Unexpectedly Intriguing!
January 8, 2014

The number of publicly-traded U.S. companies announcing that they would be acting to cut their dividend payments remained in recessionary territory December 2013.

Number of U.S. Publicly-Traded Companies Announcing Decreasing Dividends, January 2004 through December 2013

As in November 2013, it appears the economic distress is once again concentrated in the real estate sector of the U.S. economy, with Real Estate Investment Trusts (REITs) bearing the brunt of the negative actions. Amanda Alix of the Motley Fool describes the sentiment for investors in that industry:

Massive Dividend Cut Sparks Panic Among Mortgage REITs

Just when it looked like mortgage REITs were moderating, disaster struck. Anworth Mortgage (NYSE: ANH) announced a reduction in its quarterly dividend last Friday, and it was a doozy: a mere $0.08 per share, a 33% drop from the previous payout of $0.12.

Reaction was swift, and Monday saw decimation in the sector. Anworth fell by more than 0.70%, while agency peers Annaly Capital (NYSE: NLY) dropped 1.21%, Armour Residential (NYSE: ARR) lost 1.34%, and American Capital Agency (NASDAQ: AGNC) took the biggest hit, suffering a decrease of 2.70%.

Several days later, following the Fed's announcement that it would indeed reduce its mortgage-interest rate lowering QE programs by $10 billion per month, American Capital Agency (NYSE: AGNC) announced that it would once again cut its dividend payments to investors.

The driving factor behind the hits that REITs were taking in 2013 are rising mortgage rates, the higher costs from which are hurting their earnings potential, which is why the REITs' management is acting to cut dividends to investors - before they are forced to face outright losses.

But then, as in November 2013, such is life for the extremely interest-rate dependent who suddenly find themselves on the wrong side of a developing interest rate trend.

Labels: ,

About Political Calculations



blog advertising
is good for you

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

Recent Posts

Applications

This year, we'll be experimenting with a number of apps to bring more of a current events focus to Political Calculations - we're test driving the app(s) below!

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

Visitors since December 6, 2004:

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button

JavaScript

The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links
Charities We Support
Recommended Reading
Recommended Viewing
Recently Shopped

Seeking Alpha Certified

Archives
Legal Disclaimer

Materials on this website are published by Political Calculations to provide visitors with free information and insights regarding the incentives created by the laws and policies described. However, this website is not designed for the purpose of providing legal, medical or financial advice to individuals. Visitors should not rely upon information on this website as a substitute for personal legal, medical or financial advice. While we make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have an individual problem, you should seek advice from a licensed professional in your state, i.e., by a competent authority with specialized knowledge who can apply it to the particular circumstances of your case.