BRSP - 35 September Readers-Noted And 27 Ideal-To-Buy Dividend Dogs

2023-10-17 15:39:25 ET

Summary

• Prior to September 30, 2023, my Readers mentioned 35 equities in their comments on my articles. Some bad news investments (Rogues) mixed with (mostly) Favorites. Thus, these are ReFa/Ro.
• Ten analyst-target-estimated TOP-NET-GAIN Re/Fa/Ro: C, ABR, BKH, FRT, MMM, O, T, PFE, PBR.A, and BRSP, averaged 36.1% net gains from reader data collected 10/13/23.
• Ten analyst-target-augured September TOP-PRICE-UPSIDE reader faves & rogues (ReFa/Ro) were: BKH, FRT, EXR, MMM, O, T, ADM, PFE, BRSP, & OXSQ boasting a 32.63% average target price upside estimate.
• By YIELD, the following ReFa/Ro made the top ten: PFLT; ABR; OFS; BRSP; OXSQ; ARI; FSK; ACRE; OXLC; PBR.A. They averaged 16.52% annual yield. (One stock made all three lists this month: BRSP).
• $5k invested in the lowest-priced five of these top-yield ReFa/Ro dividend dogs showed 4.41% LESS net-gain than from $5k invested in all ten. Big (higher-priced) ReFa/Ro dogs out-ran this pack in September.

Reader Selections

Since May 2017, any dividend-paying stock mentioned in a message, e-mail, or comment to the author is fair game for a reader favorite listing in this series of articles. Thus, It is possible that only rogues and discontinued, or dreadful, doubtful, dividend issues may appear.

Lately readers and other contributors have questioned the intent, purpose, validity, and usefulness of my daily stock lists. Most, however, praise the effort to sort promising opportunities out of the thousands of dividend offers. After all, yield counts when searching for dividend winners.

Furthermore, my dog catching is, by method, a contrarian investing strategy and that can rub some investors the wrong way. It is most useful for new buyers; intended to guide readers to new purchases of dogs on the dips. These lists are suggestions, or warnings, not recommendations.

Most valuable to the writer, however, are those reader comments that truly catch errors in my calculations or changes in direction. Examples like the reader who missed my "safer" dividend follow-up articles because they contain dividend payout ratios. They are available in my investing group in the Seek Alpha marketplace.

There are also those who catch flagrant fouled stock lists not synchronized with the data charted. In January, a reader discovered a "Safer" net gain chart posing as a Monthly Pay chart that even Seeking Alpha editors missed.

Every month some readers discover errant ticker symbols. In January, a reader noted SSSS hadn’t paid a Q Dividend since April. And earlier this year, a reader asked how to identify Rogues in the ReFa/Ro list. The top ten are now so identified.

In June 2022 high yields were alleged, by one reader, to be sure signs of Roguishness. Not true, high yields are sure signs of high yield, how long the elevated yield lasts, depends share price and corporate directors. High Beta is the most accurate measure of Roguishness.

Reader suggestions of buy and hold dividend stocks are most welcome and sure to be reported on my ReFaRo posts. That’s my ultimate goal, of course, to find ten or twenty sure-fire long-term dividend payers purchased when their single share prices are lower than the dividend paid from $1K invested. Suggestions, please! We’re trying to predict the future here, Kings and Aristocrats might hold up but may be too old and feeble to last.

In February, 2022 one reader suggested an option strategy for monthly-paying dividend stocks:

"You should identify where options are available on the Monthly dividend stocks. What I do is find mo-pay stocks with options, I buy and write covered calls about 6 - 12 months out. I look for a scenario where I collect the dividend and get my stock bought back at a much lower price than I pay, but pocket a premium that makes up the loss. This gives me a dividend boost, since my cost is lower. It's like a guaranteed CD with little risk."

Another reader suggested I dial-back my blatant opinion that high-yield equates to high-risk:

"The article says "high dividends are a sure sign of high risk."

It should be "high dividends might be a sign of high risk."

"If a good stock/ETF/CEF with a 5% dividend drops simply because the whole market dropped, the dividend could get to 8 or 9%. I think that's a great time to buy because the high dividend and low price makes it a low risk investment."

More than one writer has decried my favoritism for low-priced stocks. They especially dislike my "ideal" stocks whose dividend returns from a $1k investment equal or exceed share price. A prime example is Sirius XM Holdings Inc. (SIRI), the satellite radio and pandora music catalog owner, priced recently at $4.75 easily passes my test (of dividends from $1k invested exceeding share price) with a forward dividend yield of 2.00%! A little over $1k investment now buys 211 shares. and they'll throw the owner a return (from $1k invested) over 4 times the share price. Assuming all things remain equal, SIRI dividends alone will pay back their purchase price in 50 years (and that assumes the satellite radio and subscription music service can survive that long)!

In August, 2022, a reader said a $15.40 dividend on a $1K investment was too small. I point out that holders of AAPL stock now garner a little over $5.40 in dividends from $1K invested.

In January, 2023, the following exchange occurred:

Sorry, but I'm confused. Why does it matter if a stock is $1000 per share and pays a $50 dividend, or $20 per share and pays a $1 dividend. Isn't that the same 5% yield?

But if I'm following your logic, you would like the latter because the total dividend from $1,000 invested is more than the individual share price, but you wouldn't like the former because it isn't.

Am I missing something?

You’re right. Both the $1000 stock paying a $50 dividend and the $20 stock paying a $1.00 dividend cost $20 per dollar of dividend. Thus, neither is preferable because you've still spent $1000 to get $50 in dividends. The difference is entirely in the share count. One share versus 50. Which would you prefer to own?

The $1k invested exceeding single share price debate rages, meanwhile dividend investors crave an easy to locate starting point for their initial dividend investment. What price are you paying for your divided? It’s a simple rule of retailing lowest cost per dividend dollar wins (or goes out of business).

The dogcatcher ideal balance point is a sweet spot to use for reference. A rule of thumb, so to speak.

Three months ago, a reader made a prediction that PACW would be the next bank to collapse. Your heard it here first!

Last month a pause in Fed interest rate hikes left PACW close to surrender but will it hang in when the hikes return? It may be saved by its announced merger with Banc of California. Stay tuned. Look for incredible shrinking balance sheets post-merger. And the surviving entity will be Banc of California.

Every month readers would grumble that they can’t find my eight Dog of the week portfolios in my service on the SA Marketplace (now called Investing Groups) site.

This year SA, has listed all the postings on my investing group by date. So to find the summary and reference guide to each portfolio look at:

August 22, 2015 for I

October 13, 2016 for II

September 12, 2017 for III

September 13, 2018 for IV (Ivy)

September 8, 2019 for V (Volio)

September 12, 2020 for VI (Vista)

October 10, 2021 for VII (Viital)

October 8, 2022 for VIII (Viking)

October 7, 2023 for IX (Ignition).

Incidentally, the VIII (Viking) portfolio of Dividend Dogs for each week launched on October 3 2022. The Viking SA Investing Groups "safer" stock reports have been gathering since November 4, 2022 and will buy its last share on October 4 2024.

My Ignition (DOTW IX) portfolio launched October 6, 2023 will have all its selections in place by October 4, 2024 and buy its last shares on October 3, 2025.

An observation from April 2023:

“Mr. Arnold, I enjoy reading your many articles and get some great ideas from them. However I find the number of charts are a bit of overkill, many duplicating the info. I'm sure you have your set format and reasons why, but I'd be happy with only two charts; your sort by target gains and your sort by div yield. It would make it a much easier read. Thank You —pmbrandt 15Apr2023”

I’d gladly just submit those two charts and ditch all the verbiage. However, twelve years ago when I started submitting articles, the SA editorial team said they needed text to go with the graphics and topsy was born.

Again this week there are complaints of too many words for little information. No doubt, less is more!

Foreword

Note that in September readers mentioned 27 stocks whose dividends from a $1K investment exceeded their single share prices. These are listed below by yield:

The ReFaRo September Ideal Dividend Dogs

Above are the 27 ideal candidates derived from the 35 tangible results from reader favorite & rogue equities received prior to October 1, 2023. YCharts data for this article was collected as of 10/13/23.

Actionable Conclusions (1-10): Brokers Estimated 27.4% To 53.86% Net Gains From 10 ReFa/Ro Stocks To October 2024

Three reader-favored top-yield September stocks were verified as being among the top 10 gainers for the coming year based on analyst one-year target-prices. (They are tinted gray in the chart below). Thus, this yield-based forecast for reader-fave stocks, as graded by Wall St. wizards, was deemed 30% accurate.

Estimated dividend returns from $1k invested in each of the highest yielding stocks, plus the median one-year analyst target prices, as reported by YCharts, created the 2023-24 data points which identified probable profit-generating trades. (Note: one-year target prices by lone analysts were not counted.) Thus, ten probable profit-generating trades projected to October 13, 2024 were:

BrightSpire Capital, Inc. ( BRSP ) was projected to net $538.60, based on the median of target price estimates from 4 analysts, plus the projected annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 71% over the market as a whole. A rogue.

Petroleo Brasileiro S.A. - Petrobras ( PBR.A ) netted $522.78 based on the median of target price estimates from 9 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 37% over the market as a whole. It’s a true rogue.

Pfizer Inc. ( PFE ) was projected to net $392.70 based on the median of target price estimates from 22 analysts, plus the projected annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 39% less than the market as a whole. A Fave.

AT&T Inc. ( T ) netted $362.56 based on the median of target price estimates from 23 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 37% under the market as a whole. T is a Fave.

Realty Income Corp ( O ) was projected to net $345.42 based on the median of target price estimates from 15 analysts, plus the projected annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 19% under the market as a whole. A Fave.

3M Co ( MMM ) was projected to net $334.65, based on the median of target price estimates from 18 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 1% under the market as a whole. 3M is a marginal fave.

Federal Realty investment Trust (FR T ) was projected to net $284.21, based on the median of target price estimates from 17 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 22% over the market as a whole. A rogue.

Black Hills Corp ( BKH ) was projected to net $278.04, based on the median of target estimates from 6 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 39% under the market as a whole. A fave.

Arbor Realty Trust, Inc. ( ABR ) was projected to net $277.45, based on the median of target price estimates from 3 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 89% over the market as a whole. It's really a rogue.

Citigroup Inc. ( C ) netted $274.07 based on the median of target price estimates from 22 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 54% over the market as a whole. It’s a rogue.

Average net gain in dividend and price was estimated at 36.11% on $10k invested as $1k in each of these ten stocks. This gain estimate was subject to average risk/volatility 14% over the market as a whole. September, 2023, top-ten gainers counted five rogues, and five faves.

The Dividend Dogs Rule

The "dog" moniker was earned by stocks exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where (3) yield (dividend/price) grew higher than their peers. So, the highest yielding stocks in any collection have become affectionately known as "dogs." More precisely, these are, in fact, best called, "underdogs."

35 For the Money

Yield (dividend/price) results from YCharts.com verified by Yahoo Finance for ReFa/Ro stocks as of market closing prices 10/13/22 for 35 equities and funds revealed the actionable conclusions discussed below.

See any Dow 30 article for an explanation of the term "dogs" for stocks reported based on Michael B. O'Higgins book " Beating The Dow " (HarperCollins, 1991), now named Dogs of the Dow . O'Higgins' system works to find bargains in any collection of dividend paying stocks. Utilizing analysts' price upside estimates expanded the stock universe to include popular growth equities, as desired.

35 ReFa/Ro By Target Gains

Actionable Conclusions (11-20): ReFa/Ro Top Rogue Dog, PBR.A , Led 35 By Yield Through September

The 35 ReFa/Ro sorted by yield included 7 of 11 Morningstar sectors and one open ended investment company (ETF).

Ten top reader-mentions by yield in August, were led by the lone Energy member in the top ten, Petroleo Brasileiro SA Petrobras [1].

Then five places went to financial services sector members: Oxford Lane Capital Corp ( OXLC ) [2], FS KKR Capital Corp ( FSK ) [4], Oxford Square Capital Corp. ( OXSQ ) [6], OFS Capital Corp ( OFS ) [8], and PennantPark Floating Rate Capital Ltd ( PFLT ) [10].

Finally, four real estate representatives chimed-in: Ares Commercial Real Estate Corp ( ACRE ) [3]; Apollo Commercial Real Estate Finance, Inc. ( ARI ) [5]; Bright Spire Capital Inc [7]; Arbor Realty Trust Inc [9], to fill out the top 10 September ReFa/Ro by yield as of October 13, 2023.

Actionable Conclusions: (21-30) Top 10 ReFa/Ro By Price Upsides Showed 17.47% To 41.68% Increases To October, 2024.

To quantify top dog rankings, analysts' median price-target estimates provided a "market sentiment" gauge of upside potential. Added to the simple high-yield metrics, analysts' median price-target estimates became another tool to dig out bargains.

Analyst Targets Revealed A 4.41% Disadvantage For 5 Highest-Yield, Lowest-Priced Re/Fa/Ro Stocks To October, 2023

10 top ReFa/Ro were culled by yield for their monthly update. Yield (dividend/price) results verified by YCharts did the ranking.

As noted above, top 10 ReFa/Ro selected 10/13/23, showing the highest dividend yields in September represented three sectors: Energy (2); financial services (5); real estate (3).

Actionable Conclusions: Analysts Predicted 5 Lowest-Priced Of Top 10 Highest-Yield Reader Favorites & Rogues To (31) Deliver 25.15% Vs. (32) 26.31% Net Gains by All 10 To October, 2024

$5k invested as $1k in each of the five lowest-priced stocks in the top 10 ReFa/Ro kennel by yield were predicted by analyst one-year targets to deliver 4.41% LESS net gain than $5k invested in all 10. The third lowest-priced ReFa/Ro top-yield equity, BrightSpire Capital, Inc., was projected to deliver the best net gain of 53.86%.

The five lowest-priced ReFa/Ro top-yield dogs for September as of October 13 were: Oxford Square Capital Corp; Oxford Lane Capital Corp; BrightSpire Capital Inc; Ares Commercial Real Estate Corp; Apollo Commercial Real Estate Finance Inc, with prices ranging from $3.11 to $10.09 per share.

Five higher-priced ReFa/Ro as of October 13 were: Pennant park Floating Rate Capital Ltd; OFS Capital Corp; Petrol Brasileiro SA Petrobras; Arbor Realty Trust Inc; FS KKR Capital Corp, whose prices ranged from $10.66 to $19.44.

The distinction between five low-priced dividend dogs and the general field of 10 reflected Michael B. O'Higgins' "basic method" for beating the Dow. The scale of projected gains, based on analysts' targets, added 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. Caution is advised, since analysts are historically only 15% to 85% accurate on the direction of change and just 0% to 15% accurate on the degree of change.

The 35 equities and funds discussed in this article were submitted within comments from Seeking Alpha members noted below.

Afterword

Here is the full pack of 35 September ReFa/Ro

(Listed alphabetically by ticker symbol, the pack includes the nicknames of recommending readers.)

Note that this month readers mentioned twenty-seven Dogcatcher Ideal stocks that offer annual dividends from a $1K investment exceeding their single share prices.

27 Dogcatcher Ideal ReFa/Ro Dogs from September

The net gain/loss estimates above did not factor in any foreign or domestic tax problems resulting from distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.

Stocks listed above were suggested only as possible reference points for your ReFa/Ro dog stock purchase or sale research process. These were not recommendations.

For further details see:

35 September Readers-Noted, And 27 Ideal-To-Buy, Dividend Dogs