I disagree. The spread is 1.55 and they use 8.25 times leverage, so that's 1.55 x 8.25 = 12.79% before expenses and the management fee. The fee is 1.5%. That drops the yield to 11.3% if not lower. The book is $6.76 so 11.3% of book equals .764/12 equals .0636. These are GAAP numbers, not tax numbers, but I think the divy is going down to 7 cents per month. I'm not an accountant and I could be wrong, but the net spread times leverage is a back of the envelope way to estimate the yield.
Current spread is 1.90, weighted average spread is 1.894857 as of COB yesterday. You're no accountant, fine, you're an investor.
Try to remember the present value of an investment is the perception of the future income prospects of the company. If you had done a weighted average of Q4, you'd have come up with 1.55 on the dot on New Year's Eve. It's no mystery.
It should also be no mystery that Q1's spread as of yesterday is 1.894857%, or higher by 0.344857%, which is an increase in spread income of (1.55/1.894857 = 22.2%) over 22%.
My advice, and you don't have to take it: stop being an accountant and start being an investor. Accounts deal with "what was" many weeks ago, and investors have insight into what the numbers are today.
Taxable income also includes drop income or realized income on the sale of the investments. Mreits often have to rely on the sale of these appreciated assets to generate enough taxable income to cover the divy. Last quarter core income was 22 cents plus the 7 cents in drop income. The divy is now 24 cents.
In a higher rate environment, there should be less reliance on drop income with core income sufficient to cover.
Dude, you're spot on ... I don't know what you do for a living but your good (and quick) ... everyone listen to this cat and he'll keep you straight ... I agree .08 is not sustainable ... and, no I am not a short ... within this year, ARR will go back to a quarterly dividend or be unable to maintain book value