AGNC: Dividend Announcements Often Precede Secondary Offerings

Includes: AGNC
by: Mike Maher

After the bell on Tuesday, American Capital Agency Corp. (NASDAQ:AGNC) declared a third quarter dividend of $1.40 per share. The dividend has a record date of September 23, 2011, an ex-dividend date of September 21, 2001, and is payable October 27, 2011.

This is the 9th consecutive dividend of $1.40 per share, which has made AGNC a very high yielding stock with a large following and investor base. This has, in turn, allowed American Capital Agency Corp to announce some very large secondary offerings, often right around the ex-dividend and record date of the dividend.

Consider the past year's worth of dividend announcements and the dates of the next offering of shares:

Quarter Div Declaration Date Ex-Div Date Record Date Offering Announcement
Q3 2010 9/14/10 9/24/10 9/28/10 9/27/10
Q4 2010 12/17/10 12/29/10 12/31/10 1/12/11
Q1 2011 3/07/11 3/21/11 3/23/11 3/21/11
Q2 2011 6/10/11 6/21/11 6/23/11 6/22/11
Q3 2011 9/13/11 9/21/11 9/23/11 ???

As the table shows, in the last year the company has announced an offering of common shares in between the ex-dividend date and the record date in 3 of the 4 quarters. While another offering is not a certainty, the historic relationship between the stock offerings and the dividends is hard to ignore.

Investors looking for entry into AGNC should keep the increased possibility of a stock offering in mind, as offerings have proved an opportunity for both entry into the name and for shorter term trades over the past year.

Disclosure: I am long AGNC.