While ANH’s management team has delivered to shareholders decent returns over the past 14 years, it's been a bumby ride.
Despite troughing around 0.8% in 2006-2007, ANH has had an average dividend yield of 11.4% since 1999. Again, the range has been quite volatile.
ANH appears to be slightly overvalued at current levels. It is currently trading 1.07x book value, which is 12% above its historical average P/BV of 0.95x.
While ANH deploys higher than comparable leverage (8.5x) the Company invests predominately in floating rate securities (>80% in floating rate).
Also, we recently completed a similar comparison for Annaly Capital (NYSE:NLY) (Analyzing Annaly Capital Through Different Interest Rate Cycles) and MFA Financial (NYSE:MFA) (Analyzing MFA Financial Through Different Interest Rate Cycles). By comparing our analysis of NLY and MFA to ANH, you can see that the volatility of REIT returns over different interest rate environments is largely dependent on the quality of the management team and its ability to manage its portfolio throughout the cycle.
That said, NLY and MFA remain our two main REIT holdings due to their strong management teams. However, we also have a small position in American Capital Agency Corp. (NASDAQ:AGNC).
Disclosure: I am long NLY, MFA, AGNC.