Big Relief For Agency mREITs: Annaly Capital Management, Inc. (NLY) and More

ARMOUR Residential REIT, Inc. (NYSE:ARR) has a special position in the hearts of income oriented investors and the company offers monthly dividends and yields 14.4%, while it is trading at 8% premium to its book value. The company has a large concentration of 15-year fixed rate MBS in its investment portfolio. Armour Residential’s charter allows its management to include securities other than Agency MBS and I believe such inclusions will expand its net interest rate spread. The company has not disclosed its fourth quarter performance, however, it expects to report fourth quarter GAAP earnings within the range of $114 million and $117 million, while the book value is expected to be within $7.28 to $7.30 per share.

Conclusion

The hike in mortgage rates since the beginning of the year are a big relief for the US mortgage REITs sector and I believe if the trend continues, American Capital Agency, Armour Residential and Annaly Capital Management will experience expansion in their net interest spread and the dividend distributions thereafter.

The article Big Relief For Agency mREITs originally appeared on Fool.com and is written by Adnan Khan.

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