ARR - Armour Residential Preferred C: Durable 8.33% Yield With 19% Upside To Better Times

2024-01-31 17:27:02 ET

Summary

• High coupon fixed-rate preferreds offer the potential for higher returns in a changing economic environment.
• Armour Residential Inc.'s 7.0% Series C Cumulative Redeemable Preferred is a test sample for these potential returns.
• The preferred shares have a current yield of 8.33% and may see capital appreciation if interest rates decrease.

We yesterday produced a report that dissected the different results we might expect from an investment in fixed to floating mREIT preferreds that were contrastingly indexed to short and long-term interest rates. Circumventing fixed to floating, we want to examine the potentials of high coupon fixed-rate preferreds in a changing economic environment. With the risk that interest rates could decline significantly, a high, fixed coupon preferred could meaningfully outperform a floating rate coupon. Armour Residential Inc.’s 7.0% Series C Cumulative Redeemable Preferred ( ARR.PR.C ) is today’s test sample....

For further details see: