In Defense of ARR

A recent article in Motley Fool questioned whether ARR is a good investment.

“Though ARMOUR Residential presently exhibits a dividend yield of nearly 14%, investors should be carefully watching ARMOUR Residential's book value in the coming quarters. This should yield a clue as to whether further dividend cuts are looming down the road."

There are two points I would make about this article: first ARR has declared their dividend through the end of 2014 so the dividend won't change either way until then, second the real estate market is at its lowest point so the price is not going to get any lower.

Some would say that ARR went down 43% last year but I would contend that that's the time to buy.  “Buy low, sell high” is the basic law of investing.  If you buy high then you won't make any money.

Here's the thing about ARR:  it's a numbers game.  In my humble opinion it's the best stock out there to make the most monthly income off dividend payments.  Because of its low price and consistent high yield you can buy more of it and make more each month.  Most dividend stocks cost too much to buy in bulk and make a decent monthly income.  I did a lot of research to find this stock and that's the reason why I've been in it so long.

If you were to put $100,000 in ARR since the dividend is declared till the end of the year, you would make $7000 by the end of the year just off dividends. That's 7 percent for 6 months not including the possible equity gain. If there is an equity loss it most likely won't be any larger than 7 percent.

For the general investor I would agree that a more conservative strategy is better.  It also depends on how old you are and how long you have to invest.  Investing in ARR is definitely an aggressive strategy and if you are risk averse, it would be prudent to balance things out with other stocks and maybe some ETFs.

Indeed, not one of us knows what's going to happen tomorrow.  If an investor says they do they're lying. We're all just making the best educated guesses we can.

We all have our strategies so you got to trust your gut. I could come up with a ton of articles to support buying ARR and just as many not to support buying ARR.  At the end of the day you got to call a play and hope your team wins.