DFR

a money manager was interviewed on the street.com about DFR -- he said he has spoken to management and he feels the dividend will continue at the current rate. No idea how credible he is or just how much info they provided him -- their dividend press release is probably 3 weeks away. Yes quite possible that dividend will continue at current rate -- also possible we could see a cut due to credit losses on the high yield portion of the portfolio or trading losses on the mortgage side (liquidity raising could have had costs) or because their book value dropped due to price declines in mortgages they may decide to conserve cash.

Still a little craziness in the credit market - LIBOR rates have dropped relative to fed funds but last I checked (a few days ago) they were not back to normal yet. that suggests liquidity in short term markets still not right yet but commercial paper has been fixed.

but the yield curve has steepened -- usually that is a good thing for a mortgage REIT but in DFR's case they have quite a few interest rate hedges so its not straightforward. I do remember them saying during the Q2 call that the yield curve steepening then was adding to their margins and the curve has continued to steepen since then.

with credit spreads widening and the yield curve steepening the overall profitability of the portfolio should be getting some help to offset any pressures mentioned above. If those pressures didn't hurt, then there is an excellent chance they should be able to reach their high teens dividend yield on a $15 stock price (i.e. a 2.50 type dividend) in a few years. Trouble with liquidity issues -- they raise the risk of total loss to be too high to really take advantage of the price decline in the stock yet if the liquidity issues fade and the company survives, we all feel like idiots for not buying at the bottom. You have to fight that feeling because the risks were too high to put money in at the bottom in this case -- that is normally not true but here it was. Liquidity risks are too tough unless you have more intimate knowledge of the repo/mortgage markets (i.e. trading conditions) than I had at the time.

Q3 dividend and earnings should be quite interesting.