Anworth Mortgage Asset Corporation (ANH) announced last night after the closing bell that its Board of Directors has declared a 12.5 percent cut in the company’s quarterly common stock cash dividend. The new quarterly dividend on the company’s common stock is 28 cents per share, down from 32 cents per share for the last quarter.
Lloyd McAdams, President and CEO of Anworth Mortgage said in an interview with Self Directed Investor this afternoon:
“There were lots of little things that all went in one direction. For example, we saw lower interest income due to resetting of ARMs at lower rates. There were two extra days on the payment side. We paid interest on 92 days and received interest on 90 days. There were several other little things as well.”
McAdams also indicated the company maintained roughly the same leverage as the previous quarter.
The annualized dividend yield for Anworth shares is 14.5 percent as of today's closing price of $7.69 per share.
The dividend is payable on November 19, 2009, to common stockholders of record at the close of business October 30, 2009. The ex-dividend date is October 28, 2009.
The board of directors also declared Anworth’s Series A Preferred Stock will pay a dividend of $0.539063 per share for the fourth quarter of 2009. The Series B Preferred Stock will also receive a dividend of $0.390625 per share for the fourth quarter of 2009. Both are payable on January 15, 2010 to holders of record on December 31, 2009. The dividend reflects the accrual from October 1, 2009 through December 31, 2009.
Since the beginning of 2009, Anworth's share price appreciation and dividend (non-reinvested) have provided a 30 percent gain, beating the 19.5 percent gain in S&P 500 index year-to-date. Technically, Anworth sits just at its 50-day moving average and well above the 200-day moving average price.
On July 29, Anworth reported second-quarter core earnings of $32.5 million or 31 cents per diluted share. Earnings for the first quarter of 2009 were $29.3 million or 30 cents per diluted share. At the end of June 30, Anworth's Agency mortgage backed securities (MBS) portfolio was valued at $5.37 billion and allocated as follows: 20 percent adjustable-rate Agency MBS; 63 percent hybrid adjustable-rate Agency MBS; 17 percent fixed-rate Agency MBS; and less than 1 percent agency floating-rate collateralized mortgage obligations, or CMOs.
Anworth Mortgage is a mortgage real estate investment trust which invests primarily in securities guaranteed by the U.S. Government, such as Ginnie Mae, or guaranteed by federally sponsored enterprises, such as Fannie Mae or Freddie Mac. Anworth generates income for distribution to shareholders primarily based on the difference between the yield on its mortgage assets and the cost of its borrowings.
Anworth is part of a sub-industry of the mortgage reit industry that invests primarily in agency-backed paper and is referred to as AmREITs. AmREITs take advantage of the spread inherent in the yield curve, borrowing short term at low-cost while investing in high-yielding, longer term mortgage securities issued by government sponsored enterprises. A major risk to the dividend payout is if the yield curve flattens.
Dividend payments have fluctuated greatly over the past few years ranging from quarterly dividends of 2 cents a share in 2006 to as high as 32 cents a share in July 2009.
Anworth Mortgage remains a solid income generator for the near term. The ARM-weighted portfolio of government backed securities also provides shareholders with a hedge against inflation as mortgage rates reset upward. High-yield investors fearful of economic uncertainty may want to consider Anworth Mortgage for their portfolio.
Anworth is expected to report third quarter earnings later this month.
For more information on AmREITs, read the following articles at Self Directed Investor.
How Much Longer Can AmREITs Fly High?
Wed, Sep 23, 11:51 AM ET
Are High Yielding aMREITs Ready to Run?
Fri, Jun 26, 2:49 PM ET
Full Disclosure: Long Anworth Mortgage.
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