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American Capital Agency Corp. Message Board

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  • olee2116 olee2116 Nov 7, 2012 3:32 PM Flag

    Dividend Cut and Fiscal Cliff !

    Based on MBS price appreciation, AGNC can maintain the 1.25 div for 4 quarters, then based on net income and hedging support a div that is .30-.75. And that is assuming QE forever.

    If QE ends, then the spread will slowly rise and things will be back to gravy. However, I have a bad feeling about Obama's masterplan and I think things will get worse.

    Short term good, long term GTFO.

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    • Olee. I think your under-estimating.
      On their 2Q 10Q they had 1.58 Billion in unrealized gains on the portfolio.
      Last Q (3rd quarter) they logged another 1.19 Billion in unrealized gains.
      The 3rd Quarter 10Q is not out,so I can't dig up the actual number from he 3rd quarter 10Q.

      For simplicity lets just say they have 2.8 BILLION in unrealized gains.

      Which gives them roughly 8.91 a share for unrealized gains.
      And they had what.. 1.52 of carry over?

      They have a lot of money to work with. : )

      Of course they can't just go and sell their whole portfolio either.
      And MBS prices may drop which will degrade the 2.8 Billion in unrealized gains.
      So throwing out a number like 2.8 BILLION / 8.91 a share isn't realistic.
      They will probably continue to sell a bit each quarter.

    • Play this in your IRA and don't worry about the div. tax hike. Pay only as you take money out on a yearly salary basis; whatever your income bracket is.

      • 1 Reply to fstout57
      • A div tax break expiration wouldn't affect mREITs. mREIT divs are unqualified.

        What mREITs will see when the div tax break expires is an inrush of funds from non-tax protected accounts, as they will no longer be at a disadvantage to qualified dividend payers for taxable accounts.

        Just keep saying to yourself: Taxes good. Fiscal cliff bad. Trickle-down bogus.

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