What is the yield on the dividend relative to ORC's current share price and how does it compare to peer REITs and capital‑market managers?

Dividend yield calculation

• Monthly dividend: $0.12 per share
  
• Annualized dividend: $0.12 × 12 = $1.44 per share
  
• Current ORC price (as of the August‑2025 dividend announcement): ≈ $7.80 * (the market was trading around $7.8‑$8.0 per share at the time).
  

[
\text{Yield} = \frac{\$1.44}{\$7.80}\times 100\% \approx 18.5\%
]

Comparison with peers and capital‑market managers

*Yield figures are based on the latest reported dividend and current market price for each entity (annualized cash‑dividend / share price).

Trading implications

1. Attractive income vs. risk – An ~18‑19 % yield is exceptionally high for a publicly‑traded REIT and well above the 9‑12 % range of peer mortgage REITs and far above the 2‑4 % yields of traditional capital‑market managers. The high yield reflects ORC’s higher credit‑risk exposure (primarily agency‑RMBS, which are sensitive to rising rates and pre‑payment risk) and the fact that the dividend is unsecured and not covered by earnings.

2. Relative valuation – The market is pricing this risk at roughly $7.80–$8.00. The dividend yield is comparable to the “high‑yield” segment of REITs but still leaves a 10‑15 % yield premium over peers, suggesting a value proposition if the credit environment remains stable. However, if rates climb faster than anticipated, ORC’s portfolio could see higher default/credit‑loss rates, which could depress the share price and erode the dividend.

3. Actionable strategy –

   • Buy on pull‑backs: If the stock dips below $7.00 (yield >20 %) and credit spreads are not widening dramatically, the high‑yield can justify a short‑term tactical long position, targeting a 3‑6 % upside plus monthly cash flow.
     
   • Set stop‑loss: Place a stop‑loss at ~6%‑7% of the current price (≈$7.20–$7.30) to protect against a rapid rate‑hike environment that would hurt the RMBS portfolio.
     
   • Consider alternatives: If you prefer lower credit risk, look at peer REITs with 11‑12 % yields (e.g., NLY) or diversify with capital‑market managers for a modest 2‑4 % dividend but lower volatility.
     

Overall, ORC’s dividend yield is substantially higher than its mortgage‑REIT peers and far above the yield of traditional capital‑market managers, making it an attractive, albeit higher‑risk, income play. The trade‑off is credit‑ and interest‑rate risk, so position sizing and a tight risk‑management plan are essential.