In this case, agree with you 100%. I’m profitable with NLY, own it from 2021, but profit %% to low. And they are juggling with divs. On 9/23/22 they 1 to 4 reverse NLY. The min value was $4.29. Now price $20.62 will be $5.15. BTW max volume price is $20 so $5 before reverse. If somebody interested to buy - buy below $20, but this company uses to change divs value.
Term structure was the basis for my liking them now. However, the yield will eventually contract as payoffs accelerate. You can already save 100’s of bps now restructuring a residential debt profile vs 2020 floaters. No free lunch. I wonder, with dividends reinvested over time, what their total return has been. Bet you it’s solid. Too lazy to look.
from 8/5/2021: total return NLY : 5% (39% loss in value and 44% income ) total return AGNC: 3% (41% loss in value and 44% income ) total return SPX : 51% (43% increase in value and 10% in divs) 44% taxed as ordinary income means you kept about 22% and still suffer the price loss. Terrible IRR. That's the problem with these. It looks like free money but it's not. I used to invest in them in the early 2010's. The only one I made money on was MFA because it was unlevered, trading below book value and book value was pricing bankruptcy of every municipality they owned bonds in.
On 2020 on AGNC I had $17+ and 3/2020 bought $6+ and made ave $12 p/s, on 5/2020 I was above water. Later I lowered price below $9. NLY I bought on 6/21 at $8 todays price is $32 , but divs compensated my losses. This NLY sucks.
Company Annual taxable income is calculated different way than company profits plus timing may be different.
You don't know how REITs work. They are a pass through entity and as a result, they don't pay taxes. Their shareholders pay ordinary income tax on the distributions. Annual Taxable income = book taxable income because there is no incentive to do them differently. REIT makes money and passes it on to the shareholders who then pay taxes on it.
Well, I did not say company pays taxes. It is known if company declared to be REIT it does not pay taxes. But company suppose to give at least 90% of its annual taxable income to its shareholders. And taxable income it’s not exactly as company profits and timing could be different. BTW company may pay shareholders back as return sometime and it’s not considered as dividends and therefore shareholders won’t pay taxes for returns.[/QUOTE]
As a person trained in statistics, you will of course know that if a bullet missed you during the last six years, and you know that for certain, but that's all you know, you will know nothing about the probability of a bullet hitting you in the next 6 years.
Probability to be killed in US is .0001 in one year. Do you know anything about regression analysis ? You putting chart how it developed in the past six years and prolonging it for next six years in the future. That is how modeling future chart - from the past behavior to the future. What you do not no - scientific forecaster will know.