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This mREIT Is Back From The Brink


  • After being bearish on the name for two years we got behind IVR in late fall 2017.
  • We believe the company's portfolio mix is well suited for handling volatile interest rates and the critical metrics support this notion.
  • The dividend is once again on the rise, but the valuation of the name is peculiar.

We believe Invesco Mortgage (NYSE:NYSE:IVR) is improving. After being bearish, we changed our tune when shares hit $16.86 a share last fall. While the mREIT sector has seen pressure thanks to fears over rising interest rates, we continue to believe that Invesco Mortgage has become a strong pick in the sector for a steady stream of income that is currently safe from a dividend cut. We believe this because the key metrics we utilize to analyze mREITs suggest the stock is a bargain at current levels relative to book value, while the dividend is being comfortably covered. Let us discuss.

In this column, we will look into the critical metrics that you need to be aware of when deciding whether to invest in an mREIT. The critical metrics which you should examine for all mREITs are summarized below for Invesco Mortgage as of Q4 2017:

Critical metrics of interest

Invesco's performance

Q4 2017 Book value and % change from Q3 2017

$18.35 (+0.1%)

Net interest rate spread in Q4


Dividend (yield)*

$0.42 (10.6%)

Q4 core income per share


Dividend covered?**


52-week share price range


*Based on current share price and forward annualized yield

**Determination based on estimate of core earnings covering dividend paid

Data table source: Invesco's Q4 earnings

Q4 net income and core earnings

We know interest rates are on the rise, and investors are concerned. We have seen pain from a number of other mREITs in the sector, but Invesco’s portfolio mix, and structure, is well prepared for this environment. Additionally, the credit profile of its investment portfolio continues to strengthen because of further improvement in residential and commercial mortgage fundamentals. While Invesco may not be entirely immune to rapidly rising rates, we think that Invesco will continue to perform well based on its portfolio mix, management team, and

This article was written by

Quad 7 Capital profile picture

Quad 7 Capital is a team of 12 with a wide range of experience sharing investment opportunities for nearly 7 years. Quad 7 Capital as a whole has expertise in business, policy, economics, mathematics, game theory, and the sciences. They share both long and short trades and invest personally in the stocks they discuss within their investing group. They lead the investing group Bad Beat Investing include: daily market commentary and market briefing, 1-2 trade ideas per week, 5 chat rooms for a range of sectors, volatility screeners, unusual options activity alerts, and economic calendars.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (4)

Olympic skaters can do triple flips, etc...this ice is too thin for my preferences
mjtroll1 profile picture
regarding this statement

I was interested in this company but... Has a negative PEG ratio over on the Fidelity website stock screener. Looks like it has a lot of Debt.

not applicable to MREIT'S as they pay out 90% of their earnings and by definition use leverage as basis of business model
I was interested in this company but... Has a negative PEG ratio over on the Fidelity website stock screener. Looks like it has a lot of Debt.
mjtroll1 profile picture
good article..the ivr/rem pair has seen ivr be a multiyear outperformer.. below are z scores based on horizon (- cheap)

1yr -2
3yr 0
5yr +.5

so while cheap on 1yr horizon its fair to rich on longer time frames the rem/jnk has seem to have bottomed after underperforming for several months ..comments welcome
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