On March 20, Wunderlich Securities released an update on mREIT American Capital Mortgage Investment Crp MTGE, titled: "Downgrading to Hold on Unexpected Dividend Cut."
American Capital Mortgage is a real estate investment trust that invests in and manages a leveraged portfolio of agency mortgage investments, non-agency mortgage investments and other mortgage-related investments.
Tale Of The Tape
Prior Year - Metrics & Dividends
Source: Company February 2015 presentation
The 2014 annual dividend of $2.60 per share, equates to a $0.65 quarterly dividend TTM.
On March 19, after the bell, American Capital Mortgage declared a cash dividend of $0.50 per share for Q1 2015.
Wunderlich - MTGE: Downgrade Buy to Hold, Lowers PT
On March 20, Wunderlich downgraded American Capital Mortgage to Hold, and reduced its 2015 price target sharply from $21.50 to $18.50.
The new Wunderlich price target of $18.50, represents a 15 percent discount to forward book value per share (BVPS).
Noting that based "on the company's allocation of equity to agency and non-agency MBS of relatively short duration and based on our expectation that its drop in income would remain fulsome, we had believed that the dividend was sustainable."
Wunderlich now feels that "there were attributes to the business strategy that we did not understand."
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