All but eleven equities and all of the funds listed in this December 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!
Long after the 2020 Ides of March dip, and before other pullbacks 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 1-yr 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 counted. Ten probable profit-generating trades so identified for December 2022 were:
Broadmark Realty Capital (BRMK) netted $382.50 based on the median of target estimates from two analysts, plus estimated annual dividends, less broker fees. A Beta number was not available for BMRK.
Ellington Residential Mortgage REIT (EARN) netted $303.57 based on the median of annual price estimates from three analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 86% greater than the market as a whole.
Stellus Capital Investment (SCM) netted $239.55 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 33% greater than the market as a whole.
Ellington Financial Inc (EFC) netted $234.12 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 109% greater than the market as a whole.
SLR Senior Investment Corp (SUNS) netted $230.37 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 34% over the market as a whole.
Dynex Capital Inc (DX) netted $200.64 based on the median of target price estimates from four analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 20% over the market as a whole.
AGNC Investment Corp (AGNC) was forecast to net $145.88 based on the median of target price estimates from thirteen analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 1% greater than the market as a whole.
North American Financial 15 Split Corp (OTC:FNCSF) netted $171.70 based on dividends alone, less broker fees. A Beta number was not available for FNCSF.
PennantPark Floating Rate Capital (PFLT) netted $148.78 based on dividends alone, less broker fees. The Beta number showed this estimate subject to risk/volatility 96% greater than the market as a whole.
LTC Properties Inc (LTC) netted $131.17 based on the median of target estimates from six analysts, plus estimated annual dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 4% less than the market as a whole.
Average net gain in dividend and price was 22.35% on $1K invested in each of these ten MoPay stocks. This gain estimate was subject to average risk/volatility 47% 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, December 13 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 (OXSQ); Partners Real Estate Investment Trust; Orchid Island Capital Inc (ORC); Cross Timbers Royalty Trust (CRT); H&R Real Estate Investment Trust (OTCPK:HRUFF); BTB Real Estate Investment Trust (OTC:BTBIF); American Finance Trust Inc (AFIN); Mesa Royalty Trust (MTR); SLR Senior Investment Corp; Ellington Financial Inc; Dividend Select 15 Corp (OTCPK:DVVDF); Chesswood Group Ltd (OTCPK:CHWWF); Sabine Royalty Trust (SBR); TORC Oil & Gas Ltd (OTCPK:VREYF); Freehold Royalties Ltd (OTCPK:FRHLF); ARC Resources Ltd (OTCPK:AETUF); Inter Pipeline Ltd (OTCPK:IPPLF); San Juan Basin Royalty Trust (SJT); Ag Growth International Inc (OTCPK:AGGZF).
Former MoPay top ten regular by yield, Bluerock Residential (BRG) announced in 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 both transitioned to QPay in June, 2020. Within three months, however, both SCM and ARR 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, 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, June 2021, and September 2021, Orchid Island Capital, released this cautionary note with its monthly dividend announcements back in 2018:
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 December 2021 at the full strength of over 100 active, not seen for years. This list was limited to 102 by raising the share price limit to $5.
Top ten of these US exchange listed monthly pay dividend equities showing the best yields for December represented just three of the eleven Morningstar market sectors, with representative firms split 1, 7, and 2 between the financial services, real estate, and energy sectors.
First place went to the lone financial services sector representative, North American Financial 15 Split Corporation.
Seven real estate representatives placed second through fourth, sixth, and eighth to tenth, Generation Income Properties Inc (GIPR) , ARMOUR Residential REIT Inc , Ellington Residential Mortgage REIT ; Ellington Financial Inc ; AGNC Investment Corp , Dynex Capital Inc , and Inovalis Real Estate Investment Trust (OTC:IVREF) .
Finally, the top ten collection was bolstered by two energy representatives placing fifth, and seventh, San Juan Basin Royalty Trust , and Cross Timbers Royalty Trust , which completed the December MoPay top ten equities list by yield.
Results from YCharts, shown below, show MoPay dividend stocks (as of market closing price December 12) compared with the median of analyst target prices one year-out. The eight top-stocks displayed 3.37% to 60.35% price upsides for the next year based on those analyst one-year targets.
Eight (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: Broadmark Realty Capital , Ellington Residential Mortgage REIT , Stellus Capital Investment , SLR Senior Investment Corp , Ellington Financial Inc .
The lower level five were, Dynex Capital Inc , AGNC Investment Corp , LTC Properties Inc , PennantPark Floating Rate Capital Ltd , and North American Financial 15 Split 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 December 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 9.95% or greater calculated as of December 13 determined the top ten.
The top-ten monthly-paying dividend investment companies, funds, & notes showing the biggest yields per YCharts & Yahoo Finance data featured four uncollateralized debt instruments [ETNs], three open-ended investment companies [ETFs], and three closed-ended investment companies [CEICs].
Four uncollateralized debt instrument companies (ETNs) placed first, second, fourth, and eighth: Credit Suisse X-Links Crude Oil Shares Covered Call ETN (USOI) , Credit Suisse X-Links Monthly Pay 2x Leveraged Mortgage REIT ETN (REML) , ETRACS 2x Monthly Pay Leveraged US Small Cap High Dividend ETN (SMHB) , and Credit Suisse X-Links Gold Shares Covered Call ETN (GLDI) .
Three open ended investment companies [ETFs] placed third, fifth, and seventh, Global X Russell 2000 Covered Call ETF (RYLD) , Global X NASDAQ 100 Covered Call ETF (QYLD) , and InfraCap MLP ETF (AMZA) .
Finally, three closed end investment companies (CEICs) placed sixth, ninth, and tenth, Aberdeen Income Credit (ACP) , Oxford Lane Capital Corp (OXLC), and PIMCO Dynamic Income (PDI)  to complete the top-ten Exchange Traded Notes, Exchange Traded Funds, and Closed End Investment Companies list for December 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 fund 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 that top outsized dividend estimate.
Note that the December 2021 top ten equity dividends are currently priced 1% lower than those of the top ten funds. In September, they were 2% higher. In June, they were 1% higher. The price differences are found in the outlandishly high dividends attributed to the top equities or funds. Without those top stocks, the funds are generally priced higher than the equities.
In June 2012, readers suggested the author include these funds, trusts, and partnerships in the MoPay article. 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, August, September, October, November, and now December. 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 Yahoo Finance, produced the following charts.
$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 29.09% LESS net gain than $5,000 invested as $.5K in all ten. The sixth lowest-priced MoPay dividend dog, Ellington Residential Mortgage REIT, was predicted to deliver the best net gain of 30.36%.
Lowest-priced five MoPay dividend stocks estimated as of December 13 were: North American Financial 15 Split Corp; San Juan Basin Royalty Trust; Generation Income Properties Inc; Inovalis Real Estate investment Trust; ARMOUR Residential REIT Inc, with prices ranging from $5.89 to $9.99.
Higher priced five MoPay dividend equities estimated as of December 13 were: Ellington Residential Mortgage REIT; Cross Timbers Royalty Trust; AGNC Investment Corp; Dynex Capital Inc; Ellington Financial Inc, whose prices ranged from $10.43 to $17.12.
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 90% 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 eleven equities and all of the funds listed in this November 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 long-past 2020 Ides of March dip, and before other pullbacks yet to come, the time to buy top yield MoPay dogs may now be at hand. There have never been more to choose from. This month's list of 102 was accomplished by raising the minimum price per share for selection from $2 to $5.
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. Open source dog art from dividenddogcatcher.com
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This article was written by
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.
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.