{"id":23327,"date":"2025-11-27T04:25:13","date_gmt":"2025-11-27T04:25:13","guid":{"rendered":"https:\/\/finderica.com\/?p=23327"},"modified":"2025-11-27T04:25:13","modified_gmt":"2025-11-27T04:25:13","slug":"will-this-15-yield-get-cut-again","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=23327","title":{"rendered":"Will This 15% Yield Get Cut Again?"},"content":{"rendered":"
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Mortgage real estate investment trusts, or mREITs, tend to have high yields, often double digits. While double-digit yields excite some investors, when I see one, my guard immediately goes up. I think, \u201cWhy is the yield so high when most dividend-paying companies \u2013 even those considered high-yield \u2013 have yields in the single digits?\u201d<\/p>\n

The reason for my skepticism is risk.<\/p>\n

When a company pays a double-digit yield, the risk is higher that the stock is going to perform badly or the dividend is going to be cut. It\u2019s not a guarantee that those things will happen, but it is more likely to happen than when the dividend yield is lower.<\/p>\n

With that knowledge, let\u2019s find out whether 15% yielder Dynex Capital<\/strong> (NYSE: DX) is in danger of cutting its dividend.<\/p>\n

Dynex Capital is a mortgage REIT. It borrows money and then lends it out at higher interest rates. The difference, after expenses, is called net interest income.<\/p>\n

Last year, Dynex generated $5.9 million in net interest income while paying out $117.8 million in dividends. That means it paid 20 times more cash in dividends than it took in.<\/p>\n

This year, I expect net interest income to rise significantly to $94.5 million. However, dividends paid are still forecast to be substantially higher at $133.2 million.<\/p>\n

\"Chart:<\/a><\/p>\n

The dividend track record isn\u2019t great either. Though Dynex has raised the monthly dividend twice in the past year from $0.13 per share to $0.17, it is still well below where it was 10 years ago.<\/p>\n

At the time, Dynex paid a quarterly dividend of $0.72, which is 41% more than the current monthly dividend extrapolated to a quarterly dividend ($0.17 per month equals $0.51 per quarter). That $0.72 per share dividend in 2015 was cut to $0.63 in early 2016, and the company lowered the dividend again in 2017 to $0.54.<\/p>\n

Two years later, Dynex began paying a monthly dividend, reducing it again to $0.15 ($0.45 quarterly) in mid-2019 and once more to $0.13 ($0.39 quarterly) in 2020.<\/p>\n

So we have a stock that can\u2019t afford its dividend and has cut the payout four times in the past 10 years.<\/p>\n

Dynex Capital will very likely cut its dividend again soon.<\/p>\n

The dividend is not safe.<\/p>\n

Dividend Safety Rating: F<\/strong><\/p>\n

\"Dividend<\/p>\n

What stock\u2019s dividend safety would you like me to analyze next? Leave the ticker in the comments section.<\/p>\n

You can also take a look to see whether we\u2019ve written about your favorite stock recently. Just click on the word \u201cSearch\u201d at the top right part of the Wealthy Retirement<\/em> homepage, type in the company name, and hit \u201cEnter.\u201d<\/p>\n

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds, or closed-end funds.<\/p>\n<\/p><\/div>\n