Dynex Capital Inc (DYT1)
XSTU 
Summary
DYT1 Chart
9.4% Dividend Yield From Dynex Capital's New Steady Preferred Share
Dynex Capital offers new preferred DX-D at 9.375%, but surging Treasury yields make me cautious on fixed-rate preferreds. DX-D's strong coverage ratios and low credit risk are attractive, yet thin spreads over Treasuries and lack of maturity temper my enthusiasm. My portfolio remains highly defensive with 28% cash. I may look to deploy some of that, but I expect to be gradual about deployment given the current bond market.
Dynex Capital's Growth Provides Safety Net For Preferreds
Dynex Capital has rapidly expanded its asset base, doubling investments multiple times and increasing its equity cushion for preferred holders. DX's portfolio is almost entirely agency-backed RMBS, offering low credit risk and strong hedging against interest rate fluctuations. DX-D preferred offers a 9.375% yield at par, with a call date in 2031, providing superior value and capital appreciation potential versus the floating-rate DX-C.
DXPRD: A 9.375% Preferred Stock IPO From Dynex Capital
Dynex Capital has issued a 9.375% Series D Cumulative Preferred Stock (DXPRD), currently trading OTC with a yield near 9.5%. DXPRD stands out for its high nominal yield and credit spread, matching sector peers AGNCZ and NLY-J but with a higher current yield. DX's agency-backed portfolio minimizes credit risk, but high leverage exposes it to interest rate volatility and basis spread widening, especially during monetary tightening.
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Dynex Capital Inc Profile
| Mortgage Real Estate Investment Trusts (REITs) Industry | Financials Sector | Byron L. Boston CEO | XSTU Exchange | US26817Q8868 ISIN |
| US Country | 28 Employees | 22 Oct 2026 Last Dividend | 21 Jun 2019 Last Split | 30 Jun 1989 IPO Date |
Overview
Dynex Capital, Inc. operates as a mortgage real estate investment trust (REIT), focusing on investing in mortgage-backed securities (MBS) on a leveraged basis within the United States. The company's approach hinges on an investment portfolio comprised of agency and non-agency MBS, including both residential and commercial MBS (CMBS), as well as CMBS interest-only securities. Agency MBS feature a principal payment guarantee by an agency of the U.S. government or a government-sponsored entity such as Fannie Mae and Freddie Mac, while non-agency MBS lack such guarantees. Having qualified as a real estate investment trust for federal income tax purposes, Dynex Capital aims to avoid federal income taxes by distributing at least 90% of its taxable income to its stockholders in the form of dividends. Founded in 1987, Dynex Capital is headquartered in Glen Allen, Virginia, and has established itself as a key player in the real estate investment sector through its focused investment strategies and commitment to shareholder value.
Products and Services
- Agency MBS
These are mortgage-backed securities that come with a guaranty of principal payment from a U.S. government agency or a government-sponsored entity like Fannie Mae and Freddie Mac. The agency MBS portfolio allows investors to engage in a relatively lower-risk segment of the mortgage market, leveraging the government-backed guarantee to mitigate the risk of default.
- Non-Agency MBS
In contrast to agency MBS, non-agency MBS are not backed by any government agency guarantee. This category includes securities backed by residential and commercial mortgages without the principal payment guaranty, posing a higher risk but potentially offering higher returns to investors willing to engage with the non-agency segment.
- Residential and Commercial MBS (CMBS)
Dynex Capital invests in both residential MBS and commercial MBS. While residential MBS are backed by mortgage loans on residential properties, CMBS are backed by loans on commercial properties. This diversification allows Dynex to balance its portfolio across different segments of the real estate market, optimizing returns and risk management.
- CMBS Interest-Only Securities
These are a specific type of commercial mortgage-backed securities where the investor receives only the interest payments from a pool of commercial mortgages. This investment product typically offers higher yields and suits investors looking for income-generating investments in the real estate market. However, they do carry a higher risk, particularly with regard to changes in interest rates and the potential impact on the value of the securities.
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