Arlington Asset Investment Corp declares $0.875 dividend

Arlington Asset Investment Corporation (AI) declares $0.875/share quarterly dividend, in line with prior.

Forward yield 13.40%

Payable Jan 31; for shareholders of record Dec. 31; ex-div Dec. 27.

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Comments (4)
  • Darren McCammon
    , contributor
    Comments (4329) | Send Message
    AI is underfollowed and misunderstood. People don't understand the differences between it and your typically mREIT. First, it's a C corp so in taxable accounts it's yield is taxed at lower corporate tax rates, not higher mREIT marginal rates. They can do this because they have a lot of tax loss carry-forwards from the financial crises. Thus the 13.4% forward yield is comparable to an mREIT paying 16% for someone in a 33% combined tax bracket. Second it's a C corp so the yield doesn't represent 90%+ of taxable income like mREITs have to; their payout ratio is much lower and the dividend much better protected. Third, it's agency MBS is almost fully hedged so the increase in rates didn't hit them much. Fourth, it's legacy non-agency assets are adjustables and currently held at 70% of par value. As home prices improve so to have the value of those assets, yet because they are short duration adjustables interest rate increases didn't hurt them much. Fifth, HARP 3.0 should be a net positive for these guys, as people in that legacy MBS refi, the 70¢ on the dollar becomes $1 cash.


    That is why AI stays up so well and is +36% YTD vs. -16% for NLY.


    Disclosure - AI is the single biggest position in the 50+ portfolio which I manage as well as the single biggest position in my personal holdings.
    19 Dec 2013, 05:48 PM Reply Like
  • material guy
    , contributor
    Comments (41) | Send Message
    Darren, thanks for your mid-summer article on mREITs, which steered me to AI. It'll be instructive to see how AI and NLY trade tomorrow.
    19 Dec 2013, 07:17 PM Reply Like
  • FlaYankee
    , contributor
    Comments (133) | Send Message
    Well said, in my opinion Arlington Investors is absolutely the best of the Mortgage REIT space with a stable dividend which is taxed at "qualified" dividend rates. However, the stock even with its great out performance gets no respect. Any conversation over the mortgage reits never even gets it a mention and unlike the big players in the sector this company has not only held up quite nicely but actually outright prospered while many have fallen hard, slashed dividends and have had massive book value loss. Long AI
    19 Dec 2013, 06:09 PM Reply Like
  • Urbannek
    , contributor
    Comments (1517) | Send Message
    They just did not do too well in 2008-2009. Probably won't have another recession like that in quite a long time. I am long AI.
    22 Dec 2013, 06:17 AM Reply Like
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