Stronger Bottom Lines Could Lead to Larger Dividends From American Capital Agency and Invesco
October 28 2011 - 8:16AM
Marketwired
It is now the heart of earnings season and investors are feverishly
following results from Real Estate Investment Trusts (REITs) in
hopes of signs of potential dividend increases. To be classified as
a REIT, a company must distribute at least 90 percent of its
taxable income to shareholders annually in the form of dividends.
The Paragon Report examines the outlook for diversified REITs and
provides equity research on American Capital Agency Corporation
(NASDAQ: AGNC) and Invesco Mortgage Capital, Inc. (NYSE: IVR).
Access to the full company reports can be found at:
www.paragonreport.com/AGNC
www.paragonreport.com/IVR
Several REITs are considered relatively risk free. Mortgage
REITs earn their money on the spread between low-interest
short-term borrowing and purchasing high-interest long-term
securities. Mortgage REITs typically borrow at low rates and lend
in the mortgage markets at higher rates, usually by buying
mortgage-backed securities. By purchasing bonds guaranteed by the
government, analysts argue these companies take on no risk of
default, with the principle concern being an interest rate
risk.
Hybrid mREITs are moderately riskier as they own mortgage backed
securities (MBS) or any debt obligations which do not have an
implicit guarantee of the US Federal Government.
The Paragon Report provide investors with an excellent first
step in their due diligence by providing daily trading ideas, and
consolidating the public information available on them. For more
investment research on diversified REITs register with us free at
www.paragonreport.com and get exclusive access to our numerous
stock reports and industry newsletters.
Earlier this week American Capital Agency announced that it
priced a public offering of 37,000,000 shares of common stock for
total estimated gross proceeds of approximately $1.0 billion. The
company also reported net income for the third quarter of 2011 of
$250.4 million, or $1.39 per share, and net book value of $26.90
per share. As of September 30, 2011, the Company's investment
portfolio totalled $42.0 billion of agency securities, at fair
value, comprised of $38.3 billion of fixed-rate securities, $3.2
billion of adjustable-rate securities ("ARMs") and $0.5 billion of
collateralized mortgage obligations ("CMOs") backed by fixed and
adjustable-rate securities, including interest-only strips.
Presently AGNC pays an annual dividend of $5.60 for a yield of
around 19.6 percent. Invesco Mortgage Capital pays an annual
dividend of $3.20 for a hefty yield of around 20.9 percent.
The Paragon Report has not been compensated by any of the
above-mentioned publicly traded companies. Paragon Report is
compensated by other third party organizations for advertising
services. We act as an independent research portal and are aware
that all investment entails inherent risks. Please view the full
disclaimer at http://www.paragonreport.com/disclaimer
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