Actionable Conclusions (1-10): Brokers Estimated Top Ten MoPay Equities To Net 13.77% to 59.61% Gains By February 2021
Three 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 yield-based strategy for this MoPay group, as graded by broker estimates for this month, proved 30% accurate.
Projections based on estimated dividend amounts from $1,000 invested in each of the ten highest-yielding stocks and the one year analyst median target prices for those stocks, as reported by YCharts, made the data points. Note: One-year target prices from single analysts were not applied (n/a). Ten probable profit-generating trades to 2021 were:
Source: YCharts
PermRock Royalty Trust (PRT) was forecast to net $596.12 based on the median of target estimates from two analysts, plus estimated annual dividends, less broker fees. A Beta number was not available for PRT.
ARC Resources Ltd (OTCPK:AETUF) netted $480.99, based on dividends, plus the median of annual price estimates from seventeen analysts, less broker fees. The Beta number showed this estimate subject to risk 15% more than the market as a whole.
Cross Timbers Royalty Trust (CRT) netted $339.54, based on the median of target estimates from two analysts, plus estimated annual dividends, less broker fees. The Beta number showed this estimate subject to risk 14% under the market as a whole.
Vermilion Energy Inc (VET) netted $304.56, based on dividends, plus the median of annual price estimates from eighteen analysts, less broker fees. The Beta number showed this estimate subject to risk 29% more than the market as a whole.
Great Elm Capital Corp (GECC) netted $295.49 based on dividend, plus the median of target prices estimated by two analysts, less broker fees. The Beta number showed this estimate subject to risk 31% less than the market as a whole.
Colony Credit Real Estate (CLNC) netted $260.01 based on dividends, plus the median of annual price estimates from two analysts, less broker fees. A Beta number was not available for CLNC.
Capitala Finance Corp (CPTA) netted $258.20, based on a median of target price estimates from six analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 17% more than the market as a whole.
American Finance Trust (AFIN) netted 186.09, based on dividends, plus the median of annual price estimates from three analysts, less broker fees. A Beta number was not available for AFIN.
Ellington Financial (EFC) netted $165.61, based on dividends, plus the median of annual price estimates from seven analysts, less broker fees. The Beta number showed this estimate subject to risk 61% less than the market as a whole.
PennantPark Floating Rate (PFLT) netted 137.69 based on a median of target price estimates from six analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk 26% less than the market as a whole.
Average net gain in dividend and price was 30.24% on $1k invested in each of these ten MoPay stocks. This gain estimate was subject to average risk 30% less than the market as a whole.
Source: k9rl.com
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”.
February Monthly Pay Dividend Data
Three lists produced numerous actionable conclusions and several more un-numbered results. To draw these conclusions and results, January 23 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. Note: YCharts data policy retains frequency of pay status on its lists for one year after termination.
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. Three prominent MoPay firms declared dividend cuts between December 2016 and July 2019.
Former MoPay top ten regular by yield. Bluerock Residential (BRG) announced in December it is retreating to quarterly dividend payments “in keeping with industry tradition.”
Third, Capitala Finance Corp cut its monthly payout from $0.13 to $0.0833 as of October 30, 2017.
Tahoe Resources (TAHO) skipped its monthly payouts and dropped out as a MoPay resource in 2018.
Top yield stock for October 2016, 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, and to $0.08 since September 2018.
Recently, in July 2019, Armour Residential REIT (ARR) cut its payout from $0.19 to $0.17.
Upon inspection, the August 2019 YCharts equity list was pared down by removing four former MoPay members: JMP Group (JMP); Global Net Lease (GNL); Dividend Select 15 Corp (OTCPK:DVVDF).
The November list scrubbed Pacific Coast Oil Trust (ROYT) which announced curtailment of its dividend as of October.
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 picking up U.S. OTC authorization.
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
List One
90 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 into January represented three of the eleven Morningstar market sectors, with representative firms split 5, 2, to 3 between the energy, real estate, and financial services sectors.
The first of five energy sector representatives led the top ten by yield, Permianville Royalty Trust (PVL) [1]. The other four energy dogs placed fourth, fifth, sixth, and ninth: San Juan Basin Royalty Trust (SJR) – it’s back! [4]; Vermilion Energy Inc [5]; Permian Basin Royalty Trust (PBT) [6]; PermRock Royalty Trust [9].
Then two real estate representatives placed second, and ninth, Orchid Island Capital Inc (ORC) [2], American Hotel Income Properties REIT LP (OTC:AHOTF) [9].
Finally, financial services equities took the three remaining slots, placing third, seventh, and tenth, Oxford Square Capital Corp (OXSQ) [2], Great Elm Capital Corp [7], Capitala Finance Corp [10], to complete the February MoPay top ten 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 January 23 were compared with analyst median target prices one year out. The ten top stocks displayed 6.89% to 48.86% price upsides for the next year based on analyst one-year targets.
Source: YCharts
Three (tinted) of the 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: PermRock Royalty Trust [1], ARC Resources Ltd [2], Cross Timbers Royalty Trust [3], Vermilion Energy Inc [4], and Great Elm Capital Corp [5].
The lower level five were, PennantPark Colony Credit Real Estate Inc (CLNC) [6], Capitala Finance Corp ([7], American Finance Trust Inc [8], Harvest Capital Credit Corp (HCAP) [9], and Ellington Financial Inc [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 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.
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 greater than 14% calculated as of January 23 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 eight uncollateralized debt instruments [ETNs], one open-ended investment company (ETF), and one closed-ended investment company (CEIC).
Source: YCharts
Uncollateralized debt instruments (ETNs) captured the first through seventh, ninth and tenth, positions: Credit Suisse X-Links MP2xLvgAlrnMLP ETN (AMJL) [1]; ETRACS 2xMnthly Py Lvrgd US SmCpHiDivETN (SMHB) [2]; UBS ETRACS M Py 2xLvg US Sm Cp HiDiv ETN (SMHD) [3]; UBS ETRACS Mthly Py 2xLvg Mortg REIT ETN (MORL) [4]; UBS ETRACS M Py 2xLvg MortgREIT ETN SerB (MRRL) [5]; Credit Suisse X-Lnks Crde OlShrsCvCllETN (USOI) [6]; Credit Suisse X-LinksMP2xLvgMortREIT ETN (REML) [7]; UBS ETRACS Mthly Py 2xLvg Closed-End ETN (CEFL) [9]; UBS ETRACS M Py 2xLvg Divers Hi Inc ETN (DVHL) [10].
Finally, one closed end investment company placed eighth, Oxford Lane Capital (OXLC) [8], to complete the top ten Exchange Traded Notes, Exchange Traded Funds, and Closed End Investment Companies list for February 2020.
Compare Equity To Fund Performance
Source: YCharts
Note that the top ten equity dividends are priced 3% less those of the top ten funds. 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.
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.
In January, February, March, April, May, June, July, August, September, October, November, and December 2013 readers contributed.
Reader suggestions continued in 2014 following the January, February, March, April, May, June, July, August, September, October, November, and December articles.
2015 continued with readers contributing in January, February, March, April, May, June, July, August, September, October, November, and December.
The 2016 articles in January, February, March, April, May, June, July, August, September, October, November, and December.
The 2017 articles of January, February, March, April, May, June, July, August, September, October, November, and December.
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 to compare and contrast MoPay equity upside potential to the now lower yield (but higher risk) buy and hold exchange traded funds and notes.
Yield Metrics Found No Advantage For 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 Five Lowest Priced of Top Ten High Yield MoPay Dividend Stocks (11) Would Produce 21.6% VS. (12) 22.05% Net Gains from All Ten by February 2021
Source: YCharts
$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 one-year targets to deliver 2.02% less net gain than $5,000 invested as $.5k in all ten. The fifth lowest priced MoPay dividend dog, PermRock Royalty Trust, was predicted to deliver the best net gain of 59.61%.
Source: YCharts
Lowest priced five MoPay dividend stocks estimated as of January 23 were Permianville Royalty Trust, San Juan Basin Royalty Trust, Permian Basin Royalty Trust, American Hotel Income Properties REIT LP, and PermRock Royalty Trust, with prices ranging from $2.03 to $5.71.
Higher priced five MoPay dividend equities estimated as of January 23 were Oxford Square Capital Corp, Orchid Island Capital Inc, Great Elm Capital Corp, Capitala Finance Corp, and Vermilion Energy Inc, whose prices ranged from $5.95 to $16.06.
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 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.
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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.
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: k9rl.com
