Printed on April tenth, 2026 by Bob Ciura
Invesco Mortgage Capital (IVR) has two interesting funding traits:
#1: It’s a high-yield inventory primarily based on its 17.2% dividend yield.
Associated: Checklist of 5%+ yielding shares.
#2: It pays dividends month-to-month as an alternative of quarterly.
Associated: Checklist of month-to-month dividend shares
You’ll be able to obtain our full Excel spreadsheet of all 118 month-to-month dividend shares (together with metrics that matter, like dividend yield and payout ratio) by clicking on the hyperlink beneath:
The inventory’s excessive dividend yield and month-to-month funds make it a strong selection for revenue traders.
This text will focus on the funding prospects of IVR intimately.
Enterprise Overview
Invesco Mortgage Capital is a Maryland actual property funding belief centered on investing in, financing, and managing mortgage-backed securities and different mortgage-related property.
Its funding portfolio is centered on Company RMBS and Company CMBS, with historic investments additionally resembling non-Company RMBS, non-Company CMBS, TBAs, unconsolidated actual estate-related ventures, and U.S. Treasury securities.
The corporate conducts its enterprise via IAS Working Partnership L.P. and is externally managed by Invesco Advisers, Inc., an oblique subsidiary of Invesco Ltd.
The corporate has no workers of its personal and depends on its exterior supervisor for funding, danger administration, and operational help.
On January twenty ninth, 2026, Invesco Mortgage Capital posted its annual outcomes for the interval ending December thirty first, 2025. For the yr, internet revenue was $101.3 million or $1.32 per diluted share, up from $34.8 million, or $0.65 per diluted share, in 2024.
Internet curiosity revenue elevated to $75.4 million from $36.8 million, as curiosity revenue rose to $295.3 million from $286.5 million and curiosity expense fell to $219.9 million from $249.7 million.
Complete different revenue was $44.4 million, pushed by a $149.3 million acquire on investments, partly offset by a $104.9 million loss on spinoff devices, whereas whole bills declined barely to $18.6 million.
Complete property elevated to $6.48 billion from $5.69 billion, and whole stockholders’ fairness rose to $797.5 million from $730.7 million.
For 2026, we anticipate EPS of $2.32.
Progress Prospects
Invesco Mortgage Capital has a wildly risky EPS historical past. Between 2016 and 2019, IVR operated a high-alpha technique involving a mixture of Company and higher-yielding Non-Company credit score.
The sturdy EPS in 2016, 2017, and 2019 was pushed by a comparatively secure rate of interest surroundings and profitable “carry trades.”
The sharp 2018 lack of ($10.32), although, was triggered by a speedy rise in rates of interest that prompted important mark-to-market GAAP losses on their mortgage-backed securities (MBS) portfolio, which their hedges failed to totally offset.
The large loss in 2020 was the corporate’s defining breaking level. When COVID-19 froze the mortgage market, IVR confronted a wave of margin calls and was compelled to liquidate its riskier credit score and business property at steep losses, completely damaging its capital base.
From 2021 to 2023, it struggled to rebuild as a smaller, Company-only REIT whereas rising Fed charges stored strain on e-book worth and earnings.
By 2024 and 2025, the brand new IVR started to stabilize. Constructive EPS got here from its shift to largely lower-risk, authorities backed Company RMBS, together with bettering spreads and financing prices as Fed expectations eased.
Earnings remained nicely beneath the legacy period, however the enterprise grew to become extra sustainable and centered on liquidity and capital preservation.
Going ahead, we anticipate EPS and the dividend to say no by about 10% per yr.
This somewhat pessimistic assumption is for us to have in mind potential dangers associated to dilution from latest share choices, strain on e-book worth, and tighter margins as financing prices keep excessive and sooner prepayments cut back yields on the Company RMBS portfolio.
Dividend & Valuation Evaluation
IVR is a low-quality, higher-risk enterprise as a result of its outcomes rely much more on charges, spreads, leverage, and funding markets than on any sturdy franchise power.
It does not likely have a moat, since that is basically a managed mortgage REIT car somewhat than a enterprise with pricing energy or sticky buyer relationships.
Any edge comes from portfolio administration and hedging, which can assist across the margins however don’t change the underlying fragility of the mannequin.
For that motive, we view IVR as a method to play a selected mortgage market setup, not as a long-term holding the place traders ought to place excessive confidence within the dividend via a full cycle.
Remaining Ideas
IVR is a high-yield, high-risk mortgage REIT that may solely work as a tactical unfold commerce. This isn’t a sturdy long-term compounder. Any doable upside is tied to secure funding and mortgage markets.
Nevertheless, significant draw back may be very more likely to come from leverage and e-book worth erosion. Whereas out whole return forecast stands at a pretty 17.2%, that is primarily based on dynamics that may simply change from everyday.
We fee the inventory a really speculative maintain.
Don’t miss the assets beneath for extra month-to-month dividend inventory investing analysis.
And see the assets beneath for extra compelling funding concepts for dividend development shares and/or high-yield funding securities.
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