Dividends4Life: The Steady 7.81% Yield That Shouldn't Exist

The Steady 7.81% Yield That Shouldn't Exist

Posted by D4L | Saturday, April 22, 2017 | | 0 comments »

While Treasury rates were falling and several preferred shares gained in value, one was left behind. These shares are easily overlooked and the yield that remains appears to be fueled by an agent selling for the mortgage REIT. The price history on the shares over the last few months shows significantly less volatility on average with a couple clear pricing failures. Since publishing on this idea, volume dramatically surpassed what investors saw for many months leading up to this.

Liquidity might kill this trade for preferred shares of Anworth (NYSE:ANH). ANH-C is falling into a routine for the market pricing and that routine doesn't appear to care very much about Treasury rates. That is important because the latest dip raised expected fair values by around $.15 per share across the preferred shares. I see the market occasionally failing quite substantially on liquidity. In some cases, the share price isn't falling as much as expected on the dividend and we also see some high and low values outside the regular chart. Spikes can happen. However, we also see the price looking extremely stable. I can't recall if ANH has an open shelf registration to issue more of these shares, but it isn't a major concern to me. This is a pretty solid price at a point when good prices just dried up. The stripped yield is 7.91% (this adjusts for accrued dividend).

Source: Seeking Alpha

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