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Capstead Mortgage boosts payout nearly 10%

  • Capstead (CMO) boosts its quarterly dividend to $0.34 per share from $0.31 previously. The annualized yield is 10.6%. The dividend is payable on April 17 to shareholders of record on March 31.
  • Press release
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Comments (9)
  • MobilePreacher
    , contributor
    Comments (437) | Send Message
     
    contrary to the cult following of other mREITs out there, CMO proves to be the most stable, least risky, most well run mREIT in the industry. the stock chart and the yield chart prove the facts.
    13 Mar, 08:15 AM Reply Like
  • tstreet
    , contributor
    Comments (744) | Send Message
     
    It does appear CMO is the least volatile stock and did a relatively good job of weathering the downturn last year. It certainly did better than the MREIT market as represented by REM. On a five year chart, it also has done better than REM even with or without dividends reinvested.

     

    My question, which I admit I ask often, is whether or not CMO would be likely to withstand a significant market downturn, at least relative to the other MREITs. This could happen fairly soon. Or not.

     

    I just ran a chart starting just before the 2008 crash. CMO appeared to hold up through the crash for some reason. I don't have definitive data, but it looks like CMO would be the stock to hold on to if one decided to shed the rest of one's portfolio at this point. But I do not know the reasons why CMO held up.

     

    Of course, I would like to see an expert analysis on this issue.
    13 Mar, 10:42 AM Reply Like
  • Be Here Now
    , contributor
    Comments (4384) | Send Message
     
    Probably because its annual dividend went up during 2008-09.
    13 Mar, 11:38 AM Reply Like
  • Darren McCammon
    , contributor
    Comments (1291) | Send Message
     
    Not that complicated. Their main assets are adjustable rate mortgages guaranteed against default.
    13 Mar, 12:20 PM Reply Like
  • tstreet
    , contributor
    Comments (744) | Send Message
     
    I wonder if book value for CMO is currently less important than say, AGNC. Might this at least be partially measured by the price to book value? It is only since May of 2013 that CMO started to show a higher p/bv than AGNC. Whatever the reason for CMOs success, it looks like a better bet in a time of volatile interest rates. And as I said, it also looks like a better stock to hold in a overall down turn.

     

    I would love to see a thorough analysis of this issue by one of our esteemed contributors on SA.
    13 Mar, 03:44 PM Reply Like
  • MobilePreacher
    , contributor
    Comments (437) | Send Message
     
    its not just that its arms...other mREITS with arms got crushed...CMO has the absolute shortest duration risk in the industry by far. their portfolio is the least risky on every metric, default, duration, and against tightening spreads.. the biggest two risks for CMO are moves in the common equity in market sympathy and prepayments.
    14 Mar, 08:13 AM Reply Like
  • MobilePreacher
    , contributor
    Comments (437) | Send Message
     
    CMO book value is important... it has remained very stable compared to its peers. Right now CMO is trading at a significant premium to book however. this could be do to people knowing the yield would increase or the expectation that the book value will increase. either way its a bit pricey right now. frankly i wouldnt mind the company selling some shares at this level
    14 Mar, 08:15 AM Reply Like
  • tstreet
    , contributor
    Comments (744) | Send Message
     
    Mobile Preacher

     

    Please explain why you would like CMO to sell some shares. I thought that would decrease book value. In any event, since last year, the market has been willing to price CMO with p/bv greater than one as opposed to AGNC.
    14 Mar, 10:39 AM Reply Like
  • MobilePreacher
    , contributor
    Comments (437) | Send Message
     
    actually CMO had been trading below book value for quite some time until their recent earnings report, albeit a much smaller discount to book than the rest of the sector. Right now the shares are trading at a pretty good premium to book, therefore if they sold shares at a price greater than their book value the actually can decrease leverage and raise more cash for other assets.
    15 Mar, 08:11 AM Reply Like
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