iShares Mortgage Real Estate Capped ETF (BATS:REM) dropped 6.3% on Thursday and is down 27% in the past month. With investors still sorting out the effects of the Federal Reserve’s hawkish policy, which is pushing up mortgage rates.
On Wednesday, Invesco Mortgage (IVR) chopped its dividend by 28% to retain additional capital and further improve its capital structure, the company said. IVR stock slid 10% on Thursday.
BTIG analyst Eric Hagen sees MFA Financial’s (NYSE:MFA) dividend vulnerable given liquidity risk, but doesn’t expect that it would need to suspend its dividend like it did at the beginning of the pandemic. MFA shares dropped 9.7%.
Several mortgage REITs also sank in the double digits — Chimera Investment (NYSE:CIM), –14%, Orchid Island Capital (NYSE:ORC) -13%, AG Mortgage Investment (NYSE:MITT), -14%, Cherry Hill Mortgage Investment (NYSE:CHMI), -13%.
Jones Research analyst Jason Stewart keeps a Hold rating on Invesco Mortgage (IVR) as he sees earnings estimates continuing to cover its dividend. He also expects modest net interest margin compression in Q3 2022 due to an increase in the weighted average cost of funds.
SA contributor Trapping Value recently upgraded Annaly Capital (NLY) to Hold from Sell and explains the volatile market’s effect on the stock.