I believe a dividend cut is imminent, from $5.00 to $4.00, reason, earnings from the squeeze have been drastically reduced, Obama's FED is squeezing the XXXX out of the yield spread, not good for the leveraging and the dropping profitability. Fiscal Cliff could cause more whipsaw and hedging is going to get creamed, this is like caught in a hurricane with no engine power.
It the the down slope and the FED Operation to bring down rates for infinity. This strategy is designed to drive yield spread to zero. It isn't working, but these idiots that just got reelected still believe they saved the economy 3 years ago and that this policy is a miracle drug. For those in touch with reality, driving rates to zero has now put a 700 Trillion dollar pension system into 40% unfunded due to lack of a safe and liquird yield. Large corporations like Excelon, Boeing and now having to dramatically cut cost and the dividend, in order to fund shrinking revenue in their pension accounts and exponential increase in Baby Boomers retiring and drawing monthly payouts.
Interest rates have to rise dramatically, not only to stabilize the pension system but they need a bigger increase now to offset the HIGHER TAXES on dividends, interest and capital gains. THE STOCK MARKETS ARE VERY VULNERABLE TO A VERY SIGNIFICANT DOWNTURN. 70-90% drop possible this time.
Sentiment: Strong Sell
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.
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.
I'm a buyer too. Lowest downgrade was 32 but one at 34 and one at 35. This stock is good for at least a couple of bucks before the huge div. payout at the end of Dec. Even if they lower the %, it's still a great retirement stock to own. I'm all in.
No. The dividend will be cut to 0.70 per quarter. 9% yield based on the current price per share of $31. It will be cut for Q1 distribution. I guarantee it. The price per share will trade down to $27 to compensate. Thats when management will buy shares back. The yield will be 10.4% at $27.
Sentiment: Strong Sell