Agency MBS spreads remain historically wide, offering unusually high risk-adjusted yields despite low prepayment risk. The embedded option premium in RMBS spreads provides a persistent, systematic risk premium for DX. A likely bull steepener, falling front-end rates with a stable long end, supports carry and reduces funding pressure.
Dynex Capital (DX) preferred DX.PR.C offers a 9.35% yield, with strong book value growth and sector-leading equity/coverage ratio after a robust quarter. DX.PR.C's price is resilient to Fed rate cuts, as floating-rate preferreds are more sensitive to credit spreads than short-term rates. Redemption risk is present but remains modest; DX appears content to keep DX.PR.C outstanding, with price likely to stay near par barring major credit spread changes.
Some believe that interest rates are going to drift down and we'll have a soft landing. History suggests that a drastic fall is far more likely. These two investments should benefit, while others struggle.
Dynex Capital, Inc. is rated a Buy for its dependable, high-yield monthly dividend and strong Q3 2025 earnings performance. DX reported YTD shareholder returns of 20%, a 15% dividend yield, and robust portfolio growth, supported by favorable agency RMBS spreads. Lower interest rates, insider buying, and cracks in private credit markets enhance the investment outlook for DX, despite sector risks.
Dynex Capital, Inc. (NYSE:DX ) Q3 2025 Earnings Call October 20, 2025 10:00 AM EDT Company Participants Alison G. Griffin - Vice President of Investor Relations Smriti L.
Dynex Capital, Inc. 6.9% SER C PFD offers a 9.8% yield, with sector-leading equity/preferred coverage, making it one of the lowest-risk agency mREIT preferreds available. Despite lower risk, DX.PR.C trades at a higher yield, due to its floating rate structure and callability, not because of underlying credit risk. Key risks include interest rate volatility and remote regulatory changes, but agency spreads and Fed support mitigate these concerns.
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A wide cross-section of investors, including both retirees as well as Gen-Z, have a strong interest in dividend stocks for income.
Dynex's Q2 results were mixed. The mREIT reported higher net interest income, offset by a net loss and a lower book value per share. An at-the-money share issuance program provided a buffer to Dynex's losses. However, the sustainability thereof might be called into question if Dynex's P&L doesn't improve. We hold a positive rates outlook with the idea that rates will fall at both the shorter and longer end, translating into bullish steepening.
Dynex Capital, Inc. (NYSE:DX ) Q2 2025 Earnings Conference Call July 21, 2025 10:00 AM ET Company Participants Alison G. Griffin - Vice President of Investor Relations Byron L.
While volatile mortgage rates will likely hurt the Zacks REIT and Equity Trust industry, companies like NLY, DX and EFC are poised to navigate the challenges.
ETFs have grown into a dominant investment vehicle due to their intraday liquidity, with income-focused investors increasingly turning to high-yield names like PFLT, SCM, EFC, DX, and HRZN—each yielding over 9%.