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Is there any reason not to invest in AGNC for it's 19% yield?
Wait until the next dip. With the share price inching closer to $30, I expect them to announce an SPO any time now. Wait until the SPO and buy on the dip that always happens after an SPO announcement. Don't wait too long though, as the share price has recovered rather quickly the last few times. Good luck if you decide to buy in.
AGNC just cut their dividend to 17% now and people are predicting it will be cut again next quarter. Still recommend a buy or is this the beginning of a large exit from these mortgage reits?
Yes, I would still call AGNC a buy, although as I said before, I would wait until the next dip. AGNC was actually up today after the dividend cut, and I attribute that to the cut having been expected. Once the cut was made, uncertainty was removed and some people who were on the fence may have jumped in. As for why the dividend was cut, see the below discussion taken from the shareholder conference call where President Gary Kain discusses the cut:
"Now, let’s now turn to slide five and we can discuss the action that we took on the dividend. Given that this is the first time in two and a half years that we adjusted our dividend and given our practice of being as transparent as possible, we decided it was important to preannounce or announce this dividend change with our earnings release. The Q1 dividend of a $1.25 per share corresponds to a yield of approximately 17% at a stock price of around $29.5. Clearly this is a very attractive return in today’s market given a ten-year treasury yield of around 1.9%.
Now, our proactive decision was based on our practice of establishing a given level that is consistent with the market conditions, that allows us to distribute our taxable income in accordance with referrals, that is not expected to reduce our book value over time, and importantly, that should not require regular quarterly adjustments over the near term.
Said differently, and this is the key point, we believe that the dividend should sustainable for a reasonable period of time given current market conditions and our best estimate of future financial performance.
As we’ve done consistently in the past we remain comfortable not immediately distributing all of our taxable income. Maintaining some undistributed taxable income which is currently at $0.80 per share significantly reduces our need for quarterly dividend adjustments.
Now, some of you may be thinking that we could have maintained the $1.40 for at least several more quarters and we don’t disagree, however, we felt that the new dividend is more consistent with current market conditions and should give investors more confidence in our ability to maintain the dividend."
Take it for what it's worth, but I think they're still a good buy on the next dip.
So if you're going to play reit's why not really play reit's? What about doing a buy/write on NLY for 3.00 covered calls and leveraging 30,000 dollars to pick up 10,000 shares. This would give an annual dividend of 68% instead of 13.8 with downside protection on the stock to 3.00 a share.
I sold out of AGNC today at $30.58, after holding at $27.59 for the last 5 quarters. Not a bad little trade when you add in the five $1.40 quarterly dividends collected and reinvested. My thinking is that it's somewhat overbought after this recent little run and I expect it to pull back a bit. If I'm lucky, management will hit us with an SPO very soon and I'll get a chance to buy back in around $28.
After selling out of AGNC, I'm taking a close look at it's younger hybrid cousin MTGE, and TWO as well. TWO just announced an SPO, so if it dips far enough tomorrow, I may buy in. 15.7% dividend, strong insider buying, and an SPO price dip - can't ask for more than that.
I had no idea IVR was reporting today until I saw a 6.22% increase!!!! Only up from here the next few days! Overall, I have a 17.46% increase since buying at the 52 week low!
Two didn't dip nearly a much as I'd hoped. A quick drop and then boom - right back up. I ended up buying into MTGE. They're managed by the same team that runs AGNC, so I'm thinking they'll eventually wind up about even, and with AGNS at an all time high, MTGE is the better value. Better to get in on the ground floor IMHO. Good luck with TWO Singlelady10!
MTGE just declared a .90 dividend, up over .80 cents last quarter. Ex-dividend date is 3-13, look for MTGE to declare an SPO either on ex-dividend day or very shortly thereafter. Also, AGNC went ex-dividend today, and at $30+, I believe they'll declare an SPO very soon as well. If you're serious about getting into an M-REIT, the SPO should provide a good buying opportunity, so get in and hold into next quarters dividend run.
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