24/7 Wall St. Quick Read SDIV’s 9.7% yield relies on mortgage REITs with payout ratios exceeding 200% and monthly dividends that have dropped 25% since early 2023. Top holdings like AGNC and IVR distribute multiples of their earnings. This practice cannot continue indefinitely. JEPI offers an 8.2% yield through covered calls on quality U.S. stocks with sustainable payout ratios like Broadcom’s 61%. If you’re thinking about retiring or know someone who is, there are three quick questions causing ma ...

Core Insights - The article emphasizes the importance of value investing, which focuses on identifying undervalued companies in the market [2] - Invesco Mortgage Capital (IVR) is highlighted as a strong value stock, currently holding a Zacks Rank of 2 (Buy) and an A for Value [4][8] Valuation Metrics - IVR has a Forward P/E ratio of 3.7, significantly lower than the industry's average of 7.95, indicating potential undervaluation [4] - The company's P/B ratio stands at 0.9, compared to the industry's average of 0.94, suggesting a solid valuation relative to its book value [5] - IVR's P/S ratio is 1.88, which is lower than the industry's average of 2.07, reinforcing the notion of undervaluation [6] - The P/CF ratio for IVR is 15.61, which is attractive compared to the industry's average of 17.51, indicating a favorable cash flow outlook [7] Investment Outlook - The combination of these valuation metrics suggests that Invesco Mortgage Capital is likely undervalued at present, making it an appealing option for value investors [8]

Group 1 - The article discusses the investment strategy of purchasing shares in Invesco Mortgage Capital Inc. (IVR) due to its high expected return on equity (ROE) and its current discount to book value [2] - IVR has been identified as a historically poor performer, yet the current market conditions present a potential opportunity for investors [2] - The Trade With Beta team, which has extensive experience in preferred stocks and baby bonds, provides insights and analysis on various fixed-income instruments, including regular reviews and investment picks [1] Group 2 - The Trade With Beta service includes features such as frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of over 1200 equities, IPO previews, and hedging strategies [2] - The team is led by an experienced trader with over 15 years in day trading and a group of 40 analysts focused on identifying mispriced investments [2]

Investment Portfolio - As of September 30, 2025, the company was invested in residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS), among other mortgage-related assets[118]. - As of September 30, 2025, the total investment portfolio was $5,749,238, a decrease of 2.1% from $5,873,696 as of September 30, 2024[134]. - The holdings of 30-year fixed-rate Agency RMBS represented 83% of the total investment portfolio, consistent with the previous quarter but down from 87% a year ago[134]. - The holdings of Agency CMBS represented approximately 16% of the total investment portfolio as of September 30, 2025, up from 11% a year ago[137]. - The company purchased $2.0 billion in MBS during the nine months ended September 30, 2025, compared to $1.9 billion in the same period of 2024[229]. Financial Performance - Net interest income for the three months ended September 30, 2025, was $17,614, an increase of 134.0% compared to $7,510 for the same period in 2024[156]. - The net income attributable to common stockholders for the three months ended September 30, 2025, was $50,208, up 42.4% from $35,271 in the same period of 2024[156]. - For the three months ended September 30, 2025, net income attributable to common stockholders was $50.2 million, an increase from $35.3 million in the same period of 2024, resulting in a basic and diluted net income per share of $0.74 compared to $0.63 per share in 2024[194]. - For the nine months ended September 30, 2025, net income attributable to common stockholders was $39.9 million, slightly down from $40.2 million in 2024, with a basic and diluted net income per share of $0.61 compared to $0.78 per share in 2024[195]. - Earnings available for distribution for Q3 2025 increased slightly to $39,026,000 compared to $38,345,000 in Q3 2024, reflecting a 1.8% increase[208]. Interest Rates and Economic Indicators - The effective Federal Funds rate decreased to 4.09% as of September 30, 2025, down from 4.33% at the end of the previous quarter, reflecting a 0.24% decline[129]. - The yield on the two-year Treasury fell to 3.60%, a decrease of 12 basis points from the previous quarter, while the ten-year yield decreased by 8 basis points to 4.15%[126]. - Inflation continued to exceed the Federal Reserve's 2% target, with the headline consumer price index (CPI) rising 2.9% year-over-year in August 2025[124]. - The average unemployment rate increased slightly to 4.3% in August 2025, up from 4.1% in June 2025[124]. Borrowings and Funding - The average balance of collateralized borrowings under repurchase agreements for the quarter ended September 30, 2025, was $4,889,782[141]. - Total average borrowings decreased by $114.7 million to $4,889,782 thousand for the three months ended September 30, 2025, but increased by $238.7 million to $4,799,047 thousand for the nine months ended September 30, 2025 compared to the same periods in 2024[168]. - Average cost of funds decreased by 78 basis points to 4.52% for the three months ended September 30, 2025, and by 95 basis points to 4.53% for the nine months ended September 30, 2025 compared to the same periods in 2024[169]. Derivative Instruments and Gains/Losses - The company recorded net losses on derivative instruments of $9.2 million for the three months ended September 30, 2025, compared to net losses of $127.3 million in the same period of 2024[194]. - The company recorded a realized loss on derivative instruments of $49,189,000 for Q3 2025, compared to a loss of $172,797,000 in Q3 2024, indicating an improvement[206]. - The company recognized net losses of $8.6 million on futures contracts for the three months ended September 30, 2025, and $55.0 million for the nine months ended September 30, 2025[188]. - The company recorded net gains of $2.6 million on TBAs during the nine months ended September 30, 2025, compared to net gains of $1.6 million in the same period of 2024[189]. Shareholder Activities - The company sold 4,638,385 shares of common stock during the three months ended September 30, 2025, generating cash proceeds of $36,145 after fees[148]. - The company did not repurchase any shares of common stock during the nine months ended September 30, 2025[149]. - The company repurchased and retired 89,223 shares of Series C Preferred Stock during the three months ended September 30, 2025[192]. Expenses and Management Fees - Management fees incurred were $2.7 million for the three months ended September 30, 2025, compared to $2.9 million in the same period of 2024[190]. - General and administrative expenses not covered under the management agreement amounted to $1.8 million for the three months ended September 30, 2025, consistent with the same period in 2024[191]. - Total expenses for the three months ended September 30, 2025, were $4,465,000, a slight decrease from $4,693,000 for the same period in 2024[173]. Liquidity and Cash Flow - The company believes it has sufficient liquidity and capital resources for ongoing commitments and potential investments, ensuring continued qualification as a REIT[226]. - As of September 30, 2025, the company held cash, cash equivalents, and restricted cash of $180.7 million, an increase from $168.5 million as of September 30, 2024[228]. - Operating activities provided net cash of approximately $97.3 million for the nine months ended September 30, 2025, compared to $121.3 million for the same period in 2024, reflecting a decrease of 19.8%[228]. - Financing activities provided net cash of $245.1 million for the nine months ended September 30, 2025, down from $747.3 million in the previous year[230].

Group 1 - The article does not provide any specific content related to a company or industry [1]

Financial Data and Key Metrics Changes - The book value per common share increased by 4.5% to $8.41 at quarter end, resulting in a positive economic return of 8.7% for the quarter [9][23] - The debt-to-equity ratio slightly increased to 6.7% from 6.5%, as the company reduced the percentage of preferred stock in its capital structure [10] - The investment portfolio totaled $5.7 billion, consisting of $4.8 billion in agency mortgages and $0.9 billion in agency CMBS [10] Business Line Data and Key Metrics Changes - The agency RMBS portfolio increased by 13% quarter over quarter, with a focus on 4.5% versus 5.5% coupons [18] - Higher coupon specified pool payouts improved during the quarter, reflecting increased investor demand for prepayment protection [17] - Agency CMBS risk premiums declined quarter over quarter, indicating increased investor demand [8] Market Data and Key Metrics Changes - The yield curve steepened, with two-year Treasury yields falling 11 basis points while 30-year yields were down just four basis points [12] - Interest rates declined across the Treasury yield curve, with a notable decrease in interest rate volatility [7][14] - The average unemployment rate increased to 4.3% in August, while inflation measures remained above the Federal Reserve's target [6] Company Strategy and Development Direction - The company remains constructive on agency mortgages, expecting investor demand to broaden due to lower interest rate volatility and attractive valuations [11] - The focus on improving the capital structure and reducing the cost of capital continues, with a commitment to maximizing shareholder returns [24] - The company is monitoring the agency CMBS sector for opportunities to increase allocation as relative value becomes attractive [20] Management's Comments on Operating Environment and Future Outlook - Management views near-term risks as balanced, with expectations for further easing of monetary policy to support agency mortgages in the long term [24] - The company anticipates that changes to bank regulatory capital rules will increase investor demand for agency mortgages and agency CMBS [11] - The economic environment is characterized by strong corporate earnings and improved growth, despite persistent inflation [5][6] Other Important Information - The company raised $36 million by issuing common stock through its ATM program, maintaining a disciplined approach to benefit existing shareholders [10] - The company retained a sizable balance of unrestricted cash and unencumbered investments totaling $423 million [10] Q&A Session Summary Question: Changes in hedge portfolio and net duration exposure - Management indicated a slight reduction in steepener positions and a preference for moving hedges into the front end of the curve, with model duration running slightly long [26][27] Question: Returns on marginal capital deployment relative to dividend level - Levered gross returns were in the upper teens, with net returns in the mid-teens, consistent with the dividend to book yield [30][31] Question: Appetite for changing capital structure with buybacks and common issuance - Management noted that preferred buybacks had minimal impact on capital structure, and they are currently not buying back shares but will consider it if conditions are favorable [35][36] Question: Relative value between agency CMBS and agency RMBS - Agency RMBS continues to provide a more attractive return on equity compared to agency CMBS, which is more aligned with lower coupon agency RMBS [37]

Third Quarter 2025 Earnings Call Invesco Mortgage Capital Inc. October 31, 2025 John Anzalone Kevin Collins Mark Gregson David Lyle Brian Norris Chief Executive Officer President Chief Financial Officer Chief Operating Officer Chief Investment Officer Cautionary Notice Regarding Forward-Looking Statements This presentation and comments made in the associated conference call, may include statements and information that constitute "forward-looking statements" within the meaning of the U.S. securities laws as ...

Financial Performance - Net income per common share was $0.74, a significant improvement from a net loss of $0.40 in Q2 2025[8]. - For the three months ended September 30, 2025, the company reported net income of $53.471 million, a significant increase compared to a net loss of $23.327 million in the previous quarter[29]. - Net income attributable to common stockholders for Q3 2025 was $50,208, compared to a loss of $26,567 in Q2 2025 and a profit of $35,271 in Q3 2024[42]. - The comprehensive income for the three months ended September 30, 2025, was $53.471 million, reflecting the company's overall financial performance[31]. Investment and Assets - The investment portfolio totaled $5.7 billion, consisting of $4.8 billion in Agency RMBS and $0.9 billion in Agency CMBS[4]. - Total assets as of September 30, 2025, amounted to $5.961 billion, an increase from $5.688 billion at the end of 2024[34]. - Average earning assets rose to $5,382.2 million in Q3 2025, up from $5,078.9 million in Q2 2025[10]. Income and Expenses - Total interest income for Q3 2025 was $72.9 million, an increase from $70.6 million in Q2 2025[10]. - Interest income for the same period was $72.916 million, while interest expense was $55.302 million, resulting in net interest income of $17.614 million[29]. - Total interest expense for Q3 2025 was $55,302, with an effective interest expense of $26,164, resulting in an effective cost of funds of 2.14%[49]. - Total expenses for Q3 2025 were $4,465, slightly down from $4,693 in Q3 2024[45]. Dividends and Shareholder Returns - The common stock dividend remained unchanged at $0.34 per share, consistent with Q2 2025[8][20]. - The company distributed dividends to preferred stockholders totaling $3.261 million for the three months ended September 30, 2025[31]. - Earnings available for distribution per common share decreased to $0.58 in Q3 2025 from $0.68 in Q3 2024, while basic income per common share increased to $0.74 from $0.63[42]. Debt and Leverage - The debt-to-equity ratio increased slightly to 6.7x from 6.5x in Q2 2025[4][10]. - The company maintained a debt-to-equity ratio, which is a critical measure for assessing financial leverage and risk[36]. - The debt-to-equity ratio as of September 30, 2025, was 6.7, up from 6.5 as of June 30, 2025[54]. Share Transactions - The Company sold 4,638,385 shares of common stock for net cash proceeds of $36.1 million during Q3 2025[21]. - The company repurchased 89,223 shares of Series C Preferred Stock for a total cost of $2.2 million during the three months ended September 30, 2025[22]. Economic Returns - Economic return for Q3 2025 was 8.7%, compared to a negative return of (4.8)% in Q2 2025[6][8]. - Effective net interest income for Q3 2025 was $46,752, with an effective interest rate margin of 3.28%[51]. Gains and Losses - The company experienced a gain on investments of $49.540 million, contrasting with a loss of $5.268 million in the previous quarter[29]. - Realized loss on derivative instruments for Q3 2025 was $49,189, compared to a loss of $172,797 in Q3 2024[43]. Future Projections - As of October 24, 2025, estimated book value per common share is projected to be between $8.31 and $8.65[4].

Core Points - Invesco Mortgage Capital Inc. will announce its third quarter 2025 results on October 30, 2025, after market close [1] - A conference call to discuss the results will take place on October 31, 2025, at 9:00 a.m. ET, featuring key executives [1] - The company is a real estate investment trust focusing on mortgage-backed securities and related assets, managed by Invesco Advisers, Inc. [3] Company Information - Invesco Mortgage Capital Inc. is externally managed and advised by Invesco Advisers, Inc., a wholly-owned subsidiary of Invesco Ltd. [3] - The company has a cash dividend of $0.34 per share declared by its Board of Directors [6]

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