Prospect Capital Corp .
The two energy representatives placed fourth and ninth by yield, Sabine Royalty Trust (SBR), and San Juan Basin Royalty Trust (SJT) . Finally, the lone basic materials sector representative in the top ten placed fifth, Chemtrade Logistics Income Fund, (OTC:CGIFF) which completed the August MoPay top ten equities list by yield.
The results shown below from YCharts for MoPay dividend stocks as of market closing price August 9 were compared with the median of analyst target prices one year-out. The ten top-stocks displayed 1.06% to 18.04% price upsides for the next year based on those analyst 1 yr. targets.
Five (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: Orchid Island Capital Inc , Dynex Capital Inc , LTC Properties Inc , Stellus Capital Investment , AGNC Investment Corp .
The lower level five were, Ellington Financial Inc , SLR Senior Investment Corp , Gladstone Commercial Corp , Pennant Park Floating Rate Capital Ltd , and Oxford Square Capital Corp .
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 to August 2022 were gleaned from 30 selected by yield. Three to nine analysts have historically provided the most accurate median target price estimates.
Eighty top monthly dividend paying (MoPay) Closed End Funds, Exchange Traded Funds and Notes listed below were culled from nearly 800 candidates. Yields of 9.89% or greater calculated as of August 9 determined the top ten.
The top ten monthly paying dividend investment companies, funds, & notes showing the biggest yields for per YChart & YahooFinance data featured four uncollateralized debt instruments [ETNs], four closed-ended investment company [CEICs], and two open-ended investment companies [ETFs].
Four uncollateralized debt instrument companies (ETNs) placed first, third, fourth, and ninth: Credit Suisse Silver Covered Call ETN (SLVO) , Credit Suisse X-Links Monthly Pay 2x Leveraged Mortgage REIT ETN (REML) , Credit Suisse Crude Oil Shares Covered Call ETN (USOI) ,Credit Suisse Gold Shares Covered Call ETN (GLDI) , and ETRACS Monthly Pay 2x Leveraged US Small Cap High Dividend ETN (SMHB) .
Four closed end investment companies (CEICs) placed second, seventh, eighth, and tenth, BlackRock 2022 Global Income Opportunity (BGIO) , Oxford Lane Capital Corp (OXLC), Aberdeen Income Credit Strategies Fund (ACP) , and First Trust Senior FR Income II (FCT) .
Finally, two open ended investment companies (ETFs) placed fifth, and sixth, Global X NASDAQ 100 Covered Call ETF (QYLD) , and Global X Russell 2000 Covered Call ETF (RYLD) . to complete the top ten Exchange Traded Notes, Exchange Traded Funds, and Closed End Investment Companies list for August, 2021-22.
However, in the single company stock world, dividends greater than 20% are generally regarded as unsustainable and, therefore ignored (or discounted). This condition exists in the top two funds listed above. Therefore, the following chart reveals the top ten dividend performance for the top ten Exchange Traded Notes, Exchange Traded Funds, and Closed End Investment Companies list without those top two outsized dividend estimates.
Note that the August 2021 top ten equity dividends (A) are currently priced 2% higher than those of the top ten funds. In June they were 1% higher. April and May equities were 2% higher. 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 two months in the fall of 2020 were the first time equities showed prices higher than funds in over a year. The price differences are found in the outlandishly high dividends attributed to the top two funds. Without those two entities the funds are priced 2% higher than the equities.
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, May, June, July and now August. We 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.
Ten monthly pay stock equities were ranked by yield. Those results, verified by YCharts and YahooFinance, produced the following charts.
$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 28.26% more net gain than $5,000 invested as $.5k in all ten. The second lowest-priced MoPay dividend dog, Orchid Island Capital Inc, was predicted to deliver the best net gain of 36.8%.
Lowest priced five MoPay dividend stocks estimated as of August 9 were: Oxford Square Capital Corp; Orchid Island Capital Inc; San Juan Basin Royalty Trust; Chemtrade Logistics Income Fund; ARMOUR Residential REIT Inc, with prices ranging from $4.69 to $10.46.
Higher priced five MoPay dividend equities estimated as of July 9 were: AGNC Investment Corp; Dynex Capital Inc; Ellington Financial Inc; Prospect Capital Corp; Sabine Royalty Trust, whose prices ranged from $16.03 to $39.00.
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.
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:
(Alphabetical by Ticker)
All but twelve equities and all of the funds listed in this August 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.
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 YCharts. Open source dog art from dividenddogcatcher.com
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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.