I wish I knew where they were on the Buy Back program. They said they were gonna be buying below book value. A few thoughts I have about this...
If you had money set aside to buy back stock, I wouldn't think you would buy soo much that you had to cut your dividend. That would be a pretty big oops. Your gonna set aside your scheduled Div payment, and buy as much stock as you can when it falls in the range, unless you have a different plan.
They could cut the div on purpose, to put downward pressure on the stock, to create a buying opportunity for themselves. The question is why? I can't answer that question but I know this for sure...
This dividend might be the last chance for anybody to enjoy a low capital gains tax on dividend income for the near future. There are many companies doing a one time large payment to enjoy the lower tax rate while its still a sure thing. Take future earnings now, etc while you can is the idea.
I also don't know what AGNC is bound to in terms of positioning, and max payouts and ratio's etc, but I'm totally fine with AGNC saying hey, we think we are gonna do the biggest DIV ever, later this month with this tax strategy in mind. It would be a nice little gift to the shareholders.
I guess we will find out whats gonna happen, but I just dont see how its possible we are gonna have a reduced dividend. As stated before, who cuts a dividend when they are in the middle of buying back stock?
There should be people everywhere taking advantage of this tax opportunity. Buy in hard, take a large dividend payment, and sell the stock for a small loss right after div, but before end of year.
I would speculate they probably did some of it at least.
Gary K bought shares of MTGE on the open market when all the reits where down.
So I would read into that he thought they were really low and why not use the buy back then to.