Wed, Jul 23, 2014, 12:31 PM EDT - U.S. Markets close in 3 hrs 29 mins

Recent

% | $
Click the to save as a favorite.

ARMOUR Residential REIT, Inc. Message Board

  • voxchaos@sbcglobal.net voxchaos Feb 25, 2011 12:06 PM Flag

    dividends...

     

    To all the naysayers, please hold the door of the bank open for me so I can deposit my huge dividend from ARR.

    This topic is deleted.
    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • LOL

    • How many shares do you have? I am thinking of selling my AGNC and getting in on this monthly cash cow.

    • Good catch ... I missed that ... they keep bumping it up considering even their last monthly update clearly said 9x ... well, if that is what they put in their most recent public input, then that must be what they have done ... a good signal since MBS valuations have rallied ... very, very nice ... still think covering that .12 dividend for the most recent offering was not really possible ... but, the leverage will definately help

    • Buried deep into the FAQ's (page 1 :-))

      ARMOUR leverages its Agency mortgage investment portfolio with borrowings,
      which are generally short term and are secured by ARMOUR’s investment securities.
      The broad target leverage ratio is six to ten times debt to equity based on ARMOUR’s
      permanent capital equity base (additional paid‐in‐capital), though ARMOUR is not
      constrained by that range.

    • I may have missed it in the FAQs section but I don't remember ever reading anywhere a leverage range that went as high as 10x ... but, they could do it I suppose if the conditions were right and they felt strongly about the move ...

    • If I recall isn't it actually 6-10 the leverage levels....

      As that's what I believe was stated in the faq link you posted.

    • Congrats on your dividend ... as a new shareholder (again), I would like for the first time to participate in the conversation concerning whether the "dividend is safe" going forward ...

      What we know:
      1) ARR did massive offerings in a short period of time that did not allow for the new shares to actually earn the dividend they were paid
      2) The dividends to these new shares were paid by "paid in capital" ... in other words, proceeds from the offerings
      3) "Paid in Capital" is not part of taxable REIT income ... which is basically "Core Earnings"
      4) REITs pay 90% of taxable earnings as dividends
      5) So, this quarter ARR paid more in dividends than it earned ...
      6) If it already paid out more than it earned, future earnings to not have to be paid out at 90% ...

      I apologize if this doesn't make sense ... I know what I want to say but I don't know how to say it well (any accountants that can explain this better?)

      In any case, it's just something to consider ... the positive side of this conversation is that if the future dividend is reduced it will be to put the "paid in captial" back into the book value where it belongs ... for the record, it is my opinion that the dividend will be reduced to cover this difference but only by a penny or two ... (per month)

      Have a great weekend.

      • 5 Replies to blueskydriving
      • With all due respect, Bluesky, "no" on the point related to paid in capital. In order to issues shares a company must file with the SEC and state the purpose of the proceeds of the share offering. No company would ever be allowed to state the purpose of paying dividends to shareholders -- that is the definition of a ponzi scheme.

        In fact, ARR stated the purpose of purchasing MBS as the reason for issuing shares, and by law, that is what they are allowed to do with the money, and nothing else, and they (ARR) intend for the interest from these MBS to pay the dividend on issued shares.

        The question of how a REIT pays more than its' earnings year after year after year confuses so many because it seems impossible, and in fact it would be. The answer lies in the rules associated with GAAP vrs REIT accounting. REITs are required to report their earnings using GAAP, however they pay their dividends from free cash flow on a before tax basis. Plug this into GAAP as an expense, and it can cause the earnings to become less than the amount payed, but you have to look at the cash flow statement to get a fair picture of what the company is doing.

        It is possible for a REIT to decide to pay out of retained earnings, but it's very unlikely that they would ever do so for more than a quarter or two and only if they believed that future earnings would allow them to make-up for the payment.

        So the short answer of how a REIT pays more than it earns is that it doesn't and only an Accountant can explain why.

      • I'm not sure I follow what you are saying about paid in capital but the info below is from a recent press release and shows paid in capital, historic book value, is higher that "book value". Is that difference consistent or inconsistent with your post? In any event, just because the new offering proceeds were deployed for the entire quarter doesn't mean the dividend paid wasn't fully earned. You are overlooking the fact that even after expenses, the offerings were accretive and you also don't know whether higher rates/margins were more than enough to make up the difference.
        ______

        # Estimated book value per share as of the close of the most recent equity offering is $6.82.
        # Historic book value per share (additional paid-in-capital) is estimated to be $7.12.

      • <Congrats on your dividend ... as a new shareholder (again), I would like for the first time to participate in the conversation concerning whether the "dividend is safe" going forward ...

        What we know:
        1) ARR did massive offerings in a short period of time that did not allow for the new shares to actually earn the dividend they were paid
        2) The dividends to these new shares were paid by "paid in capital" ... in other words, proceeds from the offerings
        3) "Paid in Capital" is not part of taxable REIT income ... which is basically "Core Earnings"
        4) REITs pay 90% of taxable earnings as dividends
        5) So, this quarter ARR paid more in dividends than it earned ...
        6) If it already paid out more than it earned, future earnings to not have to be paid out at 90% ...

        I apologize if this doesn't make sense ... I know what I want to say but I don't know how to say it well (any accountants that can explain this better?)

        In any case, it's just something to consider ... the positive side of this conversation is that if the future dividend is reduced it will be to put the "paid in captial" back into the book value where it belongs ... for the record, it is my opinion that the dividend will be reduced to cover this difference but only by a penny or two ... (per month)

        Have a great weekend.>


        Great recap Blue, Thanks! The key question is whether they earn the same 3% net interest margin they earned in 3Q on the current $2.2B portfolio. If so, they may gush enough cash to keep the divvy intact. That's a big if though since we don't know if these guys have anything else going on that would cut into the divvy like more secondaries, more rate hedges/insurance, etc.

      • I think that a portion (How much, I don't know)of the dividends is a "return of capital", and it is not taxable, but a return of your cost. This analysis will be made on your 2011 form 1099 at the end of the year.
        I am long on ARR, and will buy more on certain price drops.

      • i think i will have a cold beer and a ponzi thought

    • KAAAAA-CHING here also. I love it when a plan comes together.

 
ARR
4.265+0.025(+0.59%)12:30 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.