lots of messages are starting to duplicate what we were seeing just over a year ago, when they made the previous dividend cut to 1.25 from 1.40.
AGNC is a fairly quiet company. very few material information releases during the quarter. mostly fluff until you get to earnings announcements. what can they do before they announce the next dividend?
1. keep divvy the same
2. cut the divvy. no way to raise it, despite all the posts suggesting that they can.
3. do another offering
4. restart the buyback
5. do nothing that impacts the share count
share count first. historically, AGNC has not done anything to share count, unless it was accretive to book value. in fact, an offering price was the best non earnings announcement estimate for BV, because it was usually book plus. assuming we are close to book, another is not likely. same thing for a buyback. we are close to book, and buying back shares takes cash. to get meaningful cash, they would have to sell meaningful amounts of agency securities. they already did that, and got hosed.
now for the divvy. without the miserable 1Q result, I would say the divvy would not change. they had nearly two quarters worth stashed in the attic. now the overhang is down to less than 1 quarter worth. they are the only ones who know how well the current quarter is going. if REIT taxable income is not at least 80% of the 1.25 dividend, expect a cut. if it is cut, a cut to $1 will likely drive the share price to the mid 26 level. the current price would be about right for a 1.10 dividend.
the bad part of the dividend question is maintaining it with only a mediocre quarter, praying for Q3 to be much better.