BRSP - Readers Revealed 21 Ideal February Dividend Dogs

2023-03-17 11:38:11 ET

Summary

• Prior to February 28, 2023, readers mentioned 38 equities in recent comments on Arnold 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: ABT, MMM, PFE, CCAP, ACRE, CS, VFC, REFI, BRSP, and MITT, averaged 64.47% net gains from data collected 3/14/23.
• Ten analyst-target-augured TOP-PRICE-UPSIDE reader faves & rogues (ReFa/Ro) were: EMR, CCAP, ABT, PFE, ACRE, REFI, CS, VFC, BRSP, & MITT, boasting a 56.85% average target price upside estimate.
• By YIELD, the following ReFa/Ro made the top ten: EARN; MITT; ACRE; ARI; REFi; FSK; BRMK; ECC; HIMX EDI. They averaged 14.82% annual yield. (Three stocks made all three lists this month: ACRE; REFI; MITT).
• $5k invested in the lowest-priced five of these top-yield ReFa/Ro dividend dogs showed 32.93% more net-gain than from $5k invested in all ten. The little (lower-priced) ReFa/Ro dogs returned to lead this pack in February.

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.

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. 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 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 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 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 equaling or exceeding share price. A prime example is Sirius XM Holdings Inc. (SIRI), the satellite radio and pandora music catalog owner, priced now at $3.61 easily passes my test (of dividends from $1k invested exceeding share price) with a forward dividend of 2.66%! A little over $1k investment now buys 277 shares. and they'll throw the owner a return (from $1k invested) over 7.36 times the share price. Assuming all things remain equal, SIRI dividends alone will pay back their purchase price in 37 years and six months (and that assumes the satellite radio and subscription music service can survive that long)!

In August a reader said a $15.40 dividend on a $1K investment was too small. I point out that holders of Apple (AAPL) stock now garner about $7.00 in dividends from $1K invested.

Last month 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.

The dogcatcher ideal balance point is a sweet spot to use for reference.

Every month readers grumble that they can’t find my eight Dog of the week portfolios in my Dividend Dogcatcher service on the SA Marketplace site. This year Seeking Alpha has listed all the postings on my Dogcatcher service 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 Marketplace ‘safer’ stock reports have been gathering since November 4, 2022.

Foreword

Note that this month readers mentioned 21 stocks whose dividends from a $1K investment exceeded their single share prices. These are listed below by yield:

The ReFaRo February Ideal Dividend Dogs

Above are the 21 ideal candidates derived from the 38 tangible results from reader favorite & rogue equities received prior to February 28, 2023. YCharts data for this article was collected as of 3/14/23.

Actionable Conclusions (1-10): Brokers Estimated 24.29% To 257.86% Net Gains From 10 ReFa/Ro Stocks To February 2024

Three reader-favorite top-yield 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 March 14, 2024 were:

AG Mortgage Investment Trust Inc ( MITT ) netted $2,578.63 based on the median of target price estimates from 7 analysts, plus dividends, less broker fees. A Beta number was not available. MITT is Rogue.

BrightSpire Capital Inc ( BRSP ) was projected to net $668.13, based on the median of target estimates from 4 analysts, plus annual dividend, less broker fees. A Beta number was not available for BRSP. It is a rogue.

Chicago Atlantic Real Estate Finance ( REFI ) was projected to net $569.81, based on the median of target price estimates from 5 analysts, plus dividends, less broker fees. A Beta number was not available for REFI. It is a rogue.

V.F. Corp ( VFC ) was projected to net $537.77, based on the median of target price estimates from 21 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 rogue.

Credit Suisse Group AG ( CS ) netted $480.40 based on the median of target price estimates from 2 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 38% over the market as a whole. It’s a real rogue.

Ares Commercial Real Estate Corp ( ACRE ) was projected to net $460.52, based on the median of target price estimates from 7 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 40% over the market as a whole. It's rogue.

Crescent Capital BDC Inc ( CCAP ) was projected to net $334.22, based on the median of target price estimates from 3 analysts, plus dividends, less broker fees. A Beta number was not available for CCAP. It is a rogue.

Pfizer Inc ( PFE ) was projected to net $299.27, 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 36% under the market as a whole. A fave.

3M Company ( MMM ) was projected to net $254.86 based on the median of target price estimates from 18 analysts, plus the projected annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 3% less than the market as a whole. A Fave.

Abbott Laboratories ( ABT ) was projected to net $242.97 based on the median of target price estimates from 21 analysts, plus the projected annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 32% under the market as a whole. A rogue.

Average net gain in dividend and price was estimated at 64.47% on $10k invested as $1k in each of these ten stocks. This gain estimate was subject to average risk/volatility 9% over the market as a whole. February, 2023, top-ten gainers counted seven rogues, and three 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."

38 For the Money

Yield (dividend/price) results from YCharts.com verified by Yahoo Finance for ReFa/Ro stocks as of market closing prices 3/14/22 for 38 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.

38 ReFa/Ro By Target Gains

Actionable Conclusions (11-20): ReFa/Ro Top (Rogue), MITT , Led 38 By Yield Through February

The 38 ReFa/Ro sorted by yield included 10 of 11 Morningstar sectors.

The ten top reader-mentions by yield in February, were led by the first three financial services sector representatives in the top ten, Virtus Stone Harbor emerging Markets Fund ( EDI ) [1]. The other two placed third, and fifth: Eagle Point Credit Co Inc ( ECC ) [3], and FS KKR Capital Corp ( FSK ) [5].

Second place went to the lone technology stock in the ReFa/Ro February collection, Himax technologies Inc ( HIMX ) [2].

Finally, six real estate representatives in the top ten, placed fourth and sixth through tenth to complete the top 10 ReFa/Ro by yield as of February 28, 2023, Broadmark Realty Capital Inc ( BRMK ) [4], Chicago Atlantic Real Estate Finance Inc [6], Apollo Commercial Real Estate Finance Inc ( ARI ) [7], Ares Commercial Real Estate Corp [8], AG Mortgage Investment Trust Inc [9], and Ellington Financial Inc ( EFC ) [10].

Actionable Conclusions: (21-30) Top 10 ReFa/Ro By Price Upsides Showed 22.04% To 245.28% Increases To February, 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 32.93% Advantage For 5 Highest-Yield, Lowest-Priced Re/Fa/Ro Stocks To February, 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 3/14/23, showing the highest dividend yields in February represented three sectors: financial services (3); technology (1); real estate (6).

Actionable Conclusions: Analysts Predicted 5 Lowest-Priced Of Top 10 Highest-Yield Reader Favorites & Rogues To (31) Deliver 69.98% Vs. (32) 52.65% Net Gains by All 10 To February, 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 32.93% more net gain than $5k invested in all 10. The third lowest-priced ReFa/Ro top-yield equity, AG Mortgage Investment Trust Inc, was projected to deliver the best net gain of 257.86%.

The five lowest-priced ReFa/Ro top-yield dogs for March 14 were: Broadmark Realty Capital Inc; Virtus Stone Harbor Emerging Markets Total Income Fund; AG Mortgage Investment Trust Inc; Ellington Residential Mortgage REIT; Himax Technologies Inc, with prices ranging from $4.666 to $7.66 per share.

Five higher-priced ReFa/Ro as of March 14 were: Ares Commercial Real Estate Corp; Apollo Commercial Real Estate Finance Inc; Eagle Point Credit Co Inc; Chicago Atlantic Real Estate Finance Inc; FS KKR Capital Corp whose prices ranged from $9.67 to $17.77.

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 20% to 85% accurate on the direction of change and just 0% to 15% accurate on the degree of change.

The 38 equities and funds discussed in this article were submitted within comments from Seeking Alpha members noted below.

Afterword

Here is the full pack of 38 December ReFa/Ro

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

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

21 Dogcatcher Ideal Dogs from February

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 FoFave/Ro dog stock purchase or sale research process. These were not recommendations.

Graphs and charts were compiled by Rydlun & Co., LLC from data derived from www.indexarb.com; YCharts.com; finance.yahoo.com; analyst mean target price by YCharts. Open source dog art from dividenddogcatcher.com.

For further details see: