Despite QE3, Anworth Mortgage's 10% Dividend Yield Is Safe

Anworth Mortgage (ANH) reported below expected third quarter performance on October 25, 2012. Analysts were expecting a consensus mean earnings per share of $0.17, whereas the company reported an EPS figure of $0.15 per share, about 12% below expectations.

In conclusion, despite the fact that the company owns a major stake in adjustable rate agency securities, which the Fed does not intend to buy, the results for the third quarter were affected negatively by QE3. Going forward, we believe the company has sufficient financial muscle to continue its elevated dividend distribution, even if the Fed accelerates its bond buying program. Therefore, we recommend income oriented investors to long the stock. Read more