Dynex Capital (DX) Company Overview

Dynex Capital (DX) came out with quarterly earnings of $0.10 per share, missing the Zacks Consensus Estimate of $0.38 per share. This compares to loss of $0.24 per share a year ago.

Dynex Capital is poised to benefit from anticipated interest rate cuts in 2025, despite the Fed's recent hawkish stance and inflation uptick. The stock is currently selling at a 4% discount to book value, offering substantial value for passive income investors with a stable 13% dividend yield. Lower interest rates should improve DX's negative net interest spread, enhancing profitability and potentially leading to a higher valuation.

Caveat Emptor series aims to help investors avoid “sucker yields,” “value traps,” and “ugly ducklings” by highlighting risks and conducting due diligence. Dynex Capital is rated a sell due to poor operational performance, negative EPS, and unsustainable dividend payout ratios. Vornado Realty Trust is rated a sell due to declining AFFO, high geographic concentration risks, and a history of value erosion.

Dynex Capital Inc.'s forward dividend yield and a changing U.S. inflation outlook make a strong case for a tactical opportunity. Shifting to specified pools to secure certainty might de-risk the vehicle. Additionally, a more desirable short-term liquidity market fuels an upbeat argument. Dynex's common stock trades below book value, and its preferred stock doesn't seem overly demanding, reducing the risk of Dynex's common shares being 'toxic waste.'

Dynex Capital Series C preferred stock offers a compelling income opportunity with a 6.9% stripped yield, stepping up to 9.7% if not redeemed by Apr-2025. The stock benefits from a nearly 100% Agency MBS portfolio and a 9.2x equity/preferreds coverage, making it a lower-risk, high-yield investment. DX's proactive risk management and equity issuance behavior enhance preferreds' safety, outperforming common shares with lower volatility.

As a retired income investor, I focus on high-yield distributions, particularly from REITs, which offer diversification and inflation hedging but are sensitive to interest rates. Despite the real estate sector's poor performance over the past three years, Dynex Capital is now a compelling buy due to its strong Q3 earnings, increased dividend, and strategic positioning. Dynex's Q3 results show improved performance, with increased book value, reduced leverage, and higher comprehensive income, driven by strategic capital management and favorable market conditions.

24/7 Wall St. Insights Demand for ultra-high-yield dividend stocks is growing.

Dynex Capital, Inc. (NYSE:DX ) Q3 2024 Earnings Conference Call October 21, 2024 10:00 AM ET Company Participants Alison Griffin - Vice President, Investor Relations Byron Boston - Chairman and Co-Chief Executive Officer Smriti Popenoe - Co-Chief Executive Officer, President and Chief Investment Officer T.J. Connelly - Senior Vice President, Strategy and Research Rob Colligan - Chief Financial Officer and Chief Operating Officer Conference Call Participants Bose George - KBW Eric Hagen - BTIG Trevor Cranston - Citizens JMP Jason Weaver - Jones Trading Doug Harter - UBS Operator Ladies and gentlemen, good morning and thank you for standing by.

Dynex Capital (DX) came out with a quarterly loss of $0.10 per share versus the Zacks Consensus Estimate of $0.29. This compares to loss of $0.28 per share a year ago.