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Are Your Dividends Sustainable? – ARMOUR Residential REIT, Inc. (ARR), CYS Investments Inc (CYS), and More

This article brings to you the latest dividend declaration and dividend cuts by some of the most famous dividend stocks within the US mortgage REITs sector. The article also aims to distinguish between the mREITs which were forced to cut their dividends from the mREITs which maintained their shareholder distributions.

ARMOUR Residential REIT, Inc. (NYSE:ARR)

Armour Residential reported a 12.5% decrease in its monthly dividend rate for the first quarter of the current year. The company operates as a mortgage REIT that invests exclusively in mortgage backed securities for which any of the government Agencies guarantees the principal and interest payments. ARMOUR Residential REIT, Inc. (NYSE:ARR)’s recent quarters performance remained behind expectations. The bottom line of $0.22 per share, fell $0.05 behind what analysts had estimated. While core income for the fourth quarter of $69.8 million was 2% over the prior quarter, taxable REIT income surged 4.5% over the same time period on a higher gain on sale of MBS. With the new dividend, the dividend yield comes out to be 12.9%. The stock is currently trading at 10% discount to its book value.

CYS Investments Inc (NYSE:CYS)

CYS Investments Inc (NYSE:CYS) was forced to cut its quarterly dividend for the first quarter by 20%. The new dividend now is $0.32 per common share. Over half of the company’s investment portfolio is composed of 15-year fixed rate securities, followed by the 30-year and hybrid ARMs at 18% and 19%, respectively. The company reported a 30 bps decline in its fourth quarter net interest rate spread and conditional prepayment rate. However, the top line surged 4% to $79.6 million. After taking into account the recent dividend cut, the stock is yielding 10.5% and trading 9% below its fourth quarter book value.

American Capital Mortgage Investment Crp (NASDAQ:MTGE)

American Capital Mortgage is a sister company of American Capital Agency Corp. (NASDAQ:AGNC). American Capital Mortgage operates as a hybrid mortgage REIT with investments in both Agency and non-Agency RMBS. The company recently declared a quarterly dividend of $0.9 per common share, in line with the previous dividend distribution. Around 90% of the company’s investment portfolio is Agency RMBS, while the remainder is non-Agency RMBS. Within the Agency RMBS, 30-year fixed rate MBS dominate, followed by 15-year fixed rate securities. The company’s Agency MBS are considered to comprise of 83% HARP or lower balance securities. These are highly prepayment protected as prepayment speed increases on lower loan balance and higher LTV HARP loans should be significantly less than generic coupons. The stock is currently yielding 13.75% and trading at a moderate 2% premium to its book value.