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American Capital Agency Corp. Message Board

  • yourbestfriendintheworld yourbestfriendintheworld May 4, 2013 3:07 PM Flag

    These guys are smart.

    1.08 undistributed income as of the end of the quarter, and .50 in net taxable income during the quarter (total, with all the bad stuff included). By the time they announce the div in June. they will have accumulated enough income (especially if they have the dollar-roll fiasco that caused this quarter's losses under control) to make a $1.25 div. This is why they keep the div at a moderate level. So that fluctuations in earnings don't require fluctuation in the div.

    They might decrease the div to create a larger buffer going into the next Q, but that depends on how well they cover in the next month.

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    • Part of the reason for Q1 loss was the rise in mortgage interest rates (with a corresponding decrease in mortgage securities values, which move opposite to interest rates). So far in Q2, mortgage interest rates are back down to the lowest levels in years. That means that mark-to-market securities values are up, recouping some of those (paper) losses.

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