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American Capital Agency Corp. Message Board

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  • uhlerf uhlerf Dec 21, 2012 5:04 AM Flag

    OT: NMM

    Foxy - You do know the following, right? The 13.74% yield consisted (last year - 2011) of 57.74% dividends and 43.26% "non-dividend," which, from my experience with a couple other stocks, means that of the total $1.74 per share paid last year, 43.26% (75.27 cents) was probably a "return OF capital", which while non-taxable, it DOES reduce your cost basis by that amount, so if/when you sell you have a higher capital gains to pay tax on than if the cost basis were not lowered.....
    So, IF they do that again this year the 44.25 cent payout will really be $.2555 dividend, plus $.1914 of your own money being returned, and lowering your cost basis by 19,44 cents.
    'course that was 2011, and I was told by an I.R. person at another company that it can't be known until end of year what the tax treatment will be - There may be a good investing strategy here, but I'm still trying to figure out what it is. (It MUST be advantageous, because several companies do it that way)
    What I'm getting at is that the 13.74% yield sounds really good, but when that really amounts to 7.933% it's not quite so impressive - as I said, I'm still working on my thinking (I do have a couple of others that work that way [fairly small holdings]). I do have NM, which I believe is related to NMM, but a regular corp, paying straight dividends.....
    No guru here - just tossing out something to think about.....
    Frank
    p.s. seen "faaqcee" on several MBs and assumed maybe it meant an FAA guy in quality control, no?

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    • Hey Uhl, guys,
      I realize that a good % of NMM's dividend is a ROC, but I really don't have the intention of holding my "trading acct. shares through the ex-date(I also own NMM in an ira acct.), but thanks for giving the board this info.(my bad!).
      Today, NMM declared its now normal div. of .4425, payable(w/the ROC) Feb. 14 to shareholders of record as of Feb 8.
      NMM's earnings and CC is this Thurs.

      Imo, NMM still has legs from here.
      I have a standing sell order in at 15.51.
      With a good ER, that well may be attained.
      If she slows down, or if there is a so-so ER, I may sell then.

      NMM is currently selling for 14.60, up .30(+2.10%) for the day.

      Good luck,
      Go NMM,
      Go AGNC,
      FOXY

    • "I was told by an I.R. person at another company that it can't be known until end of year what the tax treatment will be"

      Determination for treatment of distributions is an accounting determination. It is not something preplanned or decided by a board of directors. If a distribution is not covered by earnings and profit (E&P) (either past (accumulated) or present) it is treated as a return of capital (ROC). However, management or the board of directors can make decisions to purposely affect accumulated earnings in an attempt to influence distribution determination. A return of capital is a return of some or all of your investment in the company. There are instances when assets have been depreciated (accounting) that it is advantageous to return the investment capital to shareowners or partners. Certainly it is easy to envision why MLPs depreciate or would have accumulated (retained) earnings. Obviously with an equity (property) REIT depreciating assets is commonplace. Off hand I cannot think of how a strict mREIT would have depreciable assets. Typically with REITs ROC occurs when a company must pay a required dividend but earnings make it unable to do so from its profits..

    • oops - should have said 42.26% (not 43,26)

 
AGNC
22.25-0.21(-0.93%)Sep 22 4:00 PMEDT

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