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ARMOUR Residential REIT, Inc. Message Board

  • serpentine290 serpentine290 Jul 21, 2013 5:58 PM Flag

    Dividend up or down?

    The share price is $4.52 and the annual dividend is currently $0.72. That is about 16%. The mortgage reit business only pays 12-13 percent over time. Is the share price going to go up or is the dividend going to come down?

    Sentiment: Hold

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • I see .07 dividend @ .84 annually. That would equate to 18.6%. If you go to the US treasury web site or google historic yield curve you can go to some interactive charts. INterestingly spreads between short and long term are pretty juicy right now. With tons of 30 year mortgages locked in at very low rates, the margins which existed when those loans were put on the books will persist for up to 30 years. However, in time, say around 2016, you will see spreads tightening back to normal. New loans brought in by ARR will be at smaller margins at that point and will become relatively more substantial (as a portion of the ARR total book) every month that goes by. Eventually the market will settle and you will find a 12-13% yield like you suggest.

      Stick around and reinvest your dividends. That is what I think.

 
ARR
4.24-0.01(-0.24%)Jul 25 4:04 PMEDT

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