SOURCE: Paragon Financial Limited

Paragon Financial Limited

November 23, 2011 08:16 ET

American Capital Agency and Chimera -- Impressive Dividends but Still Highly Scrutinized

Paragon Report Provides Equity Research on American Capital Agency & Chimera Investment Corp

NEW YORK, NY--(Marketwire - Nov 23, 2011) - Shares of high yielding Real Estate Investment Trusts (REITs) have been volatile in recent months. While the favorable interest rate spreads have benefitted the sector, mortgage REITs -- like the rest of Wall Street -- have been challenged by investor anxiety over the European debt crisis. Moreover, potential measures being proposed by Congress and the Obama Administration could potentially weigh on the industry's profits -- and dividends. The Paragon Report examines the outlook for diversified REITs and provides equity research on American Capital Agency Corporation (NASDAQ: AGNC) and Chimera Investment Corporation (NYSE: CIM). Access to the full company reports can be found at:

The Obama administration's latest plan to help underwater homeowners refinance turned some investors away from mortgage REITs. Mortgage prepayments are known to crimp mortgage REIT earnings. Mortgage REITs make money on the spread between interest rates on short-term debt that they use to buy higher-yielding, long-term mortgage securities. By purchasing bonds guaranteed by the government, analysts argue these companies take on no risk of default, with the principle concern being an interest rate risk.

The Paragon Report provide investors with an excellent first step in their due diligence by providing daily trading ideas, and consolidating the public information available on them. For more investment research on diversified REITs register with us free at and get exclusive access to our numerous stock reports and industry newsletters.

According to a recent article from Forbes, Agency mREITs as a group outperformed the S&P 500 in the third quarter. A set of the 7 most actively traded Agency REITs lost just over 6 percent (including dividends) compared to a 14 percent loss for the S&P 500. Net Interest Margins for the sector were under pressure in the most recent quarter as longer-term investment rates fell following implementation of Operation Twist, which led to a modest downturn for some dividends in the sector. Operation Twist was aimed at reducing the cost of borrowing for businesses and consumers, including the cost of mortgage loans, by lowering long term interest rates.

For nine consecutive quarters American Capital Agency has paid a dividend of $1.40 per share. American Capital Agency reported earnings of $1.39 per share during third quarter 2011, compared to $1.69 in the year-earlier quarter.

Chimera Investment Corporation is considered a "Hybrid mREIT." Hybrid mREITs are moderately riskier as they own mortgage backed securities (MBS) or any debt obligations which do not have an implicit guarantee of the US Federal Government. Last week the company said profit slid 43 percent in the third quarter as the company's income from investments declined, offsetting gains in net interest income. Chimera pays an annual dividend of 52 cents for a yield of around 19.4 percent.

The Paragon Report has not been compensated by any of the above-mentioned publicly traded companies. Paragon Report is compensated by other third party organizations for advertising services. We act as an independent research portal and are aware that all investment entails inherent risks. Please view the full disclaimer at