Monday, November 26, 2012

Armour Residential REIT Stock Prediction 2013

Stock market today - Armour Residential REIT Stock Prediction 2013 : Armour Residential REIT, Inc. (ARR). Armour Residential is a Florida-based mREIT established in 2008. Per their website, Armour invests in hybrid adjustable rate, adjustable rate and fixed rate residential mortgage-backed securities issued by or guaranteed by U.S. Government agencies or U.S. Government sponsored entities such as:

    Federal National Mortgage Association (Fannie Mae);
    Federal Home Loan Mortgage Corporation, (Freddie Mac); and
    Government National Mortgage Administration, (Ginnie Mae).

A week ago, the entire mREIT sector experienced a flash crash due to tax rate concerns on dividends and tightening spreads, taking ARR down with it on very high volume. The mini-crash in the sector has since subsided, with many mREIT's recovering in short order once investors began to realize the sky wasn't, in fact, falling.

I think ARR is an excellent value pick for 2013 for four reasons:

1. Current dividend yield is approximately a whopping 16%.

2. Insiders have been buying of late.

3. U.S. Real Estate market is starting to heat up again

4. Shares of ARR are presently trading under book value at $6.77 a share.

The stock has already priced in a drastic cut to the dividend, but even an unworldly reduction of 50% still gives a yield of 8%. A drastically reduced dividend yield in ARR would therefore still beat many more conservatively financed REITs, with the added benefit that ARR pays out monthly. Given that few stocks can offer a double-digit yield, a monthly distribution, and the strong potential for capital appreciation, Armour Residential is my top value pick for 2013.

Shares of ARR 2013,  ARR stock projection 2013, ARR dividend yield 2013, ARR Current dividend yield, ARR stock prices 2013, Armour Residential REIT  2013

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