SOURCE: The Bedford Report

The Bedford Report

November 08, 2011 08:16 ET

High Yielding American Capital Agency and Annaly Capital Maintain Safe Haven Appeal

The Bedford Report Provides Equity Research on American Capital Agency & Annaly Capital

NEW YORK, NY--(Marketwire - Nov 8, 2011) - After struggling for most of the summer, shares of high yielding Mortgage REITs are finally on the upswing as a strong earnings season and more stable market has restored confidence in the sector. REITs must pay at least 90 percent of their taxable income in the form of dividends, and given the strong earnings season investors are optimistic about future shareholder return. The Bedford Report examines the outlook for diversified REITs and provides equity research on American Capital Agency Corporation (NASDAQ: AGNC) and Annaly Capital Management, Inc. (NYSE: NLY). Access to the full company reports can be found at:

REITs were hammered after the SEC announced that it will solicit public comment to determine if mortgage real estate investment trusts should be regulated as investment companies and therefore subject to the Investment Act of 1940. While analysts don't expect the exemption to be lifted, the SEC review was acting as a cloud over the industry's future.

Fortunately, this earnings season drew attention away from potential long term headwinds. Mortgage REITs continued to post strong numbers as the firms benefitted from favorable interest rate spreads. Most mREITs earn their money on the spread between low-interest short-term borrowing and purchasing high-interest long-term securities. The Federal Reserve has expressed its intention to keep interest rates low which means that REITs should enjoy a good spread for the foreseeable future.

The Bedford Report releases stock research on REITs so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at and get exclusive access to our numerous analyst reports and industry newsletters.

As of September 30, 2011, American Capital Agency's investment portfolio totaled $42.0 billion of agency securities, at fair value, comprised of $38.3 billion of fixed-rate securities, $3.2 billion of adjustable-rate securities ("ARMs") and $0.5 billion of collateralized mortgage obligations ("CMOs") backed by fixed and adjustable-rate securities, including interest-only strips. The company reported net income for the third quarter of 2011 of $250.4 million, or $1.39 per share, and net book value of $26.90 per share. Presently AGNC pays an annual dividend of $5.60 for a yield of around 20.3 percent.

During the quarter ended September 30, 2011, Annaly Capital Management disposed of $3.9 billion of mortgage-backed securities and agency debentures, resulting in a realized gain of $91.7 million. The annualized dividend yield on the company's common stock for the quarter ended September 30, 2011, based on the September 30, 2011, closing price of $16.63, was 14.43 percent, as compared to 15.45 percent for the quarter ended September 30, 2010, and 14.41% for the quarter ended June 30, 2011.

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