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Western Asset Mortgage Capital Named Top Dividend Stock With Insider Buying and 15.25% Yield (WMC)

By Dividend Channel Staff, Friday, September 21, 11:58 AM ET
Play Video: The Importance of Insider Buying

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In this series, we look through the most recent Dividend Channel ''DividendRank'' report, and then we cherry pick only those companies that have experienced insider buying within the past six months. The officers and directors of a company tend to have a unique insider's view of the business, and presumably the only reason an insider would choose to take their hard-earned cash and use it to buy stock in the open market, is that they expect to make money maybe they find the stock very undervalued, or maybe they see exciting progress within the company, or maybe both. So when stocks turn up that see insider buying, and are also top ranked, investors are wise to take notice. One such company is Western Asset Mortgage Capital Corp (NYSE:WMC), which saw buying by Chief Operating Officer Travis Carr.

Back on May 15, Carr invested $37,400.00 into 2,000 shares of WMC, for a cost per share of $18.70. In trading on Friday, shares were changing hands as low as $23.58 per share, which is 26.1% above Carr's purchase price. It should be noted that Carr has collected $0.38/share in dividends since the time of their purchase, so they are currently up 28.1% on their purchase from a total return basis. Western Asset Mortgage Capital Corp shares are currently trading +8.16% on the day. The chart below shows the one year performance of WMC shares, versus its 200 day moving average:

Western Asset Mortgage Capital Corp Chart

Looking at the chart above, WMC's low point in its 52 week range is $17.57 per share, with $24.46 as the 52 week high point that compares with a last trade of $24.06. By comparison, below is a table showing the prices at which insider buying was recorded over the last six months:

Purchased Insider Title Shares Price/Share Value
05/10/2012 Stephen P. Fulton Chief Investment Officer 78,000 $18.62 $1,452,438.00
05/10/2012 Travis Carr Chief Operating Officer 2,000 $18.65 $37,300.00
05/11/2012 Edward D. Fox Director 5,400 $18.76 $101,311.00
05/11/2012 Gavin L. James President and CEO 5,300 $18.68 $99,009.30
05/15/2012 Travis Carr Chief Operating Officer 2,000 $18.70 $37,400.00
09/17/2012 James W. Hirschmann III Chairman of the Board 1,000 $21.84 $21,840.00
09/18/2012 James W. Hirschmann III Chairman of the Board 15 $21.82 $327.30

The DividendRank report noted that among the coverage universe, WMC shares displayed both attractive valuation metrics and strong profitability metrics. For example, the recent WMC share price of $22.30 represents a price-to-book ratio of 1.1 and an annual dividend yield of 15.25% by comparison, the average company in Dividend Channel's coverage universe yields 3.7% and trades at a price-to-book ratio of 1.8. The report also cited the strong quarterly dividend history at Western Asset Mortgage Capital Corp, and favorable long-term multi-year growth rates in key fundamental data points.

The report stated, ''Dividend investors approaching investing from a value standpoint are generally most interested in researching the strongest most profitable companies, that also happen to be trading at an attractive valuation. That's what we aim to find using our proprietary DividendRank formula, which ranks the coverage universe based upon our various criteria for both profitability and valuation, to generate a list of the top most 'interesting' stocks, meant for investors as a source of ideas that merit further research.''

The annualized dividend paid by Western Asset Mortgage Capital Corp is $3.4/share, currently paid in quarterly installments, and its most recent dividend ex-date was on 09/27/2012. Below is a long-term dividend history chart for WMC, which the report stressed as being of key importance. Indeed, studying a company's past dividend history can be of good help in judging whether the most recent dividend is likely to continue.

This Article's Word Cloud:   Asset   Board   Capital   Carr   Chairman   Channel   Chief   Corp   Dividend   DividendRank   Hirschmann   Insider   James   Mortgage   Officer   Operating   Travis   Western   above   also   attractive   average   below   book   both   buying   chart   companies   company   coverage   currently   dividend   history   insider   investors   maybe   most   price   purchase   recent   report   share   shares   that   their   they   trading   universe   valuation   which

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