Dividends4Life: A 13% Dividend Yield? Sure, I Can Buy That

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A 13% Dividend Yield? Sure, I Can Buy That

Posted by D4L | Saturday, August 20, 2016 | | 0 comments »

This mortgage REIT changed its portfolio with the acquisition of Javelin Mortgage Investment. The use of non-agency RMBS creates a nice hedge against refinancing activity. The 13% yield represents a 10.78% yield on book value, which is still possible in the current interest rate environment. The dividend rates change for mortgage REITs and it is worth noting that for the last several years "change" has largely been in one direction (moving lower). However, having the same number of dividends declared and paid in each quarter makes the tracking easier for analysts.

ARMOUR Residential REIT (NYSE:ARR) announced its latest dividend earlier in July. The dividend maintains its prior rate at $.22 per month, but the way ARR handles the declaration is smart enough to warrant some discussion. In late June there was this event that put some fear into the markets; you might remember "Brexit." Despite ARMOUR Residential REIT being a mortgage REIT with very little connection to the broad equity market, shares often move in a strong correlation with the S&P 500. Consequently, it was an excellent time for ARMOUR Residential REIT to provide shareholders with a sneak peak of the next dividend. The company handles that by announcing an "expected dividend." Once July 1st rolled around, it was free to confirm the dividend.

Source: Seeking Alpha

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