Look Out for Falling mREIT Dividends: Annaly Capital Management, Inc. (NLY), Hatteras Financial Corp. (HTS)

Page 1 of 2

Annaly Capital (NLY)So far, 2013 has been sweet to stocks, with the month of March being especially delightful. The Dow Jones Industrial Average has stayed up above the 14,000 mark this month, hitting highs not seen in years. In the banking sector, the positive results of the Fed’s latest stress tests has investors buzzing about seeing increased dividends from the biggest banks, some of which have been awarding embarrassingly skimpy payouts since the financial crisis.

Unfortunately, dividend news is much less agreeable from the lethargic mortgage REIT sector, which has been known in the past for its payout power. Those that invest primarily in government-sponsored-entity paper have been particularly hard-hit, and companies like Annaly Capital Management Inc. (NYSE:NLY)Hatteras Financial Corp. (NYSE:HTS) , and Apollo Residential Mortgage Inc (NYSE:AMTG) have all slashed dividends over the past few months. Late last week, CYS Investments Inc (NYSE:CYS) joined the lineup, declaring a dividend that dropped to $0.32 from the previous $0.40.

A battle-scarred sector
As stalwart mREIT investors well know, the Fed’s QE3 program has been squeezing these trusts, crimping profits as spreads continue to contract. Annaly’s spread decreased to 0.95% in the last quarter, a decrease of 76 basis points year over year, and seven BPS from the prior quarter. Hatteras Financial Corp. (NYSE:HTS) saw its spread drop to 1.08% last quarter from 1.22% in the third quarter, and 1.56% from one year prior.

Likewise, CYS saw its spread fall to 1.08% from 1.41% in Q3, and a far cry from its 1.80% from the fourth quarter of 2011. Only Apollo kept its spread intact, at 2.7%, from the last three months of 2011 to the last quarter of 2012.

Dividends suffer for most
As spreads compress, so have the dividends paid. CYS’ payout has dropped steadily since its heyday of 2010 to 2011, when it hovered at $0.60 for five quarters. More recently, it paid $0.50 as recently as last June. Hatteras Financial Corp. (NYSE:HTS) paid out a $0.90 quarterly dividend in June, which shrank to $0.70 this past December. Apollo’s December payout of $0.70 was less than its $0.85 paid at the end of September, and Annaly Capital Management, Inc. (NYSE:NLY)last announced a divvy of $0.45 at the end of the fourth quarter, down from the $0.55 it bestowed in June of last year.

Notably, however, both CYS and Apollo paid a special dividend at the end of December — CYS in the amount of $0.52, and Apollo, $0.35. While both companies explained  the special payment as a way to clear the decks of 2012 taxable income, it surely doesn’t bode well for divvy payments coming up this year.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!