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Summary

  • AGNC, along with the company’s agency mREIT peers, had a stable dividend per share rate during the second quarter of 2014.
  • Constant lowering yield percentages across the agency mREIT sector during 2013 caused a stabilization of each company's dividend per share rate during 2014.
  • AGNC continued to have yield percentages basically in-line with the agency mREIT average, thus inherently lowering the risk of dividend reductions throughout the remainder of 2014.
  • CMO, HTS, and NLY continued to have yield percentages below the agency mREIT average, while ARR and CYS continued to have yield percentages above the agency mREIT average.
  • My buy, sell, or hold recommendation on each agency mREIT company within this analysis is stated in the "conclusions drawn" section of the article.

Author's Note: PART 1 of this article examined the recent book value ("BV") per share changes of American Capital Agency Corp. (NASDAQ:AGNC), and compared the company's results to most of its agency mortgage real estate investment trust (mREIT) peers. PART 1 also showed how AGNC's premium (discount) to BV compared to the rest of the company's agency mREIT peers. PART 2 is a continuation of this analysis, but will now compare recent dividend per share rates and yield percentages. PART 1 helps lead to a better understanding of the topics and analysis that will be discussed in PART 2. The link to PART 1's analysis is provided below:

American Capital Agency Corp.'s Recent Book Value And Dividend Compared To Its Agency mREIT Peers - Part 1

This two-part article is a very detailed analysis comparing AGNC to the company's agency mREIT peers. I perform this detailed analysis for readers who anticipate/want such an analysis performed each quarter. For readers who just want the summarized conclusions/results, I would suggest to scroll down to the "Conclusions Drawn" section at the bottom of the each part of the article.

Focus of Article:

The focus of this article is to compare American Capital Agency Corp.'s recent dividend per share rates and yield percentages to the company's agency mortgage real estate investment trust (mREIT) peers. This analysis will show recent past data with supporting documentation within Table 2. Specifically, Table 2 will compare the following metrics: 1) trailing 12-month dividend yield to stock price as of 3/28/2014 and 6/27/2014; 2) annual forward yield to stock price as of 3/28/2014 and 6/27/2014; and 3) annual forward yield to BV as of 12/31/2013 and 3/31/2014.

By analyzing each company's recent dividend per share rates and yield percentages, one will better understand which agency mREIT companies inherently have a safer dividend rate going forward versus other peers who have an inherently higher risk for a potential dividend cut. This is not the only data that should be examined to initiate a position within a particular stock/sector. However, I feel this analysis would be a good "starting-point" to begin a discussion on the topic.

At the end of this article, there will be a conclusion on each agency mREIT company's recent dividend per share rates and yield percentages. There will also be a conclusion on the current situation regarding the entire agency mREIT sector's future dividend sustainability. I will also express my personal BUY, SELL, or HOLD recommendation on each agency mREIT company within this analysis.

Side Note: I waited to perform this analysis to use each company's closing stock price as of 3/28/2014 and 6/27/2014 to incorporate all "ex-dividend" dates across the six agency mREIT peers within this analysis. This ensures all dividends for the first and second quarters of 2014 have been "accounted for" within each company's stock price (stock price "resets" lower on the ex-dividend date).

Agency mREIT Dividend Per Share Rate and Yield Percentages Analysis - Overview:

Let us start this analysis by first getting accustomed to the information provided in Table 2 below. This will be beneficial when explaining how AGNC matches up to the company's agency mREIT peers regarding quarterly dividend per share rates and yield percentages.

Table 2 - Agency mREIT Dividend Per Share Rates and Yield Percentages

(click to enlarge)

(Source: Table created entirely by myself, obtaining historical stock prices from Nasdaq and each company's dividend per share rates from the SEC's EDGAR Database)

Using Table 2 above as a reference, AGNC and the five other agency mREIT peers are presented in alphabetical order according to each company's stock ticker symbol. Table 2 states the following information on the six agency mREIT companies (see each corresponding column): 1) dividend per share rate for the first quarter of 2014; 2) stock price as of 3/28/2014; 3) trailing 12-month dividend yield (dividend per share rate from the second quarter of 2013 through the first quarter of 2014); 4) annual forward dividend yield (based on the dividend per share rate for the first quarter of 2014 using the stock price as of 3/28/2014); 5) annual forward dividend yield (based on the dividend per share rate for the first quarter of 2014 using the BV as of 12/31/2013); 6) dividend per share rate for the second quarter of 2014; 7) stock price as of 6/27/2014; 8) trailing 12-month dividend yield (dividend per share rate from the third quarter of 2013 through the second quarter of 2014); 9) annual forward dividend yield (based on the dividend per share rate for the second quarter of 2014 using the stock price as of 6/27/2014); and 10) annual forward dividend yield (based on the dividend per share rate for the second quarter of 2014 using the BV as of 3/31/2014).

Now that an overview of Table 2 above has been established, let us start the comparative analysis between AGNC and the five other agency mREIT peers.

Side Note: Capstead Mortgage Corp. (NYSE:CMO) and Hatteras Financial Corp. (NYSE:HTS) are currently classified as variable-rate agency mREIT companies. AGNC, ARMOUR Residential REIT Inc. (NYSE:ARR), CYS Investments Inc. (NYSE:CYS), and Annaly Capital Management Inc. (NYSE:NLY) are classified as fixed-rate agency mREIT companies. Readers should be aware as such when the analysis is presented below. Also, the "agency averages" provided in Table 2 include the following agency mREIT companies that will not be discussed within this article: 1) Anworth Mortgage Asset Corp. (NYSE:ANH); and 2) Orchid Island Capital (NYSE:ORC). Due to the extremely low market capitalizations of these two agency mREIT companies (below $1 billion), an analysis of ANH and ORC has been excluded from this article.

1) American Capital Agency Corp.:

The first agency mREIT to discuss is AGNC. Using Table 2 above as a reference, AGNC had declared a dividend of $0.65 per share for the first quarter of 2014. This was an unchanged dividend when compared to the prior quarter. Due to the fact AGNC aggressively reduced the company's dividend from $1.25 per share during the first quarter of 2013 to $0.65 per share by the fourth quarter of 2013, the company's yield percentages materially decreased by the end of 2013.

AGNC's stock price traded at $21.25 per share on 3/28/2014. When calculated, this was a trailing 12-month dividend yield of 14.82%, an annual forward yield to AGNC's stock price as of 3/28/2014 of 12.24%, and an annual forward yield to the company's BV as of 12/31/2013 of 10.87%. When comparing each yield percentage to AGNC's agency mREIT peers, all three percentages were now in line with the agency mREIT average. When comparing AGNC's yield percentages using a stock price as of 12/20/2013 and BV as of 9/30/2013, the company's trailing 12-month dividend yield, annual forward yield to its stock price as of 3/28/2014, and annual forward yield to its BV as of 12/31/2013 had increased (decreased) (4.05%), (0.85%), and 0.58%, respectively.

Since AGNC's yield percentages were now more in line with the company's agency mREIT peers, I concluded in a prior article its dividend should continue to be stable going into the second quarter of 2014. This projection came to fruition when AGNC declared a dividend of $0.65 per share for the second quarter of 2014.

AGNC's stock price traded at $23.32 per share on 6/27/2014. When calculated, this was a trailing 12-month dividend yield of 11.79%, an annual forward yield to AGNC's stock price as of 6/27/2014 of 11.15%, and an annual forward yield to the company's BV as of 3/31/2014 of 10.62%. When comparing each yield percentage to AGNC's agency mREIT peers, all three percentages continued to be basically in line with the agency mREIT average. When comparing AGNC's yield percentages using a stock price as of 3/28/2014 and BV as of 12/31/2013, the company's trailing 12-month dividend yield, annual forward yield to its stock price as of 6/27/2014, and annual forward yield to its BV as of 3/31/2014 had increased (decreased) (3.03%), (1.09%), and (0.25%), respectively.

Since AGNC's yield percentages continued to be basically in line with the company's agency mREIT peers, I believe AGNC's dividend should continue to be stable going into the third quarter of 2014 (includes other factors not analyzed in this article). Let us perform this same analysis on the five other agency mREIT peers and see how each company compared to AGNC regarding the metrics discussed above.

2) ARMOUR Residential REIT Inc.:

Using Table 2 above as a reference, ARR had declared a dividend of $0.15 per share for the first quarter of 2014 (three separate monthly dividends of $0.05 per share). This was an unchanged dividend when compared to the prior quarter. Due to the fact ARR aggressively reduced the company's dividend from $0.36 per share during the third quarter of 2011 to $0.15 per share by the fourth quarter of 2013, the company's yield percentages also materially decreased by the end of 2013.

ARR's stock price traded at $4.13 per share on 3/28/2014. When calculated, this was a trailing 12-month dividend yield of 17.43%, an annual forward yield to ARR's stock price as of 3/28/2014 of 14.53%, and an annual forward yield to the company's BV as of 12/31/2013 of 12.63%. When comparing each yield percentage to ARR's agency mREIT peers, all three percentages continued to be slightly above the agency mREIT average. When comparing ARR's yield percentages using a stock price as of 12/20/2013 and BV as of 9/30/2013, the company's trailing 12-month dividend yield, annual forward yield to its stock price as of 3/28/2014, and annual forward yield to its BV as of 12/31/2013 had increased (decreased) (4.22%), (1.51%), and 1.22%, respectively.

Since ARR's yield percentages continued to be slightly above the company's agency mREIT peers, I concluded in a prior article its dividend would have a slightly greater probability of further reduction going into the second quarter of 2014. However, ARR had already declared dividends through the fourth quarter of 2014. As such, when compared to ARR's agency mREIT peers, I concluded the likelihood of a possible dividend reduction in the first quarter of 2015 would inherently be higher for this company. I was not saying ARR will have a reduced dividend in the first quarter of 2015. However, when compared to the five other agency mREIT companies within this analysis, ARR's probability of a dividend reduction in the first quarter of 2015 would be the greatest (even if it was a relatively low probability). ARR "confirmed" a dividend of $0.15 per share for the second quarter of 2014 (three separate monthly dividends of $0.05 per share).

ARR's stock price traded at $4.33 per share on 6/27/2014. When calculated, this was a trailing 12-month dividend yield of 15.24%, an annual forward yield to ARR's stock price as of 6/27/2014 of 13.86%, and an annual forward yield to the company's BV as of 3/31/2014 of 12.85%. When comparing each yield percentage to ARR's agency mREIT peers, all three percentages continued to be slightly above the agency mREIT average. When comparing ARR's yield percentages using a stock price as of 3/28/2014 and BV as of 12/31/2013, the company's trailing 12-month dividend yield, annual forward yield to its stock price as of 6/27/2014, and annual forward yield to its BV as of 3/31/2014 had increased (decreased) (2.19%), (0.67%), and 0.22%, respectively.

Since ARR's yield percentages continued to be slightly above the company's agency mREIT peers, the likelihood of a possible dividend reduction in the first quarter of 2015 has continued to be inherently higher. With that being said, I still believe ARR will confirm the remaining monthly dividends that have already been declared for 2014 ($0.15 per share for the third and fourth quarters of 2014).

3) Capstead Mortgage Corp.:

Using Table 2 above as a reference, CMO had declared a slight dividend increase to $0.34 per share for the first quarter of 2014. This calculated to a dividend increase (decrease) of $0.03 per share, or 10% from the prior quarter. Since CMO basically had the lowest yield percentages out of the agency mREIT sector over the past several years, this modest dividend increase was not too surprising.

CMO's stock price traded at $12.99 per share on 3/28/2014. When calculated, this was a trailing 12-month dividend yield of 9.78%, an annual forward yield to CMO's stock price as of 3/28/2014 of 10.47%, and an annual forward yield to the company's BV as of 12/31/2013 of 10.91%. When comparing each yield percentage to CMO's agency mREIT peers, the trailing 12-month dividend yield and the annual forward yield based on the company's 3/28/2014 stock price continued to be slightly below average. CMO's annual forward yield based on the company's BV as of 12/31/2013 continued to be basically in line with the agency mREIT average. When comparing CMO's yield percentages using a stock price as of 12/20/2013 and BV as of 9/30/2013, the company's trailing 12-month dividend yield, annual forward yield to its stock price as of 3/28/2014, and annual forward yield to its BV as of 12/31/2013 had increased (decreased) (0.18%), 0.52%, and 0.87%, respectively.

Since CMO's yield percentages were either slightly below or in line with the company's agency mREIT peers, I concluded in a prior article there was a high probability that its dividend would continue to be stable going into the second quarter of 2014. This projection came to fruition when CMO declared a dividend of $0.34 per share for the second quarter of 2014.

CMO's stock price traded at $13.13 per share on 6/27/2014. When calculated, this was a trailing 12-month dividend yield of 9.90%, an annual forward yield to CMO's stock price as of 6/27/2014 of 10.36%, and an annual forward yield to the company's BV as of 3/31/2014 of 10.80%. When comparing each yield percentage to CMO's agency mREIT peers, the trailing 12-month dividend yield and the annual forward yield based on the company's 6/27/2014 stock price continued to be slightly below average. CMO's annual forward yield based on the company's BV as of 3/31/2014 continued to be basically in line with the agency mREIT average. When comparing CMO's yield percentages using a stock price as of 3/28/2014 and BV as of 12/31/2013, the company's trailing 12-month dividend yield, annual forward yield to its stock price as of 6/27/2014, and annual forward yield to its BV as of 3/31/2014 had increased (decreased) 0.12%, (0.11%), and (0.10%), respectively.

It continues to appear CMO is the "safest" choice within the agency mREIT sector regarding dividend sustainability (includes other factors not analyzed in this article). However, as stated in PART 1 of this analysis, I believe the market seems to have already "priced-in" CMO's "safest choice" designation via the modest premium to CURRENT BV.

4) CYS Investments Inc.:

Using Table 2 above as a reference, CYS had declared a dividend of $0.32 per share for the first quarter of 2014. This was an unchanged dividend when compared to the prior quarter. Due to the fact CYS aggressively reduced the company's dividend from $0.55 per share during the third quarter of 2011 to $0.32 per share by the fourth quarter of 2013, the company's yield percentages materially decreased by the end of 2013. However, it should also be noted CYS was the only company out of the agency mREIT sector to declare a "special" dividend of $0.52 per share during the fourth quarter of 2012. As such, the dividend reductions that occurred in 2011, 2012, and 2013 should be deemed "less severe" due to this one-time payout.

CYS's stock price traded at $8.24 per share on 3/28/2014. When calculated, this was a trailing 12-month dividend yield of 16.02%, an annual forward yield to CYS's stock price as of 3/28/2014 of 15.53%, and an annual forward yield to the company's BV as of 12/31/2013 of 13.85%. When comparing each yield percentage to CYS's agency mREIT peers, all three percentages continued to be modestly above the agency mREIT average. When comparing CYS's yield percentages using a stock price as of 12/20/2013 and BV as of 9/30/2013, the company's trailing 12-month dividend yield, annual forward yield to its stock price as of 3/28/2014, and annual forward yield to its BV as of 12/31/2013 had increased (decreased) (1.65%), (1.60%), and 1.18%, respectively.

Since CYS's yield percentages were modestly above the company's agency mREIT peers, I concluded in a prior article its dividend would have the greatest probability of reduction going into the second quarter of 2014. I was not saying CYS would have a reduced dividend in the second quarter of 2014. However, when compared to the five other agency mREIT companies within this analysis, CYS's probability of a dividend reduction would be the greatest (even if it was a relatively low probability). This projection came to fruition when CYS declared a dividend of $0.32 per share for the second quarter of 2014.

CYS's stock price traded at $8.85 per share on 6/27/2014. When calculated, this was a trailing 12-month dividend yield of 14.69%, an annual forward yield to CYS's stock price as of 6/27/2014 of 14.46%, and an annual forward yield to the company's BV as of 3/31/2014 of 13.22%. When comparing each yield percentage to CYS's agency mREIT peers, all three percentages became more in line with the agency mREIT average (now just slightly above instead of modestly above). When comparing CYS's yield percentages using a stock price as of 3/28/2014 and BV as of 12/31/2013, the company's trailing 12-month dividend yield, annual forward yield to its stock price as of 6/27/2014, and annual forward yield to its BV as of 3/31/2014 had increased (decreased) (1.33%), (1.07%), and (0.63%), respectively.

Since CYS's yield percentages were now only slightly above the company's agency mREIT peers, the likelihood of a possible dividend reduction in the third quarter of 2014 has been reduced. With that being said, when compared to the five other agency mREIT companies within this analysis, I believe CYS's probability of a dividend reduction would be the greatest (even if it is still a relatively low probability).

5) Hatteras Financial Corp.:

Using Table 2 above as a reference, HTS had declared a dividend of $0.50 per share for the first quarter of 2014. This was an unchanged dividend when compared to the prior quarter. Due to the fact HTS aggressively reduced the company's dividend from $1.00 per share during the third quarter of 2011 to $0.50 per share by the fourth quarter of 2013, the company's yield percentages also materially decreased by the end of 2013.

HTS's stock price traded at $18.65 per share on 3/28/2014. When calculated, this was a trailing 12-month dividend yield of 12.06%, an annual forward yield to HTS's stock price as of 3/28/2014 of 10.72%, and an annual forward yield to the company's BV as of 12/31/2013 of 9.30%. When comparing each yield percentage to HTS's agency mREIT peers, all three percentages continued to be slightly - modestly below the agency mREIT average. In addition, HTS's yield percentages were now fairly close to CMO's yield percentages (which was not the case over the past several years). When comparing HTS's yield percentages using a stock price as of 12/20/2013 and BV as of 9/30/2013, the company's trailing 12-month dividend yield, annual forward yield to its stock price as of 3/28/2014, and annual forward yield to its BV as of 12/31/2013 had increased (decreased) (2.54%), (1.20%), and (0.08%), respectively.

Since HTS's yield percentages continued to be slightly - modestly below the company's agency mREIT peers, I concluded in a prior article there was a relatively high probability that HTS's dividend would continue to be stable going into the second quarter of 2014. This projection came to fruition when HTS declared a dividend of $0.50 per share for the second quarter of 2014.

HTS's stock price traded at $19.65 per share on 6/27/2014. When calculated, this was a trailing 12-month dividend yield of 10.43%, an annual forward yield to HTS's stock price as of 6/27/2014 of 10.18%, and an annual forward yield to the company's BV as of 3/31/2014 of 9.17%. When comparing each yield percentage to HTS's agency mREIT peers, all three percentages continued to be slightly - modestly below the agency mREIT average. When comparing HTS's yield percentages using a stock price as of 3/28/2014 and BV as of 12/31/2013, the company's trailing 12-month dividend yield, annual forward yield to its stock price as of 6/27/2014, and annual forward yield to its BV as of 3/31/2014 had increased (decreased) (1.63%), (0.55%), and (0.13%), respectively.

Since HTS's yield percentages continued to be slightly - modestly below the company's agency mREIT peers, I believe the likelihood of a possible dividend reduction in the third quarter of 2014 continues to be inherently a low probability (includes other factors not analyzed in this article).

6) Annaly Capital Management Inc.:

The last agency mREIT to analyze is NLY. Using Table 2 above as a reference, NLY had declared a dividend of $0.30 per share for the first quarter of 2014. This was an unchanged dividend when compared to the prior quarter. Due to the fact NLY aggressively reduced the company's dividend from $0.65 per share during the second quarter of 2011 to $0.30 per share by the fourth quarter of 2013, the company's yield percentages also materially decreased by the end of 2013.

NLY's stock price traded at $10.93 per share on 3/28/2014. When calculated, this was a trailing 12-month dividend yield of 12.35%, an annual forward yield to NLY's stock price as of 3/28/2014 of 10.98%, and an annual forward yield to the company's BV as of 12/31/2013 of 9.89%. When comparing each yield percentage to NLY's agency mREIT peers, all three percentages continued to be slightly - modestly below the agency mREIT average. When comparing NLY's yield percentages using a stock price as of 12/20/2013 and BV as of 9/30/2013, the company's trailing 12-month dividend yield, annual forward yield to its stock price as of 3/28/2014, and annual forward yield to its BV as of 12/31/2013 had increased (decreased) (2.50%), (0.90%), and 0.44%, respectively.

Since NLY's yield percentages continued to be slightly - modestly below the company's agency mREIT peers, I concluded in a prior article (see link with AGNC's analysis) there was a rather high probability that NLY's dividend would continue to be stable going into the second quarter of 2014. This projection came to fruition when NLY declared a dividend of $0.30 per share for the second quarter of 2014.

NLY's stock price traded at $11.42 per share on 6/27/2014. When calculated, this was a trailing 12-month dividend yield of 10.95%, an annual forward yield to HTS's stock price as of 6/27/2014 of 10.51%, and an annual forward yield to the company's BV as of 3/31/2014 of 9.76%. When comparing each yield percentage to NLY's agency mREIT peers, all three percentages continued to be slightly - modestly below the agency mREIT average. When comparing NLY's yield percentages using a stock price as of 3/28/2014 and BV as of 12/31/2013, the company's trailing 12-month dividend yield, annual forward yield to its stock price as of 6/27/2014, and annual forward yield to its BV as of 3/31/2014 had increased (decreased) (1.41%), (0.47%), and (0.14%), respectively.

Since NLY's yield percentages continued to be slightly - modestly below the company's agency mREIT peers, I believe the likelihood of a possible dividend reduction in the third quarter of 2014 continues to be inherently a low probability (includes other factors not analyzed in this article).

Conclusions Drawn (PART 2):

This article has compared AGNC and five other agency mREIT peers in regards to recent dividend per share rates and yield percentages. Using Table 2 as support, below were the recent dividend per share rates and yield percentages for the following two variable-rate agency mREIT companies:

CMO: $0.34 per share dividend; 9.90% trailing 12-month dividend yield; 10.36% annual forward yield to the company's stock price as of 6/27/2014; and 10.80% annual forward yield to the company's BV as of 3/31/2014

HTS: $0.50 per share dividend; 10.43% trailing 12-month dividend yield; 10.18% annual forward yield to the company's stock price as of 6/27/2014; and 9.17% annual forward yield to the company's BV as of 3/31/2014

Below were the recent dividend per share rates and yield percentages for the following four fixed-rate agency mREIT companies:

AGNC: $0.65 per share dividend; 11.79% trailing 12-month dividend yield; 11.15% annual forward yield to the company's stock price as of 6/27/2014; and 10.62% annual forward yield to the company's BV as of 3/31/2014

ARR: $0.15 per share dividend; 15.24% trailing 12-month dividend yield; 13.86% annual forward yield to the company's stock price as of 6/27/2014; and 12.85% annual forward yield to the company's BV as of 3/31/2014

CYS: $0.32 per share dividend; 14.69% trailing 12-month dividend yield; 14.46% annual forward yield to the company's stock price as of 6/27/2014; and 13.22% annual forward yield to the company's BV as of 3/31/2014

NLY: $0.30 per share dividend; 10.95% trailing 12-month dividend yield; 10.51% annual forward yield to the company's stock price as of 6/27/2014; and 9.76% annual forward yield to the company's BV as of 3/31/2014

Therefore, CMO, HTS, and NLY had yield percentages than were generally slightly - modestly lower than the agency mREIT average. As such, these companies inherently have a lower risk regarding future dividend reductions (when only considering this one factor). AGNC had yield percentages basically in line with the company's agency mREIT average. ARR and CYS continued to have yield percentages slightly higher than the agency mREIT average.

As market dynamics changed during 2013 (including a general net rise in mortgage interest rates/U.S. Treasury yields), mREIT companies that had yields nearing 20% needed to "stem back" these lofty percentages. One exception was CMO. Since CMO's yield percentages were materially lower than the rest of the agency mREIT peers over the past several years, this company did not need to reduce its dividend as aggressively as the rest of the sector. During the past several years (especially throughout 2013), we have seen the rest of the agency mREIT sector materially reduce dividend per share rates, thus establishing yields that are more similar to what CMO has maintained for several years.

Since the five other agency mREIT peers continued to lower yields throughout most of 2012 and 2013, the probability of a dividend per share "bottom" grew. I believe a bottom, regarding dividend per share rates, had occurred during the fourth quarter of 2013. As such, I continue to believe dividends should remain relatively stable for the agency mREIT sector throughout 2014. I even believe there is a modest probability for a slight increase in dividend per share rates in 2015. These slight increases will depend on each company's MBS and derivative portfolios and the general movement of mortgage interest rates/U.S. Treasury yields.

While I believe CMO continues to be the "safest" mREIT investment regarding dividend sustainability, the market seems to have already priced in CMO's safest choice designation via the modest premium to CURRENT BV.

For investors looking for potentially higher returns through stock appreciation (hence more potential risk), I would continue to consider AGNC, CYS, HTS, and/or NLY as possible investments. If I was concerned about a "spike" in interest rates over the short term, I would look towards HTS as a possible investment. If I felt interest rates over the short term would remain flat or net decrease (as has recently occurred), I would continue to look towards AGNC, CYS, and/or NLY as possible investments. I continue to rate AGNC, CYS, HTS, and NLY as a SOLID HOLD when trading at a minor-to-modest discount to CURRENT BV. I continue to rate AGNC, CYS, HTS, and NLY as a BUY when I believe the company's stock price is trading a material discount (over 10% discount) to CURRENT BV. I continue to rate CMO as a SOLID HOLD for existing shareholders, and continue to believe the unattractive premium to CURRENT BV, when compared to the rest of the sector, would lead me away from this particular company. I continue to believe ARR has underperformed when compared to the company's fixed rate agency mREIT peers (AGNC, CYS, and NLY). As such, I have no rating on ARR and will not look towards this company as a possible investment in the future.

Final Note: Each investor's BUY, SELL, or HOLD decision is based on one's risk tolerance, time horizon, and dividend income goals. My personal recommendation may not fit each investor's current investing strategy.

Disclosure: The author is long AGNC. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I currently have no position(s) in ARR, CMO, CYS, HTS, or NLY.

Source: American Capital Agency's Recent Book Value And Dividend Compared To Its Agency mREIT Peers - Part 2