My thinking all along was that it would be another $.15 decrease from the original $1.40 dividend. Therefore $1.10 sounds right. I think a decrease of $.25 would have a significant negative affect where as a $.15 decrease might actually have a positive affect like it did last year. Watch the earnings report and see if they can sustain a $1.10 dividend with all the other ways they make money beyond just the spreads. Gary has said in a CC that they are a business that makes money in more ways than just the spreads and they have demonstrated that for a while. We should have a good idea in a week or so.
Yes a spike down is a great opportunity to buy/add AGNC.
What would trigger your buy(s)?
Me-- 30.90 then 30.50.
With a decent Earnings and a minimal dividend reduction, AGNC could reach a rolling-rock 33 this quarter,imo..
How about timing?
Me-- Wed. thru next Fri., with a standing flash-crash buy-order at 29.92.
If there is no significant drop by next Wed., I'll probably try to time a Fri. first re-buy this quarter.
It seems almost every quarter has significant drop somewhere along the way. I'm more vulture than eagle when it comes to this stock just because of these "shock drops". I have 2 GTCs, one at 28.50 and the other at 26. Right now I'm still being cautious and waiting for others numbers to start trickling in. CMO just reported lower earnings, tighter spread, and a drop in book value. Of course I don't compare CMO and AGNC apples for apples, but if this trend continues in mREITs before the earnings announcement, then we could see a sector contraction.
Personally, I expect to see the dividend readjusted to 1.00 per quarter for 2013. I'm very curious to see how BV does in the report as this is AGNC's number one goal. They either had to sell lower valued assets out of the portfolio or buy back shares or some combination of both. Granted they have a nice chunk of undistributed income, but they also have continually shrinking core income.
I posted in another thread that $1.10 looked good to me. Their preference to pay a consistent dividend basically means the new dividend rate will be an indication of management's projections for 2013, rather than a backward looking calc based on actual Q4 earnings. Since they've said in investor conferences that they expect spreads to increase as early as March, my guess is that the dividend will come in higher than Q4's earnings might support.
I'm also not sure management can issue shares below book. I know some corporate charters prevent that (anyone who's followed this sector has to have seen management teams requesting permission to issue below book), but I don't know if AGNC's is one of those. If it is, an SPO may not be an option at these price levels.