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American Capital Agency Corp. Message Board

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  • instantwinbutton instantwinbutton Dec 5, 2012 12:08 PM Flag

    Isn't it about time AGNC annunced dividend and Ex-Date

    Bloomberg is wrong about the amount. The dividend amount will be lowered to 0.80 based on what Gary has been saying as of late... He continues to talk about lower returns and yields and net interest spreads only can afford 0.80. Also, AGNC doesnt want to pay out book value. So even with the roll over there.. i strongly believe they will pay excise tax on that. So you are really looking don't look at yield and think, oh it will be a $1.25 dividend. No. No. No. It's a 80c dividend with the prospect of a dividend cut to $0.50 later if the margins keep shrinking. Do I think that will happen? No one can say.. but the margins are widder today than in september. So thats positive news.. but as the fed keeps printing.. we could easily see a recover of MBS and moving to all time highs.. that would result also in higher prepayments. So it's an extremely difficult environment for MREITS. Those buying at deep discounts to book value will be rewarded as AGNC is very good at protecting book value, but don't expect dividend cut pressures to ease until the fed gets out of the market. That said, a dividend of 0.80 looks stable here at these market levels as long as the economy remains in ok shape. As the economy recovers, the yield on MBS will go up, ahead of fed policy. thats what will give us the widder spreads. If the economy doesn't recover, or is slow to recover, those spreads will tighten back up.

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    • I don't know where to begin... so I won't.

      Let's just say you've got a few bad assumptions there, and the company has over $1.50 earned but not yet paid out. The $1.25 stands and 3/7ths of the fed's policy will expire on 12/31 with regard to operation twist. QE3 is only (roughly) half the picture.

      Your 80 cent number seems to be based on one quarter, not four. Next year may see a cut, but with 3/7ths of the fed pressure going away I don't think it will be as bad as Q3 and Q4.

      Sentiment: Hold

    • Why not eliminate the dividend altogether? Makes as much sense as a steep cut to $0.50 does. Management has to keep its credibility with investors (that's where they get their working capital to buy mortgages). Earlier this year, management did a comprehensive analysis of future interest rates and refinances to determine a SUSTAINABLE dividend payment. The result was a reduction of their dividend from $1.40 to $1.25. To reduce the dividend further at this time, especially a drastic cut to $0.80 or $0.50, would severely undermine management's credibility with investors and harm the company's future growth.

      Add to that their ability to pay the December dividend at the $1.25 from retained earnings (instead of paying tax on it, which makes no sense at all). To add "icing" to that cake, AGNC has initiated a stock buy-back at a pps that is below book value (where it is now); with fewer shares outstanding, the pressure on the dividend is somewhat relieved by that stock buy-back --- why else do you think they did that with their cash when making SPO's is their life blood in buying mortgages?

      No, THIS time, Bloomberg got it right about the dividend amount.

      Sentiment: Buy

    • instantwinbutton, they have also stated many times they seemed comfortable with a dividend in the 13% - 15% range.
      It's in their con call and presentation to JP Morgan.

      So how would you read into that.

      Keep in mind with your analysis to these guys NEVER cover their dividend with just core spread income.
      They always have been paying more than core spread income.

      Their MBS money tree (from selling MBS) is not going to run out any time soon.

    • I agree entirely with many of your observations.
      Just reading off my screen.
      I have predicting much lower dividends for months

 
AGNC
23.65+0.14(+0.60%)Aug 29 4:00 PMEDT

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