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American Capital Agency Corp. Message Board

  • mrwizard9090 mrwizard9090 Jun 12, 2013 4:29 PM Flag

    you want examples, i'll give you one

    let's say you bought at the close today. 20.4% dividend yield. sounds good. but they have not declared the next dividend yet. lots of speculation and some evidence that it will get cut. remember also, that the board sets the dividend, but the market sets the yield. right now, the market is saying, "I want 20.4% yield for holding this stock".

    imagine now, that the board announces a cut to $1 per quarter. if the yield the market is demanding is truly 20.4%, expect a price drop, faster than you can click sell, to $19.6 per share. you now need 5 quarters worth of dividends to make up the nearly five dollars worth of capital loss.

    imagine now, that the market has priced in a cut to a dollar per quarter for a yield of 16.3%. what will happen? a lot of recent buyers will interpret the cut as bad news and bail. then the dividend run will start. IMHO, the run will end right where we are now.

    further imagine, that the dividend does NOT get cut. you still get to buy on the next open, participate in the dividend run, and look forward to a long and beautiful relationship with this stock. until next quarter.

    some of us "old timers" have gotten used to the volatility over the years. there are times to bet long, times to bet short, and time to not bet at all.

    AGNC will likely declare very soon, maybe even while I have been typing. it will not hurt to wait.

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    • Your example has merit but I think most people would be content with less than 20%

    • You are a moron!! The reason that the yield has risen is because the market assumes a cut in the dividend. The stock will not fall more if there is a cut. It may in fact rally if the cut is not as bad as the market fears. If we get a one dollar dividend that represents a 16% dividend which sounds pretty good.

      Sentiment: Strong Buy

    • Mr wizzard, that's a lot of typing for someone uninvolved sitting on the sideline. My Preferred have dropped more than AGNC this week. Everything with a Dividend has been wacked except NTI for some reason. My point is the market is not analyzing AGNC , it's reacting without regard to fundamentals or reason. It's a "kill em all, let God sort it out". There will be low ball bids looking for weak and tired investors. A good Dividend even with a cut will be a positive. A good August earnings will move AGNC and perhaps the sector. It's time to buy,cover or find a new bridge. The author of this post is long AGNC.

      Sentiment: Strong Buy

      • 1 Reply to mr.phil2u
      • He understands this stock so whether he buys it or shorts it he will more likely understand how to invest in this stock better than most others. So he should remain engaged so he can use this knowledge to recognize opportunities. Besides, if he is like me, it probably helps him to organize his own thinking when he expresses his thoughts and then listens to the responses of others.

    • let's say you bought at the close today. 20.4% dividend yield. sounds good. but they have not declared the next dividend yet. lots of speculation and some evidence that it will get cut. remember also, that the board sets the dividend, but the market sets the yield. right now, the market is saying, "I want 20.4% yield for holding this stock".

      imagine now, that the board announces a cut to $1 per quarter. if the yield the market is demanding is truly 20.4%, expect a price drop, faster than you can click sell, to $19.6 per share. you now need 5 quarters worth of dividends to make up the nearly five dollars worth of capital loss.

      imagine now, that the market has priced in a cut to a dollar per quarter for a yield of 16.3%. what will happen? a lot of recent buyers will interpret the cut as bad news and bail. then the dividend run will start. IMHO, the run will end right where we are now.

      further imagine, that the dividend does NOT get cut. you still get to buy on the next open, participate in the dividend run, and look forward to a long and beautiful relationship with this stock. until next quarter.

      some of us "old timers" have gotten used to the volatility over the years. there are times to bet long, times to bet short, and time to not bet at all.

      AGNC will likely declare very soon, maybe even while I have been typing. it will not hurt to wait.

      Sentiment: Strong Sell

    • knh1234@gmail.com knh1234 Jun 12, 2013 4:34 PM Flag

      Ok. Much txt but nothing readable.
      Tell us what you think?
      What did the market priced in? A dividend cut or a asking of 20,4% yield for this stock?

    • nobody expects over 20% yield, the tipping point is ~15%

 
AGNC
18.62+0.10(+0.54%)Jul 2 4:00 PMEDT