Dynex Capital (DX) Reports $57.5M Portfolio Value Change

By Bobby Samwell • Tuesday, February 27 06:10 • Permanent Link

Dynex Capital, Inc. has recently released its 10-K report, providing a detailed look at its financial performance and operations. The company, incorporated in 1987 and headquartered in Glen Allen, Virginia, is a mortgage real estate investment trust (REIT) that invests in mortgage-backed securities (MBS) on a leveraged basis in the United States. Dynex Capital focuses on agency and non-agency MBS, including residential MBS, commercial MBS (CMBS), and CMBS interest-only securities. The company has qualified as a real estate investment trust for federal income tax purposes, which generally makes it exempt from federal income taxes if it distributes at least 90% of its taxable income to its stockholders as dividends.

In the year ended December 31, 2023, Dynex Capital reported a net change in fair value of $57.5 million in its investment portfolio. This contributed to comprehensive income to common shareholders of $9.0 million, or $0.16 per common share. The company's total economic return to common shareholders was $0.14 per common share, or 1.0% of beginning book value. Dynex Capital also focused on minimizing the impact of volatile interest rates and spreads by actively managing leverage and liquidity, and it sought to pay a consistent dividend while preserving book value for shareholders.

The company's investment portfolio, including TBAs, increased by 27% compared to December 31, 2022. This increase was attributed to Dynex Capital's strategy of deploying capital during periods of wider spreads into higher coupon Agency RMBS with higher forward returns relative to the investments held as of December 31, 2022. The company purchased Agency RMBS with a cost basis of $3.6 billion during the year ended December 31, 2023.

Looking ahead to 2024, Dynex Capital expects global growth expectations to remain muted, with Chinese officials likely to increase fiscal and monetary policy. The company also anticipates U.S. growth expectations to be subdued, with the median of Federal Reserve officials' expectations for 2024 real GDP growth at just 1.4%. Additionally, Dynex Capital foresees opportunities to actively manage its coupon exposure as markets re-price for the new liquidity environment, and it expects tactical opportunities to increase amid moderate spread volatility in 2024.

For more information, read the company's full 10-K submission here.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.