CMO - Capstead Mortgage: 11% Dividend Yield Dividend Appears Safe Despite Likelihood Of Earnings Dip

• Earnings will likely decline this year because of a cooling down of the mortgage market, which will affect the supply of adjustable-rate mortgage securities.
• The yield will likely face pressure due to elevated prepayment speed and resetting of coupons.
• Despite the expected earnings decline, the dividend appears safe because the implied payout ratio is still below the historical average.
• The year-end target price suggests a limited upside from the current market price.

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