Core Viewpoint - Dynex Capital, Inc. has declared a cash dividend of $0.17 per share for October 2025, reflecting the company's commitment to returning value to shareholders [1] Company Summary - The dividend is scheduled to be paid on November 3, 2025, to shareholders of record as of October 23, 2025 [1] - Dynex Capital specializes in transforming residential real estate into long-term yields, leveraging its expertise in capital markets and housing finance [1]

Core Insights - The mortgage REITs have identified an opportunity in agency-backed mortgages due to historically high spreads, leading to significant capital deployment in this sector [1][2][4] - Dynex Capital (DX) exemplifies the trend among agency mREITs, having raised over $3 billion to expand its investment portfolio in agency MBS [2][15] - The tightening of mortgage spreads has resulted in substantial mark-to-market gains for mREITs, with 30-year mortgage yields dropping from approximately 7% to 6.5% [7][11][31] Group 1: Market Dynamics - Agency-backed mortgages are considered nearly as safe as U.S. Treasuries, with the added risk of prepayment and duration risk [5] - The recent increase in mortgage rates over the past five years has led to many mortgages trading at a discount to par, making prepayment potentially profitable for mREITs [6] - The tightening of spreads has been beneficial, with a notable drop in 30-year mortgage yields contributing to gains in mREIT portfolios [7][11] Group 2: Investment Strategies - Many mREITs have followed a similar strategy to Dynex by issuing equity to capitalize on high mortgage spreads, which has diluted common shareholders but benefited preferred shareholders [17][31] - AGNC Investment has also expanded its agency RMBS portfolio through equity issuance, leading to increased asset value amid spread tightening [15][31] - Preferred shares of mREITs are viewed as more attractive investments compared to common shares, with many trading at discounts to par and offering high dividend yields [33] Group 3: Future Outlook - The anticipated 3Q earnings reports are expected to reflect significant gains in book value for mREITs due to the recent tightening of spreads [31][32] - The market may not yet fully recognize the gains experienced by these companies, which could lead to a shift in sentiment and a reduction in the risk premium for both common and preferred shares [32] - There is potential for investment in common shares, but preferred shares are generally considered the better option due to their higher yields and discounted prices [33]

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Core Points - Dynex Capital, Inc. announced a corrected cash dividend amount for the third quarter 2025 for its Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock [1] - The corrected cash dividend is $0.64147, payable on October 15, 2025, to holders of record as of October 1, 2025 [1]

Core Insights - During market turbulence, investors often seek dividend-yielding stocks, which typically have high free cash flows and offer substantial dividends [1] Group 1: High-Yielding Stocks in Financial Sector - Dynex Capital, Inc. (DX) has a dividend yield of 16.28%. UBS analyst Doug Harter maintained a Neutral rating and raised the price target from $12.5 to $13 on September 3, 2025, with an accuracy rate of 62%. Keefe, Bruyette & Woods analyst Bose George maintained an Outperform rating and increased the price target from $12.5 to $13 on July 10, 2025, with an accuracy rate of 71%. Recent quarterly results were mixed [7] - MFA Financial, Inc. (MFA) has a dividend yield of 14.24%. UBS analyst Douglas Harter maintained a Neutral rating and raised the price target from $10 to $10.5 on September 3, 2025, with an accuracy rate of 71%. JMP Securities analyst Mikhail Goberman maintained a Market Outperform rating but lowered the price target from $12 to $11 on July 17, 2025, with an accuracy rate of 77%. A dividend of 36 cents per share was announced on September 11, 2025 [7] - AGNC Investment Corp. (AGNC) has a dividend yield of 14.13%. UBS analyst Brock Vandervliet maintained a Neutral rating and increased the price target from $9.5 to $9.75 on September 3, 2025, with an accuracy rate of 67%. Keefe, Bruyette & Woods analyst Bose George maintained an Outperform rating and raised the price target from $9.5 to $10 on July 10, 2025, with an accuracy rate of 71%. A monthly common stock dividend of 12 cents per share was declared for September [7]

GLEN ALLEN, Va.--(BUSINESS WIRE)--Dynex Capital, Inc. announced today that the Company's Board of Directors has declared a cash dividend of $0.17 per share on its Common Stock (NYSE: DX) for September 2025. The Common dividend is payable on October 1, 2025, to shareholders of record as of September 22, 2025. The Company's Board also declared a quarterly cash dividend of $0.62752 per share of its Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock (NYSE: DXPRC) for the third qu. ...

Group 1 - The article focuses on Dynex Capital (NYSE: DX) from the perspective of preferred shareholders, providing insights into its performance and positioning within the mortgage REIT sector [1] - It highlights the preferred shares of Dynex Capital (NYSE: DX.PR.C) and places them in the context of the broader mREIT market, indicating the importance of understanding their relative performance [1] Group 2 - The article suggests exploring additional resources such as Systematic Income and their Income Portfolios, which are designed with yield and risk management in mind [1] - It also mentions the availability of Interactive Investor Tools for navigating various investment markets, including BDC, CEF, OEF, preferred, and baby bond markets [1]

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Core Viewpoint - Dynex Capital (DX) reported a Q2 2025 performance that was largely in line with expectations, with a minor book value (BV) outperformance of 1.6% and core earnings meeting projections. Strong capital raises and timely mortgage-backed securities (MBS) purchases helped mitigate early-quarter volatility [1][2][9]. Financial Performance - The quarterly BV for DX showed a modest decrease, consistent with expectations, amidst a volatile environment for agency mREIT stocks. The BV fluctuations were influenced by market conditions, including a spike in mortgage interest rates and U.S. Treasury yields in early April 2025 [2][3]. - DX's management aggressively raised capital during Q2 2025, increasing on-balance sheet MBS by 25% and off-balance sheet MBS by 33%, exceeding initial projections of 15% and 20% respectively [4][10]. - Core earnings/EAD for DX improved, driven by net interest income that matched expectations, although NDR income slightly underperformed. Operational expenses were largely in line with projections [6][9]. Market Conditions - The early part of Q2 2025 saw market volatility due to proposed tariff policies, which led to increased mortgage interest rates and margin calls for some agency mREIT peers. However, DX was insulated from significant margin calls due to its cash reserves and equity issuance [3][4]. - As market conditions stabilized in May 2025, driven by trade negotiations and reduced economic risks, both stock market and MBS pricing rebounded, contributing to DX's performance [3][4]. Risk and Valuation - DX's risk/performance rating remains at 3, reflecting the need to navigate various risks including spread/basis, leverage, and interest rate fluctuations. The company is projected to experience 1-2 basis point cuts in the Federal Funds Rate in the latter half of 2025 [8][16]. - The current valuation of DX is deemed appropriate, with a HOLD recommendation in place. The company is expected to maintain its dividend payout, although future sustainability will be closely monitored [22][21].

PART I [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated financial statements for Dynex Capital, Inc., showing total assets increased to **$11.3 billion** and a net loss of **$16.3 million** for Q2 2025 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$11.3 billion** by June 30, 2025, from **$8.2 billion** at year-end 2024, driven by mortgage-backed securities and repurchase agreements Consolidated Balance Sheet Highlights ($s in thousands) | Account | June 30, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$11,311,265** | **$8,184,579** | | Mortgage-backed securities, at fair value | $10,510,006 | $7,512,087 | | **Total Liabilities** | **$9,701,272** | **$6,999,643** | | Repurchase agreements | $8,600,143 | $6,563,120 | | **Total Shareholders' Equity** | **$1,609,993** | **$1,184,936** | [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) The company reported a **net loss of $13.6 million** for Q2 2025 and a **net loss to common shareholders of $21.3 million** for H1 2025, primarily due to derivative losses Key Income Statement Data ($s in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net interest income (expense) | $23,128 | $1,287 | $40,260 | $(1,904) | | Total other (loss) gains, net | $(24,441) | $(2,348) | $(32,532) | $52,264 | | Net (loss) income | $(13,606) | $(8,304) | $(16,682) | $31,815 | | Net (loss) income to common shareholders | $(16,286) | $(10,227) | $(21,285) | $27,968 | | Net (loss) income per common share-diluted | $(0.14) | $(0.15) | $(0.21) | $0.44 | [Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity) Shareholders' equity increased to **$1.61 billion** by June 30, 2025, driven by **$521.8 million** from common stock issuance, partially offset by net loss and dividends - For the six months ended June 30, 2025, the company issued **40.7 million shares**, raising **$521.8 million**[13](index=13&type=chunk) - Total dividends on common stock for the first six months of 2025 amounted to **$103.2 million**[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by financing activities was **$2.46 billion** for H1 2025, primarily funding **$2.41 billion** in investing activities and generating **$38.2 million** from operations Cash Flow Summary for Six Months Ended June 30 ($s in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $38,242 | $1,505 | | Net cash used in investing activities | $(2,413,422) | $(102,685) | | Net cash provided by financing activities | $2,459,478 | $272,579 | | **Net increase in cash** | **$84,298** | **$171,399** | [Notes to the Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Detailed notes reveal the company's structure as a mortgage REIT, with its Agency MBS portfolio growing to **$10.5 billion**, financed by **$8.6 billion** in repurchase agreements, and **$522 million** raised via ATM program - The company is an internally managed mortgage REIT that primarily invests on a leveraged basis in Agency mortgage-backed securities (Agency MBS) and to-be-announced securities (TBAs)[20](index=20&type=chunk) Mortgage-Backed Securities Portfolio ($s in thousands) | Date | Fair Value | Amortized Cost | | :--- | :--- | :--- | | June 30, 2025 | $10,510,006 | $10,743,650 | | Dec 31, 2024 | $7,512,087 | $7,912,848 | Repurchase Agreements Outstanding ($s in thousands) | Date | Balance | Weighted Average Rate | | :--- | :--- | :--- | | June 30, 2025 | $8,600,143 | 4.47% | | Dec 31, 2024 | $6,563,120 | 4.80% | - During the six months ended June 30, 2025, the company issued **40,712,768 shares** of common stock through its at-the-market (ATM) program, raising approximately **$522 million**[101](index=101&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses H1 2025 capital deployment of **$522 million** into Agency MBS, growing the portfolio to **$14.0 billion**, improving net interest income, but resulting in a comprehensive loss due to hedging activities [Executive Overview](index=27&type=section&id=Executive%20Overview) The company raised **$522 million** via its ATM program in H1 2025, deploying capital into Agency MBS to improve net interest and spread income amidst lower interest rates and market volatility - The company raised approximately **$522 million** of new capital through its ATM program during the six months ended June 30, 2025[112](index=112&type=chunk) - Net interest income and spread income have improved due to adding higher-yielding assets, reducing financing costs, and yield from the swap portfolio[112](index=112&type=chunk) Common Book Value Per Share Rollforward (Q2 2025) | Description | Per Common Share | | :--- | :--- | | Balance as of March 31, 2025 | $12.56 | | Comprehensive loss to common shareholders | - | | Net proceeds from stock issuance | - | | Common dividends declared | - | | **Balance as of June 30, 2025** | **$11.95** | [Financial Condition](index=30&type=section&id=Financial%20Condition) The investment portfolio, including TBAs, grew by **44%** to **$14.0 billion** by June 30, 2025, financed by increased repurchase agreements, with a weighted average market yield of **5.20%** - The investment portfolio (including TBAs) increased by approximately **44%** as of June 30, 2025, compared to December 31, 2024[124](index=124&type=chunk) - The company added approximately **$2.8 billion** of Agency RMBS and **$418 million** of Agency CMBS during the six months ended June 30, 2025[126](index=126&type=chunk) Total Agency RMBS Portfolio (including TBAs) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Par/Notional ($s in thousands) | $14,041,261 | $10,136,763 | | Estimated Duration (years) | 5.02 | 5.22 | | Market Yield | 5.20% | 5.49% | [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Q2 2025 net interest income improved to **$23.1 million**, but a **$58.1 million** derivative loss resulted in a comprehensive loss, while H1 2025 net interest income reached **$40.3 million** Quarterly Results Summary ($s in thousands) | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Net interest income | $23,128 | $17,133 | | Loss on derivative instruments, net | $(58,093) | $(118,088) | | Comprehensive (loss) income to common shareholders | $(12,222) | $14,391 | Semi-Annual Net Interest Income Comparison ($s in thousands) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net interest income (expense) | $40,260 | $(1,904) | | Average Repurchase Financing Cost | 4.50% | 5.49% | Non-GAAP EAD per Common Share | Period | EAD per common share | | :--- | :--- | | Q2 2025 | $0.22 | | Q1 2025 | $0.21 | [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Total liquidity reached **$891 million** by June 30, 2025, comprising cash and unencumbered Agency MBS, with leverage at **8.3 times** shareholders' equity, supporting the company's REIT dividend policy - Total liquidity as of June 30, 2025, was approximately **$891 million**, consisting of **$388 million** in unrestricted cash and **$499 million** in unencumbered Agency MBS[174](index=174&type=chunk) - Leverage, including the cost basis of TBA long positions, was **8.3 times** shareholders' equity as of June 30, 2025; leverage based solely on repurchase agreements was **5.3 times**[176](index=176&type=chunk)[177](index=177&type=chunk) - As a REIT, the company is required to distribute at least **90%** of its REIT taxable income to shareholders annually[186](index=186&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages interest rate risk with hedging instruments but not spread risk, providing sensitivity analyses for interest rate shifts and market spread changes on its portfolio and common equity Interest Rate Sensitivity Analysis (Parallel Shift) as of June 30, 2025 | Rate Change | Total % Change in Market Value | Total % Change in Common Equity | | :--- | :--- | :--- | | +100 bps | (0.8)% | (7.8)% | | +50 bps | (0.3)% | (2.5)% | | -50 bps | (0.1)% | (1.3)% | | -100 bps | (0.8)% | (8.0)% | Market Spread Sensitivity Analysis as of June 30, 2025 | Spread Change | % Change in Market Value of Investments | % Change in Common Equity | | :--- | :--- | :--- | | +20/+50 bps | (1.1)% | (10.2)% | | +10 bps | (0.5)% | (5.1)% | | -10 bps | 0.5% | 5.1% | | -20/-50 bps | 1.1% | 10.2% | [Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[221](index=221&type=chunk) - No material changes were made to internal control over financial reporting during the three months ended June 30, 2025[222](index=222&type=chunk) PART II [Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no pending or threatened legal proceedings expected to materially adversely affect its financial condition or results of operations - To the Company's knowledge, there are no pending or threatened legal proceedings which could have a material adverse effect on the Company[223](index=223&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred regarding the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - There have been no material changes from the risk factors discussed in the 2024 Form 10-K[224](index=224&type=chunk) [Unregistered Sale of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sale%20of%20Equity%20and%20Use%20of%20Proceeds) The company has an authorized share repurchase program for up to **$100 million** common stock and **$50 million** preferred stock, but no repurchases occurred in Q2 2025 - The company did not repurchase any shares of its common stock or Series C Preferred Stock during the three months ended June 30, 2025[226](index=226&type=chunk) [Other Information](index=48&type=section&id=Item%205.%20Other%20Information) No directors or Section 16 officers adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No directors or Section 16 officers adopted or terminated any Rule 10b5-1 trading arrangements during Q2 2025[229](index=229&type=chunk) [Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, securities descriptions, compensatory plans, and Sarbanes-Oxley certifications