ARMOUR Residential REIT, Inc. (NYSE:ARR) announced that it expects to increase common stock dividends in Q3 2015 and that its Board of Directors has approved a reverse stock split of ARMOUR’s outstanding shares of common stock at a ratio of one-for-eight.
One-for-Eight Reverse Stock Split
The reverse stock split is scheduled to take effect at about 5:00 p.m. Eastern Time on July 31, 2015 (the “Effective Time”). At the Effective Time, every eight issued and outstanding shares of common stock of the Company will be converted into one share of common stock of the Company. In addition, at the Effective Time, the number of authorized shares of common stock will also be reduced on a one-for-eight basis. The par value of each share of common stock will remain unchanged. Trading in ARMOUR’s common stock on a split adjusted basis is expected to begin at the market open on August 3, 2015. ARMOUR’s common stock will continue trading on the NYSE under the symbol “ARR” but will be assigned a new CUSIP number. The Company believes that existing stockholders will benefit from the ability to attract a broader range of investors as a result of the reverse stock split and a higher per share stock price. In this regard, the Company notes that the average book value of ARMOUR’s common stock over the last five trading sessions was approximately $4.00 per share, which is approximately 28% above last night’s closing price of $2.87.
As a result of the reverse stock split, the number of outstanding shares of ARMOUR’s common stock will be reduced from approximately 350,000,000 to approximately 43,750,000. Concurrently, the authorized number of shares of common stock will be reduced from 1,000,000,000 to 125,000,000.
No fractional shares will be issued in connection with the reverse stock split. Instead, each stockholder holding fractional shares will be entitled to receive, in lieu of such fractional shares, cash in an amount determined on the basis of the average closing price of ARMOUR’s common stock on the NYSE for the three consecutive trading days ending on July 31, 2015. The reverse stock split will apply to all of ARMOUR’s authorized and outstanding shares of common stock as of the Effective Time. Stockholders of record will be receiving information from Continental Stock Transfer & Trust Company, ARMOUR’s transfer agent, regarding their stock ownership following the reverse stock split and cash in lieu of fractional share payments, if applicable. Stockholders who hold their shares in brokerage accounts or “street name” are not required to take any action in connection with the reverse stock split.
Q3 2015 Common Stock Dividends
The Board of Directors of ARMOUR today announced the Company’s expected third quarter 2015 cash dividend rates per common share as set forth below.
|Month||Dividend||Holder of Record Date||Payment Date|
|July 2015||$0.04||July 15, 2015||July 27, 2015|
|August 2015||$0.33||August 17, 2015||August 27, 2015|
|September 2015||$0.33||September 15, 2015||September 28, 2015|
The expected July 2015 dividend rate of $0.04 per common share, which is the same as the Q2 2015 dividend rate, does not reflect the effect of the reverse stock split and would be equivalent to $0.32 per common share on a basis reflecting the one-for-eight reverse stock split. After the completion of the reverse stock split on July 31, 2015, ARMOUR’s August 2015 and September 2015 dividend rates are expected to be set at $0.33 per share. As a result, the aggregate dividends per common share that ARMOUR expects to pay in Q3 2015 is an increase over the aggregate dividends per common share that the Company paid in Q2 2015. (Original Source)
Shares of Armour Residential closed yesterday at $2.87 . ARR has a 1-year high of $4.38 and a 1-year low of $2.76. The stock’s 50-day moving average is $2.94 and its 200-day moving average is $3.11.
On the ratings front, Armour Residential has been the subject of a number of recent research reports. In a report issued on May 6, MLV & Co. analyst Rich Eckert reiterated a Hold rating on ARR, with a price target of $3.55, which implies an upside of 23.7% from current levels. Separately, on May 1, Keefe’s Michael Widner maintained a Hold rating on the stock and has a price target of $3.50.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Rich Eckert and Michael Widner have a total average return of 2.2% and 1.3% respectively. Eckert has a success rate of 41.9% and is ranked #1925 out of 3632 analysts, while Widner has a success rate of 59.1% and is ranked #2177.
ARMOUR Residential REIT Inc invests in and manages a leveraged portfolio of residential mortgage backed securities. Itinvest in residential mortgage backed securities issued or guaranteed by a United States Government-sponsored entity.