AGNC Declares Dividend Payout - Analyst Blog
12 Juni 2012 - 7:34PM
Zacks
American Capital Agency Corp. (AGNC), a real
estate investment trust (REIT), has recently declared a second
quarter 2012 dividend of $1.25 per share, which is payable in cash
on July 27, 2012 to shareholders of record as on June 21, 2012.
Earlier in first quarter 2012, American Capital Agency had also
paid a quarterly dividend of $1.25 per share, which equated to a
total of $1.5 billion in dividends or $20.11 per share since its
initial public offering in May 2008. Over the years, the company
has been paying a steady dividend to its shareholders and even
continued to pay it during recession when most companies had
suspended the same to avoid liquidity crunch.
A steady dividend payout facilitates the long-term strategy of
American Capital Agency to provide attractive risk-adjusted returns
to its stockholders. Investors looking for high dividend yields are
increasingly favoring REITs. Solid dividend payouts are arguably
the biggest enticement for REIT investors as the U.S. law requires
REITs to distribute 90% of their annual taxable income in the form
of dividends to shareholders.
American Capital Agency focuses on investments in mortgage
pass-through securities and collateralized mortgage obligations
(CMOs). The company purchases single-family residential
pass-through securities which are interests in pooled loans of
principal and interest including pre-paid principal that are made
to the holders of the notes. Collateralized mortgage obligations
consist of multiple classes with payments of principal and interest
being made to note holders based on the maturity date of the class
of security.
American Capital Agency invests only in fixed-rate agency
securities where payments are guaranteed by the U.S. government or
government-owned entities, such as Fannie Mae (FNMA), Freddie Mac
(FHLMC) and Ginnie Mae (GNMA). Specifically, American Capital
Agency invests in FHLMC Gold certificates, FNMA certificates, and
GNMA certificates.
With the government takeover of FNMA and FHLMC, American Capital
Agency’s securities have an explicit government guarantee, which
makes it a much more attractive prospect for investors.
Additionally, the company’s portfolio of government-backed assets
is relatively liquid and credit risk is limited.
American Capital Agency borrows against its investment portfolio
pursuant to a master repurchase agreement which provides short-term
financing, typically 30-90 days. The company makes a profit and
pays dividend from net interest income, which is the difference
between interest earned on investments and its cost of
borrowing.
American Capital Agency also purchases payer swaptions to
protect against lower interest rates that might lead to early
prepayment of the mortgages. This measure ultimately facilitates
the company to continue making money by collecting premium and
ensures a steady revenue stream, which in turn helps to maintain a
steady dividend payout.
We maintain our long-term Outperform recommendation for American
Capital Agency, which presently has a Zacks #1 Rank that translates
into a short-term Strong Buy rating. We have a Neutral
recommendation and a Zacks #3 Rank (short-term Hold rating) for
Anworth Mortgage Asset Corporation (ANH), one of
the competitors of American Capital Agency.
AMER CAP AGENCY (AGNC): Free Stock Analysis Report
ANWORTH MTGE (ANH): Free Stock Analysis Report
To read this article on Zacks.com click here.
AGNC Investment (NASDAQ:AGNC)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
AGNC Investment (NASDAQ:AGNC)
Historical Stock Chart
Von Jul 2023 bis Jul 2024