Actionable Conclusions (1-10): Brokers Estimated Top 10 MoPay Equities To Net 12.8% to 29% Gains By June 2021
Five of the 10 top-yield MoPay stocks (shaded in the chart below) were verified as being among the top 10 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 50% accurate.
Projections based on estimated dividend amounts from $1k invested in each of the 10 highest yielding stocks and the one-year analyst median target prices for those stocks, as reported by YCharts, produced the data points. Note: One-year target prices from single analysts were not applied (n/a). 10 probable profit-generating trades to June 2021 were:
American Finance Trust (AFIN) netted $290.00, based on dividends plus the median of annual price estimates from three analysts less broker fees. The Beta number showed this estimate subject to risk/volatility 42% greater than the market as a whole.
Ellington Financial Inc. (EFC) netted $287.54 based on dividend, plus the median of target prices estimated by seven analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 104% more than the market as a whole.
Solar Senior Capital (SUNS) netted $256.60 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 30% over the market as a whole.
Keppel Corp. Ltd. (OTCPK:KPELY) was forecast to net $228.80 based only on estimated annual dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 34% more than the market as a whole.
Dynex Capital Inc. (DX) netted $225.09 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/volatility 32% more than the market as a whole.
Prospect Capital Corp. (PSEC) netted $218.49 based only on dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 4% less than the market as a whole.
Gladstone Commercial Corp. (GOOD) netted $181.07 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% more than the market as a whole.
AGNC Investment Corp. (AGNC) netted $161.19 based on a median of target price estimates from 14 analysts, plus dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 10% less than the market as a whole.
Orchid Island Capital (ORC) netted $135.40 based on dividends alone less broker fees. The Beta number showed this estimate subject to risk/volatility 30% more than the market as a whole.
Permianville Royalty Trust (PVL) netted $128.009 based on dividends less broker fees. The Beta number showed this estimate subject to risk/volatility 76% more than the market as a whole.
Average net gain in dividend and price was 21.12% on $1k invested in each of these 10 MoPay stocks. This gain estimate was subject to average risk/volatility 67% 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.”
June Monthly Pay Dividend Data
Three lists produced numerous actionable conclusions and several more unnumbered results. To draw these conclusions and results, June 12 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. These are flagged with blue highlight in charts illustrating the article
Former MoPay top 10 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. (NYSE:SCM) both transitioned to QPay this month (June 2020) and are therefore no longer listed.
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. 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, the company declared $0.035 monthly distributions for July, August and September.
Top yield stock for October 2016, 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.
Add PTSRF, CRT, HRUFF, BTBIF, AFIN, MTR, SUNS, EFC, DVVDF, CHWWF, SBR, VREYF, FRHLF, AETUF, IPPLF, and SJT to the list (by descending yields) who have all announced reduced dividends for the coming periods. In all 19 of our now 75 US listed monthly paying dividend equities are reducing future payouts.
The U.S. exchange MoPay segment is volatile, transitive, and shrinking. More trades in monthly pay equities are available from Canadian firms, many of which are listed on U.S. OTC exchanges.
Most Readers like MoPays:
“[Y]ou list a few issues here whose distributions are rife with RETURN OF CAPTAL [ROC] at its most destructive form, funds that pay you back your own money each and every month in their distributions with no regard to what they truly earn…- these should not be included in any list containing the word “dividend”. – NYer1
“I can enter or exit a position and still reap dividends for at least 2/3s of the quarter. They also smooth the income stream so I have cash at any given time to make a purchase at dips.” – Ed Invests
“At this level of risk, I’m only buying monthly dividend payers. Dividend if cut only [sits] for a month and not a quarter.” – Sinjjn Smythe
“… love those monthly payers.” – Hardog
“Some of us are comfortable investing in Dog stocks because we feel the reward is worth the risk. As long as [my sin stock] continues to pay and raise the dividend like it has for 16 years now, it will have a spot in my portfolio.” – Miz Magic DiviDogs
“One thing to point out: These stocks are not buy & hold. If you buy any of these stocks, set a price where you will sell… trailing stops work real good & with mopays you can get out & get back in without losing a whole quarter of dividends…” – drking
75 US Exchange Traded Monthly Pay Dividend Equities by Yield
Top 10 of these US exchange listed monthly pay dividend equities showing the best yields in mid-June represented four of the eleven Morningstar market sectors, with representative firms split 1, 4, 1, and 4 between the industrial, financial services, energy, and real estate, sectors.
Firstly, in first place was the lone industrial representative, Keppel Corp. Ltd. . Secondly, the first of four financial services sector representatives, placed second, Great Elm Capital Corp. (GECC) . The remaining three financials placed fifth through seventh, Prospect Capital Corp. , PennantPark Floating Rate Capital Ltd. (PFLT) (6), and Oxford Square Capital Corp. .
Thirdly, real estate equities took the third, and eighth through tenth slots, Orchid Island Capital Inc. , H&R Real Estate Investment Trust (OTCPK:HRUFF) , Bridgemarq Real Estate Services Inc. (OTCPK:BREUF) , and Dynex Capital Inc. .
Finally, one energy representative placed fourth, Permianville Royalty Trust (PVT) , to complete the June 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 May 15 were compared with analyst median target prices one year out. The 10 top stocks displayed 38.17% to 204.35% price upsides for the next year based on analyst one-year targets.
Five (tinted beside the graph) of 10 on this price upside list were members of the top 10 list by yield. The first five places on this upside list went to: Ellington Financial Inc. , American Fiance Trust Inc. , Solar Senior Capital , Dynex Capital Inc. , Gladstone Commercial Corp. .
The lower level five were, Prospect Capital Corp. , AGNC Investment Corp. , Keppel Corp. Ltd. , Orchid Island Capital Inc. , and Permianville Royalty Trust .
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 10 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 greater than 15.8% calculated as of June 12 determined the top 10.
The top 10 monthly paying dividend investment companies, funds, and notes showing the biggest yields for per YChart and Yahoo Finance data featured two uncollateralized debt instruments [ETNs], two open-ended investment companies (ETFs), and six closed-ended investment company [CEICs].
MOPAY (6A) FUNDS DIVSPR&PIE Jun20
Finally, six closed end investment companies (CEICs) placed third through seventh and ninth, OFS Credit Company Inc. (OCCI) , Eagle Point Credit Co. (ECC) , Highland Global Allocation Fund (HGLB)) , XAI Octagon FR & Alt Income Term Trust (XFLT) , Aberdeen Income Credit Strategies Fund (ACP) , and RiverNorth Marketplace Lending Corp (RSF) , to complete the top 10 Exchange Traded Notes, Exchange Traded Funds, and Closed End Investment Companies list for June, 2020.
Compare Equity To Fund Performance
Note that the top 10 equity dividends are priced 1% less those of the top 10 funds for June. However they were 3% apart in March, April and early May. They were 2% apart in December and November 2019 but in October they were 1% less. For September equities were 2% under funds but in August they were equal. The difference is 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 an upside vs. buy & hold in November. Another list factored December 2012 reader comments.
The 2018 articles in January, February, March, April, May, June, July, August, September, and October/November, and December. The 2019 articles in January, February, March, April, May, June, July, August, September, October, November, and December. Now we have a new year and decade of 2020 beginning in January, and continuing in February, March, April, early May, and mid May, now June to compare and contrast MoPay equity upside potential to the now lower yield (but higher risk/volatility) buy and hold Exchange Traded Funds and Notes.
Yield Metrics Found No Advantage For Five Lowest Priced Of 10 High Yield MoPay Equities
10 monthly pay stock equities were ranked by yield. Those results, verified by YCharts and Yahoo Finance, produced the following charts.
Actionable Conclusions: Analysts Estimated Five Lowest Priced of Top 10 High Yield MoPay Dividend Stocks (11) Would Produce 10.92% VS. (12) 12.83% Net Gains from All 10 by June 2021
$5k invested as $1k in each of the five Lowest priced stocks in the top 10 MoPay dividend dog kennel by yield were predicted by analyst one-year targets to deliver 14.85% less net gain than $5k invested as $.5k in all 10. The eighth lowest priced MoPay dividend dog, Keppel Corp. Ltd., was predicted to deliver the best net gain of 22.88%.
Lowest priced five MoPay dividend stocks estimated as of June 12 were: Permianville Royalty Trust, Oxford Square Capital Corp., Great Elm Capital Corp., Orchid Island Capital Inc., Prospect Capital Corp., with prices ranging from $1.33 to $5.47.
Higher priced five MoPay dividend equities estimated as of June 12 were: H&R Real Estate Investment Trust, Bridgemarq Real Estate Services Inc., Keppel Corp. Ltd., PennantPark Floating Rate Capital Ltd., Dynex Capital Inc., whose prices ranged from $7.85 to $14.08.
This distinction between five low-priced dividend dogs and the general field of 10 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 www.ycharts.com, www.dividend.com, finance.yahoo.com, analyst mean target price by YCharts. Dog Photo: boostcampbuzz.wordpress.com
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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.
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.