Basically buying it sub-$30 currently after adjusting for the dividend
The ex-div date is only a couple of weeks away.
Even if the dividend gets cut to $4 next year (still an "if"), you still get a 13.3% dividend yield at that rate using the (dividend adjusted) $30 share price today, which is roughly 8% below current BV.
BV preservation is job 1 for this management team and hedge ratios are very high as a result. So you have some degree of protection buying below BV today.
Mortgage spreads are also wider today than at 9/30/12, which is an oppty to get higher NIMs on current purchases and even book some gains in the future as these mortgages appreciate if the Fed continues to bid aggressively for lower coupon assets. Also repo rates are temporarily elevated and should tick down 10-15 bps as we get into January, which should also boost new investment spreads.
Buying now @ $31.00 and collecting the div -- is a win win .. i agree with oldschoolbuilder .. I never heard of cum-div .. If you buy now, then you get the div in a few weeks .. No dividend .. need be announced? What are you taking about? I think next div is $1.25 and the next one after that also $1.25 .. With a stock price of $34.00 by March 2013 .. And I'm betting on it ... Rich
1. No dividend has been announced. No dividend need be announced.
2. You are buying it cum-dividend until the ex-dividend date. If you wait to sell until the ex-dividend date you will get the dividend in the mail a few weeks later. You are not buying it without the dividend. That's what "cum-dividend" means. You won't buy it without the dividend until the ex-dividend date. That's what "ex-dividend" means.
I see this fallacy dominating the prices for Put options right now. People demanding those prices are making multiple assumptions. And I'm not paying those prices until the assumptions are nullified.
The pattern for MREITs and AGNC specifically is: dividend is announced, stock runs up by the amount of the dividend, then sells down by the amount of the dividend, then comes back to its original price within 1-2 months (or sooner).
But aside from the stock trading pattern, let me make this silly but relevant analogy:
AGNC is currently pregnant with a $1.25 baby and is giving birth within 2-3 weeks. Buy it today you get to keep both the baby and the mommy (who produces more babies every quarter). The market values the mommy's "reproductive" (earnings) power, and you don't have to wait long for the baby this time around. This is different than buying in January, for instance, when the mommy just barely got knocked up.
At $30, AGNC looks interesting--and that's essentially what you are paying today after adjusting for the dividend to come in just 2-3 weeks.