Financial Performance - Total economic return of $0.33 per common share, representing 2.6% of beginning book value, with dividends declared of $0.47 per common share and a decline in book value of $(0.14) per common share[5] - Comprehensive income of $0.16 per common share, while net loss was $(0.06) per common share for the first quarter of 2025[8] - Book value per common share decreased to $12.56 as of March 31, 2025, down from $12.70 as of December 31, 2024[7] Capital and Liquidity - Raised equity capital of $240 million through at-the-market common stock issuances, net of issuance costs[5] - Liquidity position stood at $790 million as of March 31, 2025[5] Assets and Liabilities - Total assets increased to $9.04 billion as of March 31, 2025, compared to $8.18 billion as of December 31, 2024[7] - Total liabilities increased to $7.65 billion as of March 31, 2025, up from $6.99 billion as of December 31, 2024[7] Interest Income and Expenses - Net interest income rose to $17.13 million for the first quarter of 2025, compared to $6.89 million in the previous quarter[8] - For Q1 2025, total interest income increased to $95,059,000 from $88,496,000 in Q4 2024, representing an increase of 1.77%[12] - The net interest income for Q1 2025 was $17,133,000, up from $6,887,000 in Q4 2024, indicating a significant increase of 148.5%[23] - Economic net interest income rose to $27,984,000 in Q1 2025, compared to $18,813,000 in Q4 2024, reflecting a growth of 48.5%[23] - The economic net interest spread improved to 0.79% in Q1 2025 from 0.41% in Q4 2024[23] Investment Activities - The company purchased $895 million in Agency RMBS and $55 million in Agency CMBS during the quarter[5] - The average balance of Agency RMBS increased to $7,726,081,000 in Q1 2025 from $7,181,923,000 in Q4 2024, a rise of 7.6%[12] - The effective yield on Agency RMBS improved to 4.66% in Q1 2025 from 4.59% in Q4 2024[12] Derivatives and Risk Management - The company experienced a net loss on derivatives of $118,088,000 in Q1 2025, compared to a gain of $276,670,000 in Q4 2024[15] - The company reported a net periodic interest from interest rate swaps of $10,851,000 in Q1 2025, slightly down from $11,926,000 in Q4 2024[23] - The projected amortization of net deferred tax hedge gains is estimated at $100,144,000 for fiscal year 2025, including $24.9 million for Q1 2025[17] Shareholder Information - The weighted average common shares increased to 90,492,327 in Q1 2025 from 81,145,733 in Q4 2024[23] Company Strategy and Environment - Dynex Capital, Inc. focuses on ethical stewardship of stakeholders' capital and employs comprehensive risk management strategies[28] - The company operates as a REIT and is internally managed to maximize stakeholder alignment[28] - The performance of the investment portfolio is influenced by cash flow, prepayment rates, and credit performance[26] - Changes in Federal Reserve policies regarding Agency RMBS, Agency CMBS, and U.S. Treasuries significantly impact market conditions and asset prices[26] - The company faces risks related to the cost and availability of financing, including potential changes in regulations affecting financial institutions[26] - Increased competition and changes in government regulations are key factors affecting the company's business environment[26] - The company is exposed to risks from defaults by borrowers on loans underlying MBS[26] - There is uncertainty regarding continued government support of the U.S. financial system and housing markets[26] - The company emphasizes the importance of the quality of performance from third-party service providers for critical operations[26] - Forward-looking statements are subject to various risks and uncertainties, and the company undertakes no obligation to update them[27]

Core Insights - Albert Anthony is a Croatian-American media personality who has gained over 1,000 followers on investor platforms since 2023, focusing on markets and stocks [1] - He is set to launch a new book titled "Financial Markets: Growing A Dividend Income Portfolio" in 2025, coinciding with an ongoing series of articles on the same topic [1] - Albert Anthony has a background in management and information systems, having worked in a top-10 financial firm's IT department [1] Company Overview - Albert Anthony & Co. is a sole proprietorship registered in Austin, Texas, and is wholly owned by Albert Anthony [1] - The company does not provide personalized financial advisory services but offers general market commentary based on publicly available data [1] Investment Focus - Albert Anthony has launched the Future Investor Fund, which aims to build a dividend portfolio [1] - The brand emphasizes a home-based investment approach, utilizing the founder's own capital [1]

Investment Portfolio - As of December 31, 2024, the majority of the company's investments were Agency-issued pass-through RMBS, primarily backed by fixed-rate single-family mortgage loans [22]. - The company's CMBS investments comprised less than 1% of the investment portfolio as of December 31, 2024, and are backed by multifamily housing loans [24]. - The company’s investment policy limits investment in non-Agency MBS rated BBB+ or lower to 10% of total shareholders' equity [32]. Leverage and Hedging - The company employs leverage to enhance returns, primarily through repurchase agreements, with original terms to maturity ranging from overnight to six months [27]. - As of December 31, 2024, the company did not have more than 10% of equity at risk with any of its repurchase agreement counterparties [28]. - The company’s hedging strategy is dynamic, adjusting based on assessments of U.S. and global economic conditions and monetary policies [30]. Human Capital - The company had 22 full and part-time employees as of December 31, 2024, with an average tenure of 10.8 years and a voluntary turnover rate of 4% over the past three years [41]. - The company’s human capital strategy focuses on creating a supportive and equitable culture to attract and retain skilled employees [40]. Regulatory Compliance - The company’s business model may be impacted by changes in regulatory requirements, including those related to REIT qualifications and the 1940 Act [36]. - The company must derive at least 75% of its gross income from real estate-related sources to maintain its REIT status [52]. - The company is required to distribute at least 90% of its REIT taxable income to retain its REIT status [46]. - The company must have more than 100 shareholders and not have more than 50% of its shares owned by five or fewer persons to maintain its REIT status [57]. - The company operates under the exemption provided under Section 3(c)(5)(C) of the Investment Company Act of 1940, requiring at least 55% of its assets to be mortgage loans and at least 80% to be real estate-related [58]. Financial Performance - The estimated REIT taxable income for the year ended December 31, 2024, is $96.3 million, which includes $99.9 million related to the amortization of net deferred tax hedge gains [47]. - The total dividends declared for tax purposes for the year ended December 31, 2024, is $1.58 per share, with common dividends declared at $1.60 per share [50]. - The projected amortization of net deferred tax hedge gains to be recognized as taxable income totals $719.038 million over the periods indicated, with $100.144 million for fiscal year 2025 [49]. - As of December 31, 2024, the company has $557.9 million of capital loss carryforwards, all of which will expire by December 31, 2027, or December 31, 2028 [49]. - The company declared common dividends of $1.27707 as ordinary income and $0.30293 as return of capital for the year ended December 31, 2024 [50]. Market Competition - The company reported that competition in the market may reduce the available supply of investments and negatively impact income from these investments [45].

Core Viewpoint - The Zacks REIT and Equity Trust industry is currently facing challenges due to volatile mortgage rates, but companies like Annaly Capital Management, AG Mortgage Investment Trust, and Dynex Capital are well-positioned to navigate these conditions [1][2]. Industry Overview - The Zacks REIT and Equity Trust industry consists of mortgage REITs (mREITs) that invest in and originate mortgages and mortgage-backed securities (MBS), focusing on either residential or commercial mortgage markets [3]. - Agency securities, backed by the federal government, are considered safer investments, limiting credit risks for mREITs [4]. Current Trends - Mortgage rates have been volatile, but a gradual decline is expected, which may lead to increased loan demand [5]. - The economy remains stable, suggesting that mortgage originations will improve, albeit at a slower pace than previously anticipated [6]. - The industry is experiencing dividend cuts due to eroding book values, high interest rates, and widening spreads between Agency MBS and treasury rates [7][8]. Financial Performance - The Zacks REIT and Equity Trust industry has underperformed compared to the broader Zacks Finance sector and the S&P 500, with a gain of 13.3% over the past year versus 29.6% for the sector and 25.2% for the S&P [13]. - The industry's current price-to-book (P/BV) ratio is 0.96X, significantly lower than the S&P 500's 8.88X, indicating a solid discount compared to the broader finance sector's P/BV of 4.18X [14][15]. Company Highlights - **Annaly Capital Management (NLY)**: Focuses on prudent asset selection and capital allocation, with a portfolio valued at $98.2 billion as of December 31, 2024. The company's 2025 earnings have been revised upward by 9.2% to $2.81 per share, indicating a year-over-year rise of 4.1% [16][19]. - **AG Mortgage Investment Trust (MITT)**: Invests in residential mortgage assets and has committed to acquiring $200 million in home equity loans, tapping into a $2 trillion market. Its 2025 earnings outlook has been revised downward by 3.2% to 89 cents per share, but it still indicates a year-over-year surge of 106.9% [20][21][22]. - **Dynex Capital (DX)**: Engages in mortgage and consumer finance, with a focus on multi-family and manufactured home loans. The company's 2025 earnings outlook has been revised upward by 3.7% to $1.87 per share, reflecting a year-over-year rise of 654.3% [23][26].

Industry Overview - The Zacks REIT and Equity Trust industry includes mortgage REITs (mREITs) that invest in and originate mortgages and mortgage-backed securities (MBS), providing mortgage credit for homeowners and businesses [3] - The industry is currently facing challenges due to volatile mortgage rates and high interest rates, which are affecting valuations and operational performance [6][7] Current Market Conditions - Recent volatility in mortgage rates has led to a decrease in loan demand, although there are signs of improvement in purchase applications [4] - The Federal Reserve's interest rate cuts are expected to gradually lower mortgage rates, which may increase loan demand over time [1][5] Financial Performance - The Zacks REIT and Equity Trust industry has underperformed compared to the broader Zacks Finance sector and the S&P 500, gaining only 13.3% over the past year compared to 29.6% and 25.2% respectively [13] - The industry's current-year earnings estimate has decreased by 16% over the last year, indicating a negative earnings outlook [11] Valuation Metrics - The industry is currently trading at a trailing 12-month price-to-book (P/BV) ratio of 0.96X, significantly lower than the S&P 500's 8.88X [15] - Compared to the broader Zacks Finance sector, which has a P/BV of 4.18X, the REIT and Equity Trust industry is trading at a substantial discount [17] Company Highlights Annaly Capital Management, Inc. (NLY) - NLY's investment strategy focuses on traditional Agency MBSs and aims to enhance returns through non-agency and credit-focused asset classes [19] - The company has a market capitalization of $11.6 billion and a Zacks Rank of 1 (Strong Buy) with a projected 2025 earnings of $2.81 per share, reflecting a year-over-year rise of 4.1% [21] AG Mortgage Investment Trust, Inc. (MITT) - MITT invests in residential mortgage assets and has recently acquired approximately $150 million in home equity loans, with plans for an additional $200 million [23] - The company has a market capitalization of $1.26 billion and a Zacks Rank of 3 (Hold), with a projected 2025 earnings of 89 cents per share, indicating a year-over-year surge of 106.9% [24] Dynex Capital, Inc. (DX) - DX focuses on originating mortgage loans secured by multi-family properties and has expanded into commercial real estate loans [26] - The company has a market capitalization of $1.06 billion and a Zacks Rank of 2 (Buy), with a projected 2025 earnings of $1.87 per share, indicating a year-over-year rise of 654.3% [29]

Group 1 - HDO is the largest community of income investors and retirees with over 6800 members, focusing on generating strong returns regardless of market volatility [1] - The Income Method simplifies retirement investing, making it less stressful and straightforward [1] - The service offers features such as model portfolios, buy/sell alerts, and regular market updates, emphasizing community and education [2] Group 2 - The service philosophy is built on the belief that nobody should invest alone, promoting an active and vibrant community [2] - Recommendations and positions are closely monitored, with exclusive Buy and Sell alerts for members [4]

Group 1 - The article discusses the preferred stock and baby bond market activity, providing both bottom-up insights on individual news and events and top-down analysis of the broader market [1] - It highlights the importance of yield and risk management considerations in the Income Portfolios offered by the company [1] - The article encourages the use of Interactive Investor Tools to navigate various markets including BDC, CEF, OEF, preferred, and baby bonds [1] Group 2 - The company offers Investor Guides for CEFs, Preferreds, and PIMCO CEFs to assist investors [2] - A promotional offer for a 2-week free trial is available, allowing potential investors to explore services without risk [2]

Group 1 - Dynex Capital, Inc. (NYSE: DX) has been frequently analyzed, indicating a preference for an active investment approach rather than a passive one [1] - Previous analysis suggested that Dynex would benefit from elevated interest rates and a de-risked portfolio [1]

Financial Data and Key Metrics Changes - Book value ended the quarter at $12.70 per share, with an economic return of 1% for the quarter and 7.4% for the year [18] - Common equity capital grew to over $1 billion, with a year-over-year growth of over 40% [12] - The company raised $64 million in new capital during the fourth quarter [21] Business Line Data and Key Metrics Changes - Interest income increased from the third quarter due to the addition of higher-yielding assets [18] - The leverage ratio increased from 7.6% to 7.9% during the quarter as the company bought $900 million in 30-year mortgage-backed securities [31] Market Data and Key Metrics Changes - The investment environment remains favorable, with nominal spreads on agency RMBS in the range of 135 to 140 basis points over seven-year treasuries and 175 to 185 over swaps [35] - The company expects net issuance in 2025 to remain modest in the $200 billion to $250 billion range [36] Company Strategy and Development Direction - The company is focused on delivering value at the intersection of capital markets and housing finance, with a strategy to leverage expertise in residential real estate mortgage markets [7][46] - The management team emphasizes proactive engagement and flexibility to navigate policy changes [45] Management's Comments on Operating Environment and Future Outlook - Management noted that the macroeconomic landscape is evolving quickly, with expectations for a wider distribution of rates and potential volatility [33] - The company is preparing for GSE reform discussions, which could create opportunities for capital deployment [28] Other Important Information - The company has added three new Board members with strong skill sets across technology, risk, asset management, and strategy [12] - The management team is co-invested alongside shareholders, reinforcing their commitment to delivering value [46] Q&A Session Summary Question: Drivers of the shift from treasury futures to swaps - The shift was driven by swap spreads reaching levels that compensate for potential fiscal issuance, adding 200 to 300 basis points to marginal ROE [51] Question: Update on book value - Book value has remained essentially flat since the end of the quarter [55] Question: Strategy for growing the capital base in 2025 - The strategy is predicated on the investment environment, focusing on capital deployment when ROEs exceed long-term dividend levels [59] Question: MBS market pricing in GSE reform - The MBS market currently prices in a small percentage risk of meaningful changes, with spreads remaining tight historically [69] Question: Shift in hedge portfolio and future expectations - The hedge portfolio is currently positioned as desired, with no immediate plans to shift further into swaps [77] Question: Prepayment environment and risks - The company is focused on security selection to avoid segments that are highly refinanceable, which could impact spreads [93] Question: Implications of new FHFA director on GSEs - The ideological biases suggest a smaller footprint for GSEs, potentially increasing private label issuance [100]

Financial Data and Key Metrics Changes - The book value at the end of Q4 was reported at $12.70 per share, with an economic return of 1% for the quarter and 7.4% for the year [13] - The common equity capital grew to over $1,000,000,000, reflecting a year-over-year growth of over 40% [10] - The leverage increased from 7.6% to 7.9% during Q4 as new pools and TBAs were added [21] Business Line Data and Key Metrics Changes - Interest income increased due to the addition of higher-yielding assets, while older lower-yielding assets continued to pay down [14] - The company raised $64,000,000 in new capital during Q4, maintaining ample liquidity to deploy into higher yield markets [15] Market Data and Key Metrics Changes - The investment environment remains favorable, with mortgage spreads in the range of 130 to 140 basis points over 7-year treasuries and 175 to 185 over swaps [26] - The company noted that bond fund flows have been positive at higher yields, which could accelerate given the sizable holdings in money market funds [26] Company Strategy and Development Direction - The company is focused on delivering value at the intersection of capital markets and housing finance, with a strong emphasis on agency-backed single-family residential MBS [5] - The management team is committed to proactive engagement with policymakers to navigate the evolving policy environment [32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver dividends driven by current and future returns, emphasizing the importance of scale and disciplined capital deployment [33] - The macroeconomic landscape is evolving, with expectations of a wider distribution of rates and potential volatility due to government policy changes [23] Other Important Information - The company has generated the leading total shareholder return among agency-focused mortgage REITs over 1, 3, and 5 years, even during challenging market conditions [11] - The management team has been actively engaged with Washington to monitor developments related to GSE reform and its implications for housing finance [20] Q&A Session Summary Question: Can you walk through the drivers of the shift from treasury futures to swaps this quarter and any impact that has on spreads? - The shift was driven by swap spreads reaching levels that compensate for potential fiscal issuance, with an expected addition of 200 to 300 basis points of marginal ROE from this change [37][38] Question: Can we get an update on book value quarter to date, any big changes? - The book value has remained essentially flat since the end of the quarter [39] Question: Can you talk about your strategy for continuing to grow the capital base in 2025? - The strategy is predicated on the investment environment, focusing on accretive capital deployment when ROEs exceed long-term dividend levels [43] Question: How do you think the MBS market is currently pricing in the potential for GSE reform? - The MBS market appears to be pricing in a small percentage risk of meaningful changes, with spreads currently reflecting a low probability of significant shifts [46] Question: If we see swap spreads stay around current levels, would you expect that shift to continue to move more into swaps? - The hedge portfolio is currently positioned as desired given the market environment, with no immediate plans for further shifts [53] Question: How do you still price in the risk to spreads related to short-term rallies and rates? - The company is preparing for segments of the market that are less refinanceable, focusing on security selection to mitigate risks [67] Question: With the new FHFA Director, where do you see the origination footprint of the GSEs moving? - It is difficult to predict, but a smaller footprint and increased private label issuance are logical expectations based on ideological biases [72]