Invesco Mortgage Capital Inc. 7.5% Preferred Series C Holds Steady with $0.4688 Dividend Amid High Yield Stability

Invesco Mortgage Capital Inc. (NYSE: IVR), a real estate investment trust (REIT) focused on residential and commercial mortgage-backed securities, has reaffirmed its commitment to its preferred shareholders with the recent declaration of a $0.4688 dividend per share for its 7.5% Cumulative Redeemable Preferred Series C (IVR.PR.C). This marks the latest in a series of consistent payouts for this security, which has maintained its semi-annual dividend amount since at least early 2023.

Dividend Consistency Amid Volatile Markets

The Series C Preferred Stock, which pays semi-annual dividends, has delivered a steady $0.4688 per share since its last adjustment in mid-2022. This stability contrasts with the company’s common stock dividends, which dipped to $0.34 per share in Q1 2025 from $0.40 in the prior quarter. The preferred dividend’s fixed rate of 7.5%—valid until September 2027—ensures predictability, even as the REIT’s broader operations face headwinds from rising interest rates and tighter credit conditions.

The most recent dividend, declared on May 6, 2025, will be paid on June 27, 2025, to shareholders of record as of June 5, 2025. Investors purchasing the stock before the ex-dividend date of June 4, 2025, will be eligible for the payout.

High Yield Attracts Income Seekers

With a current yield of 18.0%, the Series C Preferred Stock offers an attractive income opportunity. This yield is calculated using the annual dividend of $0.9375 (two semi-annual payments of $0.4688) divided by the stock’s recent closing price of $8.88. While high yields often signal higher risk, the Series C’s cumulative and fixed-rate structure provides some assurance: preferred shareholders rank ahead of common stockholders in the event of liquidation, and missed dividends accumulate until paid.

Company Overview and Risks

Invesco Mortgage Capital invests primarily in residential and commercial mortgage-backed securities (MBS), which carry risks such as prepayment acceleration in falling rate environments or credit defaults in economic downturns. The company’s Q1 2025 financials highlight challenges: net income dropped 43% year-over-year, reflecting higher borrowing costs and reduced MBS valuations. However, the preferred dividend remains insulated from these pressures due to its fixed-rate terms.

Key risks for preferred investors include:
- Interest Rate Sensitivity: The Series C’s floating-rate feature after September 2027 could lead to volatility if rates rise further.
- Liquidity: With a market cap of $434 million and a relatively small float of preferred shares, trading volumes may be thin.
- Call Risk: The company could redeem the preferred stock at $25 per share (its liquidation preference) before maturity.

Market Context and Valuation

The Series C Preferred Stock’s price has fluctuated significantly in recent years, dropping to lows of $8.50 in early 2024 before rebounding. Its current price of $8.88 reflects investor optimism about its fixed-rate stability. By comparison, the broader preferred stock market, as measured by the iShares U.S. Preferred Stock ETF (PFF), has returned just 0.8% year-to-date—a stark contrast to IVR.PR.C’s 5% rise over the same period.

Conclusion: A High-Yield Bet with Caution

The Series C Preferred Stock’s 18% yield and consistent dividend history make it an intriguing option for income-focused investors. However, the REIT’s exposure to mortgage markets and interest rate cycles demands vigilance.

• Strengths:
• Fixed-rate stability until 2027.
• Cumulative feature ensures missed dividends are paid later.

• Strong liquidity preference over common stock.

• Weaknesses:

• Sensitivity to rising interest rates post-2027.
• Volatile share price due to small float and macroeconomic factors.

For investors willing to accept these risks, the Series C offers a rare blend of income and relative safety in a low-yield world. Yet, with Invesco’s net income under pressure, the durability of this payout hinges on the company’s ability to navigate a challenging mortgage-backed securities environment. Monitor upcoming dividend declarations, especially after the September 2027 fixed-rate expiration, for clues about its long-term prospects.

In short, the $0.4688 dividend underscores Invesco Mortgage’s focus on preferred shareholders—but investors should pair this income stream with a close eye on broader economic trends.