Investors who owned stocks in the 2010s generally experienced some big gains. In fact, the SPDR S&P 500's (NYSE: SPY) total return for the decade was 250.5%. But there’s no question some big-name stocks did much better than others along the way.
Invesco Mortgage Capital’s Difficult Decade: One underperformer of the last decade was mortgage REIT Invesco Mortgage Capital Inc (NYSE: IVR).
For Invesco, the 2010s were exactly what most REIT investors are looking for in an investment. The stock bounced along with relatively low volatility while investors received their dividend payout, which ranged mostly between 10% and 18%.
Invesco shares started the 2010s trading at around $23.90 and hit their decade high of $24.07 in early 2011. Invesco shares traded as low as $9.74 in early 2016, but the dividend always helped support the stock when it hit the low end of its trading range.
From late 2016 through the end of the 2010s, the stock traded no higher than $18.86 and no lower than $13.67, finishing the decade at $16.65, about 30% lower than where it started the 2010s.
The story for Invesco investors has changed dramatically in 2020. The COVID-19 outbreak triggered extreme volatility in interest rates and liquidity concerns among mortgage REITS.
Roughly 70% of Invesco’s investment portfolio entering 2020 consisted of government-backed residential mortgage and commercial mortgage securities. Still, the economic collapse in March resulted in margin calls from Invesco’s lenders. The company sold a large portion of its portfolio and negotiated forbearance agreements with its banks.
Between the end of 2019 and the end of May 2020, Invesco’s book value per share had dropped 82% and the company had cut its robust dividend by 96%. The share price plummeted to a decade low of $1.82 back in April.
Invesco shares have since recovered to $3.40 as of the time of publication, but the stock is still below its trading range throughout the 010s.
Invesco In 2020 And Beyond: Invesco is in the process of attempting to work through its financial problems and selling assets to raise cash. While insolvency no longer seems to be imminent, Invesco shares are still trading at premium to both other mortgage REIT peers and to the company’s estimated book value per share of between $2.65 and $3.15.
Given the company’s disastrous 2020, it has been a lackluster overall investment for long-term shareholders. In fact, $1,000 worth of Invesco stock in 2010 would be worth about $738 today, assuming reinvested dividends.
Looking ahead, analysts expect Invesco shares to struggle to maintain their valuation. The average price target among the four analysts covering the stock is $2.75.
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