Invesco Mortgage Capital (IVR): Revisiting Valuation After Its New Higher, Monthly Dividend Policy
Invesco Mortgage Capital (IVR) just gave income investors something new to chew on, raising its common stock dividend to 0.36 dollars a share and shifting from quarterly to monthly payouts starting January.
See our latest analysis for Invesco Mortgage Capital.
The market seems to like this move already, with a 1 month share price return of just over 16 percent feeding into a roughly 27 percent 1 year total shareholder return. However, the 5 year total shareholder return still sits deeply negative, so momentum looks to be rebuilding rather than fully repaired.
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Yet despite stronger earnings growth and a richer dividend stream, IVR still trades below analysts’ price targets. This raises a key question for investors: is this a mispriced turnaround, or are markets already baking in future gains?
Most Popular Narrative: 12.7% Overvalued
With Invesco Mortgage Capital last closing at 8.83 dollars versus a narrative fair value near 7.83 dollars, the story assumes powerful earnings and margin tailwinds ahead.
The focus on higher coupon Agency RMBS and increased allocation to Agency CMBS is designed to leverage declining interest rate volatility and capitalize on attractive valuations. This strategic positioning is anticipated to positively impact revenue growth by optimizing portfolio returns.
Want to see what kind of revenue surge and margin makeover this narrative is baking in, and how that transforms future earnings power and valuation multiples? Read the full story to unpack the bolder assumptions behind that seemingly modest fair value gap.
Result: Fair Value of $7.83 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, persistent interest rate volatility and a higher debt burden could squeeze margins, undermining both the bullish earnings ramp and today’s premium valuation.
Find out about the key risks to this Invesco Mortgage Capital narrative.
Build Your Own Invesco Mortgage Capital Narrative
If the current narrative does not quite fit your view, dive into the numbers yourself and build a personalized thesis in minutes, starting with Do it your way.
A great starting point for your Invesco Mortgage Capital research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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