WBA - Readers Post 31 October Dividend Buy Candidates

2023-11-19 07:40:02 ET

Summary

• Prior to September 30, 2023, my Readers mentioned 36 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: MVRL, FSK, T, RC, MO, BRSP, AHOTF, AB, WBA, and MITT averaged 56.52% net gains from reader data collected 11/15/23.
• Ten analyst-target-augured October TOP-PRICE-UPSIDE reader faves & rogues (ReFa/Ro) were: ABR, MMM, RC, O, BRSP, MO, T, AB, WBA, & MITT boasting a 47.19% average target price upside estimate.
• By YIELD, the following ReFa/Ro made the top ten: ACRE; WR; OFS; FSK; XFLT; AGNC; PBR; OXLC; MVRL; AHOTF. They averaged 17.23% annual yield. (No stock made all three lists this month.).
• $5k invested in the lowest-priced five of these top-yield ReFa/Ro dividend dogs showed 5.44% LESS net-gain than from $5k invested in all ten. Big (higher-priced) ReFa/Ro dogs out-ran this pack by half a length in October. Of 36 mentioned. 31 qualified as “ideal” as their dividends from $1k invested exceeded their single share price.

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.

Frequently 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 for the members of my investing group in the SA marketplace.

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 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 $5.04 easily passes my test (of dividends from $1k invested exceeding share price) with a forward dividend yield of 2.07%! A little under $1k investment now buys 198 shares. and they'll throw the owner a return (from $1k invested) over 4.1 times the share price. Assuming all things remain equal, SIRI dividends alone will pay back their purchase price in 48.3 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 $5.10 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 dividend? It’s a simple rule of retailing, and the 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.

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

Late summer, a pause in Fed interest rate hikes left PACW close to surrender but could it hang in when the hikes returned? It maybe 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 Dogcatcher 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 post its last return 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 post its last return 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, thirteen 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 October readers mentioned 31 stocks whose dividends from a $1K investment exceeded their single share prices. These are listed below by yield:

The ReFaRo October Ideal Dividend Dogs

Above are the 31 ideal candidates derived from the 36 tangible results from reader favorite & rogue equities received prior to November 1, 2023. YCharts data for this article was collected as of 11/15/23.

Actionable Conclusions (1-10): Brokers Estimated 20.56% To 326.88% Net Gains From 10 ReFa/Ro Stocks To October 2024

Two reader-favored top-yield October 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 20% 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 November 15, 2024 were:

AG Mortgage Investment Trust, Inc. ( MITT ) netted $3,268.76 based on the median of target price estimates from 23 analysts, plus dividends, less broker fees. (Record haul in 12 years of dogatcher analytics!) The Beta number showed this estimate subject to risk/volatility 37% under the market as a whole. It’s a true fave.

Walgreens Boots Alliance ( WBA ) was projected to net $350.56 based on the median of target price estimates from 13 analysts, plus the projected annual dividend, less broker fees. The Beta number showed this estimate is subject to risk/volatility 20% less than the market as a whole. A Fave.

AllianceBernstein Holding L.P. ( AB ) was projected to net $341.07 based on the median of target price estimates from 5 analysts, plus the projected annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 30% over the market as a whole. A Rogue.

American Hotel Income Properties ( AHOTF ) was projected to net $275.70, based on dividends alone, less broker fees. The Beta number showed this estimate subject to risk/volatility 84% greater than the market as a whole. AHOTF is a rogue.

BrightSpire Capital, Inc. ( BRSP ) was projected to net $266.97, 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% under the market as a whole. A fave.

Altria Group, Inc. ( MO ) was projected to net $244.97, 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 35% under the market as a whole. A fave.

Ready Capital Corp ( RC ) was projected to net $244.53, based on the median of target estimates from 8 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 41% over the market as a whole. A rogue.

AT&T Inc. ( T ) netted $240.60 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 39% under the market as a whole. T is a Fave.

FS KKR Capital Corp ( FSK ) was projected to net $213.61, based on the median of target price estimates from 10 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 36% over the market as a whole. It's a rogue.

ETRACS Monthy Pay 1.5X Leveraged Market REIT ETN ( MVRL ) netted $205.50 based on dividends, less broker fees. A Beta number was not available for MVRL. It’s a real rogue.

Average net gain in dividend and price was estimated at 56.52% on $10k invested as $1k in each of these ten stocks. This gain estimate was subject to average risk/volatility 8% under the market as a whole. October, 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."

36 For the Money

Yield (dividend/price) results from YCharts.com verified by Yahoo Finance for ReFa/Ro stocks as of market closing prices 11/15/22 for 36 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.

36 ReFa/Ro By Target Gains

Actionable Conclusions (11-20): ReFa/Ro Top Rogue Dog, AHOTF , Led 36 By Yield Through October

The 36 ReFa/Ro sorted by yield included 3 of 11 Morningstar sectors, one Uncollateralized Debt Instrument ( ETN ), and one open ended investment company (ETF).

Ten top reader-mentions by yield in October, were led by the first of three real estate representatives: American Hotel Income Properties REIT LP [1]. Other RE firms placed fifth and tenth, AGNC Investment Corp [5], and Ares Commercial Real Estate Corp ( ACRE ) 10].

The lone ETN placed second, ETRACS Monthly Pay 1.5X Leveraged Market REIT ETN [2].

Then the first of five financial services sector members placed third: Oxford Lane Capital Corp ( OXLC ) [3]. the other financials placed sixth to ninth, XAI Octagon FR & Alt Income Term Trust (XFL T ) [6];FS KKR Capital Corp ((FSK)) [7], OFS Capital Corp ( OFS ) [8], and Invesco Senior Income Trust ( VVR ) [9].

The lone energy member in the top ten, placed fourth, Petroleo Brasileiro S.A. - Petrobras ( PBR ) [4] to fill out the top 10 October ReFa/Ro by yield as of November 15, 2023 data.

Actionable Conclusions: (21-30) Top 10 ReFa/Ro By Price Upsides Showed 11.27% To 316.2% Increases Through 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 5.44% Disadvantage For 5 Highest-Yield, Lowest-Priced Re/Fa/Ro Stocks Through 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 11/15/23, showing the highest dividend yields in October represented three sectors: real estate (2); financial services (5); Energy (1), plus one ETN and one ETF.

Actionable Conclusions: Analysts Predicted 5 Lowest-Priced Of Top 10 Highest-Yield Reader Favorites & Rogues To (31) Deliver 16.46% Vs. (32) 17.41% Net Gains by All 10 Through 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 5.44% LESS net gain than $5k invested in all 10. The very lowest-priced ReFa/Ro top-yield equity, American Hotel Income Properties REIT LP, was projected to deliver the best net gain of 27.57%.

Five lowest-priced ReFa/Ro top-yield dogs for October as of November 15 were: American Hotel Income Properties REIT LP; Invesco Senior Income Trust; Oxford Lane Capital Corp; XAI Octagon FR & Alt Income Term Trust; AGNC Investment Corp, with prices ranging from $0.63 to $8.68 per share.

Five higher-priced ReFa/Ro as of November 15 were: OFS Capital Corp; Ares Commercial Real Estate Corp; Petrol Brasileiro SA Petrobras; ETRACS Monthly Pay 1.5X Leveraged Market REIT ETN; FS KKR Capital Corp, whose prices ranged from $10.18 to $19.90.

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

Afterword

Here is the full pack of 36 September ReFa/Ro

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

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

31 Dogcatcher Ideal ReFa/Ro Dogs from October

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.

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 Dividend Dog Catcher -.

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