ARMOUR Residential REIT Inc's Dividend Analysis
Delving into the Dividend Dynamics of ARMOUR Residential REIT Inc
ARMOUR Residential REIT Inc(NYSE:ARR) recently announced a dividend of $0.24 per share, payable on 2024-01-30, with the ex-dividend date set for 2024-01-12. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into ARMOUR Residential REIT Inc's dividend performance and assess its sustainability.
What Does ARMOUR Residential REIT Inc Do?
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ARMOUR Residential REIT Inc is a real estate investment trust that invests in residential mortgage-backed securities or RMBS. These are issued or guaranteed by U.S.-government-sponsored enterprises, such as Fannie Mae, Freddie Mac, or Ginnie Mae. The company's investment portfolio is composed of mortgage-backed securities, adjustable-rate mortgage securities, and multifamily mortgage-backed securities. In terms of total fair value, most of ARMOUR's investments are long-term, fixed-rate agency RMBS. Multifamily RMBS also represents a substantial amount. Fannie Mae guarantees most of the company's holdings. ARMOUR derives substantially all its revenue as interest income from its investments.
A Glimpse at ARMOUR Residential REIT Inc's Dividend History
ARMOUR Residential REIT Inc has maintained a consistent dividend payment record since 2010. Dividends are currently distributed on a monthly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down ARMOUR Residential REIT Inc's Dividend Yield and Growth
As of today, ARMOUR Residential REIT Inc currently has a 12-month trailing dividend yield of 25.69% and a 12-month forward dividend yield of 14.81%. This suggests an expectation of decreased dividend payments over the next 12 months. Over the past three years, ARMOUR Residential REIT Inc's annual dividend growth rate was -17.80%. Extended to a five-year horizon, this rate increased to -14.90% per year. And over the past decade, ARMOUR Residential REIT Inc's annual dividends per share growth rate stands at -18.50%.
Based on ARMOUR Residential REIT Inc's dividend yield and five-year growth rate, the 5-year yield on cost of ARMOUR Residential REIT Inc stock as of today is approximately 11.47%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, ARMOUR Residential REIT Inc's dividend payout ratio is 0.00.
ARMOUR Residential REIT Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks ARMOUR Residential REIT Inc's profitability 2 out of 10 as of 2023-09-30, suggesting the dividend may not be sustainable. The company has reported net profit in 2 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. ARMOUR Residential REIT Inc's growth rank of 2 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable. Revenue is the lifeblood of any company, and ARMOUR Residential REIT Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. ARMOUR Residential REIT Inc's revenue has increased by approximately 20.00% per year on average, a rate that outperforms approximately 90.69% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, ARMOUR Residential REIT Inc's earnings increased by approximately 22.70% per year on average, a rate that outperforms approximately 78.29% of global competitors.
Conclusion: Evaluating ARMOUR Residential REIT Inc's Dividend Prospects
In conclusion, while ARMOUR Residential REIT Inc's dividend yield is currently attractive, the negative dividend growth rate and low profitability rank raise concerns about the sustainability of future dividend payments. The company's strong revenue growth and earnings performance provide some counterbalance, suggesting that while there may be challenges ahead, there is also potential for ARMOUR Residential REIT Inc to maintain or even improve its dividend payments. Investors should closely monitor the company's financial health and market conditions to make informed decisions. For those seeking high-dividend yield opportunities, GuruFocus Premium users can explore further using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
