MFA Financial Stock Flourishes After Company Revokes Dividends
MFA stock is up over 200% after deciding to cancel dividend payouts. MFA Financial (NYSE:MFA) made the announcement on March 25th due to the coronavirus outbreak and the uncertainty in the stock market.
This decision was made to give MFA time to assess how the stock market drop will affect their business overall. Since the press release, the company’s stock is surging in the right direction.
MFA Financial is a real estate investment trust that primarily invests in residential mortgage assets. This includes residential mortgage-backed securities and whole loans.
How Has the Announcement Affected MFA Stock?
Before the announcement on March 25th, MFA Financial was trading at $0.72 a share. Its 52-week low reached a mere $0.32 a share.
MFA, in general, is feeling the effects of the COVID-19 pandemic just like everyone else. Before the panic began in the United States, MFA stock was trading at over $8 a share.
It took a massive dive, much like the rest of the market over the past few weeks. However, the decision to revoke dividend payouts has led to a rare boost in such difficult times.
As of market closing on the 25th, MFA Financial was up to $1.14. Some reports suggest it will continue to benefits over the coming days.
MFA Financial Announcement Overview
So, what does this announcement mean for shareholders? Specifically, MFA is revoking its previously announced first quarter 2020 cash dividends on the company’s common stock. It’s also revoking 7.50% of its Series B Cumulative Redeemable Preferred Stock.
Series B is the second round of funding for a business. These investors typically receive convertible preferred stock that include more unique features than common stock.
The quarterly cash dividend on common stock was set at $0.20 a share on March 11th. Payment was set for April 30th. The Series B Preferred Stock dividend was $0.46875 per share to be paid at the end of March.
All unpaid dividends on the Series B Preferred Stock shall accrue without interest. In addition, no dividends may be paid of the common stock unless full cumulative dividends on the Series B Preferred Stock are paid in cash.
Stock Market Volatility is the Guilty Party
The current volatility in the market is the reason why MFA Financial is cancelling dividend payouts. Until it can better assess the situation and its overriding effects on their business, it seems to be the safest option.
The decision is already showing its effects on MFA stock. However, will the stock market continue to drop for the foreseeable future? This is the question that many investors are debating today.
President Trump hopes to get the workforce back into full gear by Easter, and that announcement alone had a tiny ripple effect on the market.
The CDC and other health officials believe the President’s goal is a bit ambitious. If so, the market will inevitably continue to suffer.
Stock market volatility is a difficult path to manage. But, MFA is playing it safe and the decision is leading to unlikely results in the market. How long it will last is another question altogether.
Investing in MFA Stock During the COVID-19 Pandemic
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MFA stock is surging while the rest of the market is looking for answers. Maybe other businesses will follow suit? Nevertheless, watch MFA stock closely over the next few weeks. Let’s see how this announcement plays out in the long run.