Annaly, Chimera Reduce Dividends In Proportion To Share Performance

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 |  Includes: AGNC, CIM, CMO, HTS, IVR, MFA, NLY
by: Zvi Bar

On Monday, December 19, 2011, after the markets closed, both Annaly Capital Management (NYSE:NLY) and Chimera Investment Corporation (NYSE:CIM) announced their quarterly dividends. Chimera is managed by FIDAC, a subsidiary of Annaly Capital Management. Annaly is the largest publicly traded mREIT while Chimera is the largest hybrid/non-agency mREIT.

Annaly declared a Q4 2011 common stock cash dividend of $0.57 per common share, payable January 26, 2012, to shareholders of record on December 29, 2011, with an ex-dividend date is December 27, 2011. Chimera declared a Q4 dividend of $0.11 per share, with the same relevant dates. Both represent a dividend reduction.

Last quarter, Annaly paid a $0.60 quarterly dividend, and in Q4 2010 Annaly paid a $0.64 dividend. This represents a 5% drop from the Q3 2011 dividend and a 10.93% drop from Q4 last year. Chimera paid a $0.13 dividend last quarter and a $0.17 cent dividend in Q4 2010. This represents a 15.38% drop from the Q3 2011 dividend and a 35.11% drop from Q4 last year.

These dividend reductions are very similar to their share price reductions over the last year. Annaly cut its dividend by 10.93% and its shares have fallen by 10.33% over the last 12 months. Similarly, Chimera cut its dividend by 35.29% and is shares have fallen by 35.11% over the last 12 months.

Several mREITs provided Q4 dividend data last week. On Monday, December 12, 2011, American Capital Agency (NASDAQ:AGNC) declared a cash dividend of $1.40 per share for fourth quarter 2011. The dividend is payable on January 27, 2012, to common shareholders of record as of December 22, 2011, with an ex-dividend date of December 20, 2011. AGNC has now maintained this $1.40 quarterly dividend for 10 straight quarters.

On Tuesday, December 13, 2011, Capstead Mortgage Corporation (NYSE:CMO) announced a fourth quarter dividend of $0.43 per common share on January 20, 2012, to stockholders of record as of December 30, 2011. CMO’s new dividend is one-cent below its dividend last quarter, but four cents above its dividend for the same quarter last year.

Also on Tuesday, Invesco Mortgage Capital (NYSE:IVR) announced that it plans to repurchase up to seven million shares of its common stock. Last week, on December 8, 2011, it announced its quarterly dividend would be 65 cents, 15 cents below the previous quarter and 32 cents below the dividend for the fourth quarter of 2010. Hatteras Financial (NYSE:HTS) also released its quarterly dividend on Tuesday, declaring $0.90 per common share to be paid on January 20, 2012, to shareholders of record on December 23, 2011, with an ex-dividend date of December 21, 2011.

On Wednesday, December 14, MFA Financial (NYSE:MFA) declared a regular quarterly cash dividend of $0.25 per share and an additional special cash dividend of $0.02 per share, both paid on January 31, 2012, to stockholders of record as of December 30, 2011, with an ex-dividend date of December 28, 2011.

Below is a 12-month share price performance comparison chart for these equities, not counting dividends paid.

Click to enlarge

Click to enlarge

American Capital Agency, Annaly, Capstead and Hatteras Financial are agency mREITS, and only hold securities with a U.S. agency backing. Invesco Mortgage Capital, MFA Financial and Chimera are non-agency or hybrid mREITs that hold securities without an agency backing, though many also hold large positions in agency paper.

Disclaimer: This article is intended to be informative, and should not be construed as personalized advice as it does not take into account your specific situation or objectives.

Disclosure: I am long NLY, CIM.