Western Asset Mortgage Opportunity Fund: Don't Let High Yield Mislead You

The Western Asset Mortgage Opportunity Fund Inc (NYSE:DMO) is a closed-end fund that invests in mortgage-backed securities, providing investors with an attractive income level. Despite its high yield, the fund has been successful in this regard, with a current yield of 10.73%. The fund has a history of generating strong returns for its shareholders.

Anthony Grillo, a director at Western Asset Mortgage Opportunity Fund Inc. (NYSE:DMO), recently acquired 1,000 shares of the company’s common stock. The shares were purchased at a price of $11.60 each, totaling $11,600. This transaction increases Grillo’s direct ownership in the company to 1,000 shares [1].

The $132 million market cap company currently offers an attractive 13.4% dividend yield and has maintained dividend payments for 16 consecutive years [1]. The fund demonstrates good financial health with a P/E ratio of 7.7, suggesting reasonable valuation. For deeper insights into DMO’s financial metrics and additional ProTips, explore InvestingPro.

On May 27, 2025, Grillo purchased 1,000 shares, which were bought at a price of $11.6 per share, totaling $11,600 [2]. This transaction was filed with the SEC under Form 4 [2]. The stock price of DMO gained 0.517% on the last trading day (Thursday, May 29, 2025), rising from $11.60 to $11.66 [3]. The stock has been going up and down for this period, and there has been a 0.17% gain for the last two weeks. The volume has increased on the last day along with the price, which is a positive technical sign [3].

DMO holds buy signals from both short and long-term Moving Averages, giving a positive forecast for the stock [3]. However, some negative signals were issued, and these may have some influence on the near short-term development. A sell signal was issued from a pivot top point on Monday, May 12, 2025, and so far it has fallen -0.93% [3]. Further fall is indicated until a new bottom pivot has been found.

The Western Asset Mortgage Defined stock finds support from accumulated volume at $11.27, and this level may hold a buying opportunity as an upwards reaction can be expected when the support is being tested [3]. The stock tends to have very controlled movements and with good liquidity, the risk is considered very low in this stock [3].

For the upcoming trading day on Friday, May 30, 2025, we expect DMO to open at $11.65 and during the day move between $11.52 and $11.80, which gives a possible trading interval of +/-$0.138 (+/-1.19%) up or down from the last closing price [3]. If DMO takes out the full calculated possible swing range, there will be an estimated 2.38% move between the lowest and the highest trading price during the day [3].

At the current level, DMO should be considered as a hold candidate (hold or accumulate) in this position whilst awaiting further development [3]. Our analysis conclusion for this stock has been upgraded from a Sell to a Hold/Accumulate candidate [3].

References:
[1] https://www.investing.com/news/insider-trading-news/western-asset-mortgage-opportunity-fund-director-buys-11600-in-stock-93CH-4068964
[2] https://www.tradingview.com/news/tradingview:1feb42c86a64c:0-western-asset-mortgage-opportunity-fund-director-acquires-1-000-shares/
[3] https://stockinvest.us/stock/DMO