January Readers Noted 30 Ideal-To-Buy Dividend Dogs

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 members of my investing group in the Seeking Alpha 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 $4.74 easily passes my test (of dividends from $1k invested exceeding share price) with a forward dividend yield of 2.25%! A little over $1k investment now buys 211 shares. and they’ll throw the owner a return (from $1k invested) about 4.75 times the share price. Assuming all things remain equal, SIRI dividends alone will pay back their purchase price in 44.5 years (and that assumes the satellite radio and subscription music services can survive that long)!

This year, in December 2023 a reader suggested my share price equal or less than the income from a $1k investment was too low. I agree with him that opportunities are lost and that many strong stocks exist at higher prices. For example, even the dividend from $10k invested in Apple Inc could not buy one share of that stock. Plainly nobody buys Apple for the dividend, just growth.

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, 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? Its assets as of December 16 are now in the hands of Banc of California. The new entity is now traded under the ticker BANC. PACW is no longer and entity to trade.

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

This year, Seeking Alpha 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.

Last month a reader asked what the XN rating in the Market Cap column of my Yield and Target Price charts means. Here is my summary of those codes:

Dogcatcher Market Cap Codes

L= $10B+

M= $2B-$10B

S= $200M-$2B

XN=<$200M

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, fourteen 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! I’ll be sure to make the Dividend Kings articles less obfuscating.

Foreword

Note that in January readers mentioned 30 stocks whose dividends from a $1K investment exceeded their single share prices. These are listed below by yield:

The ReFaRo January Ideal Dividend Dogs

Above are the 30 ideal candidates derived from the 37 tangible results from reader favorite & rogue equities received prior to January 31, 2024. YCharts data for this article was collected as of 2/20/24.

Actionable Conclusions (1-10): Brokers Estimated 23.36% To 126.48% Net Gains From 10 ReFa/Ro Stocks To January 2025

Three reader-favored top-yield January 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 2024-25 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 February 20 2025 were:

Orchid Island Capital Inc (ORC) netted $1,264.75 based on the median of target price estimates from 2 analysts, plus dividends, less broker fees. (Record haul in 12 years of dogatcher analytics!) The Beta number showed this estimate subject to risk/volatility 82% over the market as a whole. It’s a true rogue.

Ares Commercial Real Estate Corp (ACRE) was projected to net $402.73 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 is subject to risk/volatility 48% greater than the market as a whole. A Rogue.

Altria Group Inc (MO) was projected to net $398.39, based on the median of target price estimates from 8 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 a rogue.

Ellington Financial Inc (EFC) was projected to net $368.19, based on the median of target price estimates from 7 analysts, plus the projected annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 96% over the market as a whole. A rogue.

Modiv Industrial Inc (MDV) was projected to net $261.20, based on the median of target estimates from 3 analysts, plus annual dividends, less broker fees. A beta number is not available for MDV. Maybe it’s a fave.

Ready Capital Corp (RC) was projected to net $245.78 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 34% under the market as a whole. A Fave.

3M Co (MMM) was projected to net $237.89, 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 2% over the market as a whole. A rogue.

Kinder Morgan Ind (KMI) netted $237.45 based on the median of target price estimates from 15 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 9% under the market as a whole. A fave.

Realty Income Corp (O) was projected to net $234.58, based on the median of target price estimates from 15 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 6% less than the market as a whole. O is a fave.

Kenvue Inc (KVUE) netted $233.57 based on the median of target price estimates from 14 analysts, plus dividends, less broker fees. A Beta number was not available for KVUE. It maybe a fave.

Average net gain in dividend and price was estimated at 38.85% on $10k invested as $1k in each of these ten stocks. This gain estimate was subject to average risk/volatility 27% over the market as a whole. January, 2024, 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.”

37 For the Money

Yield (dividend/price) results from YCharts.com verified by Yahoo Finance for ReFa/Ro stocks as of market closing prices 1/23/24 for 37 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.

37 ReFa/Ro By Target Gains

Actionable Conclusions (11-20): ReFa/Ro Top Rogue Dog, MVRL, Led 37 By Yield Through January

The 37 ReFa/Ro sorted by yield included 10 of 11 Morningstar sectors, one ETN and one ETF.

Ten top reader-mentions by yield in December, were led by one ETN, ETRACS Monthly Pay 1.5X Leveraged Mortgage REIT (MVRL) [1].

Then five financial services placed second and seventh, through tenth: Oxford Lane Capital Corp (OXLC) [2];XAI Octagon Floating Rate & Alternative Income Trust (XFLT) [7]; FS KKR Capital Corp (FSK) [8], Trinity Capital Inc (TRIN) [9], and Pimco Dynamic Income Fund (PDI) [10].

Finally, the first of four real estate representatives placed third through sixth: Orchid Island Capital Inc [3], Ares Commercial Real Estate Corp [4], AGNC Investment Corp (AGNC) [5], and Ellington Financial Inc [6], to fill out the top 10 January ReFa/Ro by yield as of February 20, 2023 data.

Actionable Conclusions: (21-30) Top 10 ReFa/Ro By Price Upsides Showed 17.82% To 110.27% Increases Through to January, 2025.

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 32.32% Advantage For 5 Highest-Yield, Lowest-Priced Re/Fa/Ro Stocks Through January, 2025

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 2/20/24, showing the highest dividend yields in January represented an ETF (1) and two sectors: financial services (5); real estate (4).

Actionable Conclusions: Analysts Predicted 5 Lowest-Priced Of 10 Top -Yield Reader Favorites & Rogues To (31) Deliver 43.31% Vs. (32) 32.73% Net Gains by All 10 Through February, 2025

$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 32.32% more net gain than $5k invested in all 10. The fourth lowest-priced ReFa/Ro top-yield equity, Orchid Island Capital Inc, was projected to deliver the best net gain of 126.47%.

Five lowest-priced ReFa/Ro top-yield dogs for January as of February 20 were: Oxford Lane Capital Corp; XAI Octagon Floating Rate and Alternative Income Trust; Ares Commercial Real Estate Corp; Orchid Island Capital Inc; AGNC Investment Corp, with prices ranging from $5.05 to $9.49 per share.

Five higher-priced ReFa/Ro as of February 20 were: Ellington Financial Inc; Trinity Capital Inc; Ellington Financial Corp; ETRACS Monthly Pay 1.5X Leveraged Mortgage REIT ETF; PIMCO Dynamic Income Fund; FS KKR Capital Corp, whose prices ranged from $11.90 to $20.07.

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

Afterword

Here is the full pack of 37 January ReFa/Ro

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

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

30 Dogcatcher Ideal ReFa/Ro Dogs from January

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.