19.6%-Yielding ARMOUR Residential REIT Stock Pays Dividends Monthly
February 7, 2023
Why ARR Stock Is Worth Considering
It wasn’t that long ago I last wrote about ARMOUR Residential REIT, Inc. (NYSE:ARR), but when it comes to investing, it’s all about opportunity. Right now, in a rising interest rate environment, financial stocks are doing well, and they’re expected to continue to do so.
This is reflected in ARMOUR Residential REIT stock, which has gone up by 14% since the start of 2023 and approximately 20% since I last wrote about the stock back in November 2022.
When it comes to investor sentiment, nothing has really changed since then. Investors who are looking for a safe, ultra-high-yield monthly dividend stock with high long-term growth potential should keep ARMOUR Residential REIT, Inc. on their radar.
ARMOUR Residential REIT is a real estate investment trust (REIT) that primarily invests in residential mortgage-backed securities (RMBSs) that are issued or guaranteed by U.S. Government-sponsored enterprises. The company also invests in interest-only securities, U.S. Treasury securities, and money market instruments. (Source: “ARMOUR Residential REIT, Inc. Company Update,” ARMOUR Residential REIT, Inc., January 13, 2023.)
ARMOUR Residential REIT’s investments are primarily fixed-rate loans. The company essentially raises capital through the issuing of debt and then reinvests that capital in higher-yielding debt instruments. It returns the vast majority of its earnings to investors in the form of share buybacks and stable, ultra-high-yield monthly dividends.
Since its inception in November 2009, ARR stock has paid out $1.9 billion in dividends.
The company’s next common stock dividend will be $0.10 per share, for a current yield of 19.6%. It will be paid on February 27 to shareholders of record as of February 15.
ARMOUR Residential REIT, Inc. also creates value for investors through its share buyback plan. Since 2013, the company has returned $276.0 million to its common shareholders through share repurchases. In the third quarter of 2022, it repurchased 780,000 shares at an average cost of $4.96 per share, for an aggregate of $3.9 million.
ARMOUR Residential REIT Stock Outpacing Broader Market
When I profiled ARR stock back in November, its dividend yield was 22.9%, so its yield has fallen a bit since then. The only time I’m okay with a company’s dividend going down is when its share price is going up. That’s exactly what’s been going on with ARMOUR Residential REIT stock.
ARR stock has been trending significantly higher since the company reported solid third-quarter financial results in October 2022. Those results included distributable earnings of $38.8 million, or $0.32 per share. That was more than enough to cover the company’s $0.10 monthly dividend. (Source: “ARMOUR Residential REIT, Inc. Announces Q3 Results and September 30, 2022 Financial Position,” ARMOUR Residential REIT, Inc., October 26, 2022.)
Since reporting its third-quarter results, ARMOUR Residential REIT stock has rallied by an impressive 33.5%. It’s also up by 14% since the start of 2023. The stock has found support at $5.84 and resistance at $7.61.
Chart courtesy of StockCharts.com
Despite the large gains, ARR stock still has room to grow. It needs to climb by 135% to get to where it was before the COVID-19 pandemic. The stock’s bullish momentum could continue if the company reports impressive fourth-quarter 2022 results.
The Lowdown on ARMOUR Residential REIT, Inc.
ARMOUR Residential REIT stock is a great mortgage REIT stock that has seen its share price rebound over the last few months.
In October 2022, ARMOUR Residential REIT, Inc. reported third-quarter distributable earnings of $0.32 per share, which was more than enough to cover its monthly dividend. Over the coming quarters, the company’s improving metrics should help juice ARR stock’s price and, hopefully, its monthly ultra-high-yield dividends.
