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Western Asset Mortgage Capital Corporation Message Board

  • mysonchino mysonchino Jun 20, 2013 1:02 PM Flag

    Relax and remember

    It's time to remember why we bought this stock. I bought it for the dividend. When I bought it (some at 21.00 some for less) I calculated that if the company cut the dividend by 40%(unlikely) it would still yield 10.8% on a 21.00 purchase price. At the time I could find nothing that I didn't already own, and had enough of, that paid a solid 10.8% dividend. Also, while I do not believe there will be a 40% dividend cut I did believe there would be a cut of some amount. Why? Because you just don't get an 18% risk free dividend yield for a very long period of time. So I think will hold for this quarter and maybe be followed by a .05 cut next quarter. Maybe 10 cents.

    What if I am wrong? Then they cut more than .05 but I truly believe less than 40%(.38 per qtr) and I have a yield of over 10.8% on my origanal investment. But haven't I lost a lot of money? No! I don't plan to sell it. I'll simply wait and collect a nice dividend for waiting. I believe some day within the next few years WMC will sell for more than 21.00. If it is paying a nice dividend I won't sell it then. Things cycle and go round and round. Remember, your money has to have a place to live just like you do. If you sell WMC you have to find a new place for your money to live. Now where are you going find a place paying as nice a dividend as WMC? These guys are quality money managers. In time you will collect many dividends and the stock price will go back up. For now just relax. There is very little you can do. It will work itself out over time. While you wait your cash flow continues. Enjoy. WMC isn't going away.

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