Actionable Conclusions (1-10): Brokers Estimated Top Ten MoPay Equities Could Net 15.71% to 75.52% Gains By November 2021
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 Dogcatcher yield-based strategy for this MoPay group, as graded by broker estimates this month, proved 40% accurate.
Projections based on estimated dividend amounts from $1000 invested in each of the ten highest-yielding stocks and analyst median 1yr target prices for those stocks, as reported by YCharts, produced the data points. Note: target prices from single analysts were not applied (n/a). Ten probable profit-generating trades to November 2021 were:
American Finance Trust (AFIN) netted $755.19, based on dividends plus the median of annual price estimates from three analysts less broker fees. A Beta number was not available for AFIN
Great Elm Capital Corp (GECC) netted $344.55 based on dividends alone, less broker fees. A Beta number was not available for GECC.
Gladstone Commercial Corp (GOOD) netted $323.42 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 3% over the market as a whole.
Solar Senior Capital Ltd (SUNS) netted $295.06 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 32% over the market as a whole.
Pembia Pipeline Corp (PBA) netted $271.80 based on the median of target estimates from twenty-two analysts, plus estimated annual dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 35% over the market as a whole.
PennantPark Floating Rate Capital Ltd (PFLT) was forecast to net $249.48 based on a median of target price estimates from five analysts, plus estimated annual dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 77% more than the market as a whole.
Sabine Royalty Trust (SBR) netted $247.66 based on a median of target price estimates from two analysts plus dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 30% less than the market as a whole.
Ellington Financial Inc (EFC) netted $210.85 based on the median of annual price estimates from seven analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 106% more than the market as a whole.
Dynex Capital Inc (DX) netted $211.02 based on dividends plus the median of annual price estimates from four analysts less broker fees. The Beta number showed this estimate subject to risk/volatility 31% more than the market as a whole.
Gladstone Investment Corp (OXSQ) netted $162.24 based on dividends, plus the median of target prices estimated by fivef analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 37% more than the market as a whole.
Gladstone Capital Corp (GLAD) netted $157.10 based on a median of target price estimates from three analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 51% more than the market as a whole.
Average net gain in dividend and price was 30.17% on $1k invested in each of these ten MoPay stocks. This gain estimate was subject to average risk/volatility 39% more than the market as a whole.
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”.
November Monthly Pay Dividend Data
Three lists produced numerous actionable conclusions and several more un-numbered results. To draw these conclusions and results, October 27 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. Blue Bluerock Residential (BRG) announced in December it is 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. Stellus stuck with its QPay status but ARR has returned to Mo Pay.
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, the company declared $0.035 monthly distributions for July August and September.
Top yield stock for July, 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 ORC monthly dividend jumped from $0.06 to $0.065 for September and October
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. This months active listing of MoPays is up to 71 from 70 in October, but not yet at full strength compared to 75 in May/June.
71 US Exchange Traded Monthly Pay Dividend Equities by Yield
Top ten of these US exchange listed monthly pay dividend equities showing the best yields for November represented three of the eleven Morningstar market sectors, with representative firms split 6, 3 and 1 between the financial services, real estate, and energy sectors.
First place went to the first of the six financial services sector representatives, Great Elm Capital Corp . The remaining five financials placed second, fifth, sixth, ninth, and tenth: Oxford Square Capital Corp , PennantPark Floating Rate Capital Ltd , Prospect Capital Corp (PSEC) , Gladstone Capital Corp , and Dividend Select 15 Corp (OTCPK:DVVDF) .
Then, those three real estate equities took the third, fourth, and eighth slots: Orchid Island Capital Inc , American Finance Trust Inc , and ARMOUR Residential REIT Inc .
Finally, the lone energy representative placed seventh, Cross Timbers Royalty Trust (CRT)  to complete the November MoPay top ten list by yield.
Monthly Pay Dividend Equities by Price Upside
The results shown below from YCharts for MoPay dividend stocks as of market closing price October 27 were compared with the median of analyst target prices one year-out. The ten top stocks displayed 5.85% to 61.74% price upsides for the next year based on analyst 1 yr. targets.
Three (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: American Finance Trust Inc , Gladstone Commercial Corp , Solar Senior Capital Ltd , Pembina Pipeline Corp , Sabine Royalty Trust .
The lower level five were, Ellington Financial Inc , PennantPark Floating Rate Capital Ltd , Dynex Capital Inc , Gladstone Investment Corp (GAIN) , AGNC Investment Corp (AGNC) , and Gladstone 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 into 2020 were gleaned from 30 selected by yield. Three to nine analysts have historically provided the most accurate median target price estimates.
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 13.39% or greater calculated as of October 27 determined the top ten.
The top ten monthly paying dividend investment companies, funds, & notes showing the biggest yields for per YChart & YahooFinance data featured two uncollateralized debt instruments [ETNs], two open-ended investment company (OTC:ETFS), and six closed-ended investment company [CEICs].
Two uncollateralized debt instrument companies (ETNs) placed first and seventh: ETRACS 2x Monthly Pay Leveraged US Small Cap HiDividend ETN (SMHB) , and Credit Suisse X-Links Silver Covered Call ETN (SLVO) .
Finally, six closed end investment companies (CEICs) placed third through sixth, eighth, and ninth, Stone Harbor Emerging Markets Income (EDF) , Stone Harbor Emerging Markets Total Income (EDI) , Highland Global Allocation Fund (HGLB) , First Trust MLP & Energy Inc Fund (FEI) , RiverNorth Marketplace Lending Corp (RSF) , and Aberdeen Income Credit Strategies Fund (ACP) , to complete the top ten Exchange Traded Notes, Exchange Traded Funds, and Closed End Investment Companies list for November, 2020.
Compare Equity To Fund Performance
Note that the top ten equity dividends are now priced equal to those of the top ten funds. In October they were 1% lower. But 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 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 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.
Now we have a new year and decade of 2020 beginning in January, and continuing in February, March, April, early May, and mid May, June, July, August, September, October, and now November to compare and contrast MoPay equity upside potential to the yield (and higher risk/volatility) should one attempt to buy and hold Exchange Traded Funds and Notes.
Yield Metrics Found A 31.38% Disadvantage To The Five Lowest Priced Of Ten High Yield MoPay Equities
Ten monthly pay stock equities were ranked by yield. Those results, verified by YCharts and YahooFinance, produced the following charts.
Actionable Conclusions: Analysts Estimated 5 Lowest Priced of Top Ten High Yield MoPay Dividend Stocks (11) Would Produce 14.62% VS. (12) 21.31% Net Gains from All Ten by November, 2021
$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 31.38% LESS net gain than $5,000 invested as $.5k in all ten. The sixth lowest-priced MoPay dividend dog, American Finance Trust Inc (AFIN), was predicted to deliver the best net gain of 75.52%.
Lowest priced five MoPay dividend stocks estimated as of October 27 were: Oxford Square Capital Corp); Great Elm Capital Corp; Dividend Select 15 Corp; Orchid Island Capital Inc; Prospect Capital Corp, with prices ranging from $2.49 to $5.22.
Higher priced five MoPay dividend equities estimated as of September 29 were: American Finance Trust Inc; Cross Timbers Royalty Trust; Gladstone Capital Corp; PennantPark Floating Rate Capital Ltd; ARMOUR Residential REIT Inc, whose prices ranged from $5.75 to $9.66.
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.
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.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any 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.
Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.