Unexpectedly Intriguing!
September 22, 2015

Up until a week ago, if a publicly traded U.S. company was announcing it was cutting its dividends, we would have almost automatically assumed, based on what we've observed since the first quarter of the year, that it was an oil industry-related firm.

But now, we can't automatically make that assumption because for the first time since late 2013 and early 2014, we've seen a significant increase in the number of Real Estate Investment Trusts (REITs) announcing that they will be cutting their dividends.

In fact, of the eight firms we counted as taking such action in the last week (via Seeking Alpha's Market Currents, filtered for dividends, and the WSJ's dividend declarations database, five were REITS.

The reason that's significant is because a number of REITs are especially sensitive to interest rate hikes, with the announced dividend cuts lagging several months behind when interest rates have risen.

In fact, from late 2013 all the way up to November 2014, after which the U.S. oil industry claimed the title of being the most distressed sector of the U.S. economy, and a brief increase at the end of first quarter of 2015, we really haven't seen very many REITs listed among the U.S. firms announcing dividend cuts until the past week.

Here's the short list: Hatteras Financial (NYSE: HTS), Invesco Mortgage Capital (NYSE: IVR), Ellington Residential Mortgage REIT (NYSE: EARN), American Capital Mortgage (NASDAQ: MTGE), and New York Mortgage Trust (NASDAQ: NYMT). Going back to the beginning of the month, we would need to add Capstead Mortgage (NYSE: CMO). The last REIT to declare a dividend cut before that was Western Asset Mortgage Capital (NYSE: WMC) back on 19 June 2015. Going back to the beginning of the first quarter, we find that 18 REITs have announced dividend cuts during the 2015, with both Capstead Mortgage and American Capital Mortgage having done so twice.

We'll conclude this post by updating our real-time chart reporting the relative health of the U.S. economy in 2015 as measured by the cumulative number of U.S. firms announcing that they are cutting their dividends by the day of the quarter.

Cumulative Announced Dividend Cuts in U.S. by Day of Quarter

It would appear that after six weeks of relative quiet, recessionary conditions are making their presence within the U.S. economy felt once more.

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.