MDV - Readers Post 20 July Dividend Buys

2023-08-23 11:47:44 ET

Summary

• Prior to July 31, my readers mentioned 39 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: MO, ACRE, PFE, O, KHC, MDV, VFC, BRSP, BTI, and MITT, averaged 48.7% net gains from reader data collected 8/18/23.
• Ten analyst-target-augured July top-price upside reader faves and rogues (ReFa/Ro) were: MDV, BIIB, KHC, PARA, VFC, DIS, BRSP, BTI and MITT boasting a 47.71% average target price upside estimate.
• By yield, the following ReFa/Ro made the top ten: JEPI; JEPQ; ABR; MITT; BRSP; FSCO;ARI; ACRE; TPVG; MVRL. They averaged 13.27% annual yield. (Two stocks made all three lists this month: BRSP and MITT.).
• $5k invested in the lowest-priced five of these top-yield ReFa/Ro dividend dogs showed 61.75% more net-gain than from $5k invested in all ten. Little (lower-priced) ReFa/Ro dogs over-ran this pack in July.

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's 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.

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.

There are also those who catch flagrant fouled stock lists not synchronized with the data charted.

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 "rogueishness ." 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 "rogueishness."

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 10 or 20 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 mopay 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 $4.40 easily passes my test (of dividends from $1k invested exceeding share price) with a forward dividend yield of 2.16%. A little over $1k investment now buys 227 shares. and they'll throw the owner a return (from $1k invested) near 5 times the share price. Assuming all things remain equal, SIRI dividends alone will pay back their purchase price in 46.25 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 $5.50 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 $1,000 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 vs. 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.

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

Two months ago a reader made a prediction that PacWest (PACW) would be the next bank to collapse. Your heard it here first!

This 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 (BANC). Stay tuned.

Every month readers grumble that they can’t find my eight portfolios in my service. This year SA has listed all the postings on my 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).

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 Nov. 4, 2022.

Two new observations from April 2023:

“As much as I like SBLK I wouldn't post the past dividend , and project it as a template for it's future yield.

As always the first quarter is the lousy quarter for dry bulk earnings. SBLK dividend policy is "("Total Cash Balance - A Minimum Cash Balance) / Shares Outstanding." You shouldn't expect much— ramisle 20Apr2023.”

“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, 12 years ago when I started submitting articles, the SA editorial team suggested text to go with the graphics and topsy was born.

Foreword

Note that in July readers mentioned 20 stocks whose dividends from a $1K investment exceeded their single share prices. These are listed below by yield:

The ReFaRo July Ideal Dividend Dogs

Above are the 20 ideal candidates derived from the 39 tangible results from reader favorite and rogue equities received prior to August 1, 2023. YCharts data for this article was collected as of 8/18/23.

Actionable Conclusions (1-10): Brokers Estimated 23.35% To 202.55% Net Gains From 10 ReFa/Ro Stocks To August 2024

Three reader-favored top-yield stock was 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, 10 probable profit-generating trades projected to Aug. 18, 2024, were:

AG Mortgage Investment Trust Inc ( MITT ) was projected to net $2,025.45, 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 89% over the market as a whole. MITT is way rogue.

British American Tobacco PLC ( BTI ) was projected to net $466.59, 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 45% under the market as a whole. It's a favorite.

Brightsphere Capital Inc ( BRSP ) was projected to net $465.75, based on the median of target price estimates from four analysts, plus the projected annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 470% over the market as a whole. A rogue.

VF Corp ( VFC ) was projected to net $319.37, based on the median of target price estimates from 20 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 48% over the market as a whole. VFC is very rogue.

Modiv Inc ( MDV ) was projected to net $313.61, based on the median of target estimates from three analysts, plus annual dividend, less broker fees. A Beta number was not available for MDV. MDV is a rogue.

The Kraft Heinz Co ( KHC ) netted $294.18 based on the median of target price estimates from 19 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 33% under the market as a whole. KHC is a Fave.

Realty Income Corp ( O ) was projected to net $265.34 based on the median of target price estimates from 14 analysts, plus the projected annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 22% under the market as a whole. A Fave.

Pfizer Inc ( PFE ) was projected to net $249.10 based on the median of target price estimates from 23 analysts, plus the projected annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 38% less than the market as a whole. A Fave.

Ares Commercial Real Estate Corp ( ACRE ) netted $237.11 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 39% over the market as a whole. It’s a true rogue.

Altria Group (MO) was projected to net $233.51, 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 41% under the market as a whole. It is a fave.

Average net gain in dividend and price was estimated at 48.7% on $10k invested as $1k in each of these ten stocks. This gain estimate was subject to average risk/volatility 25% over the market as a whole. July, 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."

39 For the Money

Yield (dividend/price) results from YCharts.com verified by Yahoo Finance for ReFa/Ro stocks as of market closing prices 8/18/22 for 39 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.

39 ReFa/Ro By Target Gains

Actionable Conclusions (11-20): ReFa/Ro Top (Rogue ETF), MVRL , Led 39 By Yield Through July

The 39 ReFa/Ro sorted by yield included 10 of 11 Morningstar sectors and four open ended investment companies (ETFs).

Ten top reader-mentions by yield in July, were led by one of three ETF members in the top 10, ETRACS Mnthly Py 1.5X Lvgd Mtg REIT ETN ( MVRL ) [1]. The other two ETFs placed ninth and tenth, JPMorgan Nasdaq Equity Premium Inc ETF ( JEPQ ) [9], and JPMorgan Equity Premium Income ETF ( JEPI ) [10].

Then two places went to financial services sector members: TriplePoint Venture Growth BDC Corp ( TPVG ) [2], and FS Credit Opportunities Corp (FSC O ) [5].

Finally, five real estate representatives took the field: Ares Commercial Real Estate Corp ( ACRE ) [3]; Apollo Commercial Real Estate Finance Inc ( ARI ) [4]; Bright Spire Capital Inc [6]; AG Mortgage Investment Trust Inc [7], Arbor Realty Trust Inc ( ABR ) [8], to complete the top 10 July ReFa/Ro by yield as of August 18, 2023.

Actionable Conclusions: (21-30) Top 10 ReFa/Ro By Price Upsides Showed 20.78% To 36.48% Increases To August, 2023.

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 61.75% Advantage For five Highest-Yield, Lowest-Priced Re/Fa/Ro Stocks To August 2023

Ten 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 8/18/23, showing the highest dividend yields in July represented two sectors and ETFs: ETFs (3); financial services (2); real estate (5).

Actionable Conclusions: Analysts Predicted 5 Lowest-Priced Of Top 10 Highest-Yield Reader Favorites and Rogues To (31) Deliver 59.84% Vs. (32) 37.00% Net Gains by All 10 To August 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 61.75% more net gain than $5k invested in all 10. The second lowest-priced ReFa/Ro top-yield equity, AG Mortgage Investment Trust Inc, was projected to deliver the best net gain of 202.55%.

The five lowest-priced ReFa/Ro top-yield dogs for May as of Aug. 18 were: FS Credit Opp Corp; AG Mortgage Investment Trust Inc; BrightSpire Capital Inc, Ares Commercial Real Estate Corp; Apollo Commercial Real Estate Finance Inc, with prices ranging from $5.35 to $10.12 per share.

Five higher-priced ReFa/Ro as of August 18 were: Triple Point Venture Growth BDC Corp; Arbor Realty Trust Inc; ETRACS Monthy Pay 1.5% Leveraged REIT ETN; JPMorgan Nasdaq Equity Premium Income ETF; JP Morgan Equity Premium Income ETF; whose prices ranged from $11.00 to $54.51.

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

Afterword

Here's the full pack of 39 July ReFa/Ro

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

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

20 Dogcatcher Ideal Dogs from July

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 FoFa/Ro dog 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.

Graphs and charts were compiled by Rydlun & Co., LLC from data derived from www.indexarb.com; YCharts.com; Yahoo Finance - Stock Market Live, Quotes, Business & Finance News; analyst mean target price by YCharts. Open source dog art from the service.

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