the 30 year Mortgage rate has stayed at about 3.4% for the past 2.5 months, going on 3 months now. that is in the face of the MOST fed buying there has been since the program started.
actually the rate is starting to rise, hitting 3.5% recently... what ever the Fed's intention maybe, it is obvious they either do not want the rate to fall further, or they can't get the rate to fall further, in either case, it is now bankable.
what does that mean, pretty simply, what ever NLY produces as a dividend this quarter, will be what they are able to produce for the rest of the year, and the year after that on average
the other good new is NLY will announce a dividend for this quarter of most likely 40 cents, judging from that rate and the rate last quarter. and if it holds for the next 2 months.
so now one has what they need to decide how much they would pay for a $1.60 dividend a year.
the costs of the MBS paper have also gotten cheaper as a result of the above, (people believing that there are better (higher) rates to be had in the future)
the haircut that NLY pays for MBS is now less than a few months ago.
this trifecta is what you look for in Mreits... the corner has been turned. As surely as the prediction that AGNC's stock price would fall, now it is certain that NLY's profits have stabilized and starting to go up as of what ever they announce for the January quarter dividend and earnings.
and a 40 cent dividend is actually extremely good to have as a base, compared to many other times in NLY history.
in most times, 40 cents is considered fantastic for a NLY dividend. the perception people have is because they are comparing the best years, last couple years, to the current dividend..
those rates achieved two years ago are the best anyone has ever seen, nor will ever likely see again. this spread and dividend we are in now is much more "normal".