Mon, Oct 20, 2014, 5:43 PM EDT - U.S. Markets closed

Recent

% | $
Quotes you view appear here for quick access.

Annaly Capital Management, Inc. Message Board

  • archcrim archcrim Dec 17, 2012 11:53 AM Flag

    AMERICAN CAPITAL AGENCY MAINTAINS DIVIDENT AT $1.25.....HOW IS THIS OCCURRING????

    ...with rates spreads being squeezed by Fed Rate Agency Ma...how can this occurr?

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • 4:32 PM Annaly Capital Management (NLY) declares $0.45/share quarterly dividend. For shareholders of record Dec. 28. Payable Jan. 29. Ex-div date Dec. 26

      Sentiment: Hold

    • What's a Divident ?

    • I think there is two reasons.....

      First, NLY does not maintain a UTI (undistributed taxable income) account. The UTI is excess taxable earnings that are carried forward to smooth divy movements. Take the case of AGNC who carries a UTI of $1.52 If AGNC has taxable income (TI) of $1.20, then 90% would be $1.08. AGNC could pay a divy of $1.25 by using 17 cents (1.25-1.08) of UTI. The AGNC UTI would be reduced 1.52 -.17 = $1.35 and available for following quarters. Since NLY does not have a policy of maintaining a UTI, NLY will pay the 90% taxable income as divys (holding divy shifts to 5 cent increments).

      Second, NLY has poor quality MBS with a high CPR. Most Mreits are selling assets and realizing a taxable gain, NLY is is unable to generate the asset sale gains greatly reducing taxable income and related divy.

      • 2 Replies to bovisutor
      • ----------------------------------------------------
        Second, NLY has poor quality MBS with a high CPR. Most Mreits are selling assets and realizing a taxable gain, NLY is is unable to generate the asset sale gains greatly reducing taxable income and related divy.
        ----------------------------------------------------

        what is particularly strange about this comment is that the $0.45 divy is not a "greatly reduced" divy. considering the change in the MBS environment, it is rather stout actually. once more the divy is coming from actual quarter real earnings. so that "poor" quality MBS paper is earning a great deal... even with high "CPR", (which isn't too surprising, because the CHANGE in CPR is what effects a quarter's earnings from quarter to quarter...

        in reality AGNC's CHANGE in CPR went from 12% to 14%, their MBS paper earned a very small number, (but apparently this is "high quality" to someone) , and their hedging just killed the earnings.

        in reality, AGNC's dividend is not coming from actual earnings... that should be the scary part.

      • ------------
        Second, NLY has poor quality MBS with a high CPR
        --------------------

        you got most of it right, except your example, in real life AGNC didn't earn $1.20... their real cash earnings was $0.25, (it was a loss the quarter before... )

        they took heavy derivative losses... (great management indeed)

        they are claiming a $1.25 dividend on "unrealized gains"... the kind that will get you in serious trouble when the unrealized gains disappear one quarter...

        yet this is what AGNC is doing... they are "paying it forward" as you will... except their forward will have to come up with it.

        and losses of about $0.66 for the last six months don't make that forward very appealing...

        there is a reason AGNC followed the rest of the MReit sector down... and it isn't because it is really earning $1.25... and the market is slowly realizing it.

    • Who cares...ya making money

      Sentiment: Strong Buy

 
NLY
11.29+0.09(+0.80%)Oct 20 4:01 PMEDT

Trending Tickers

i
Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.