Dynex Capital (DX) Stock: Dividend vs Earnings, Book Value

The dividend against the company’s own earnings number

Quote pages show a monthly dividend and a yield. The filings show what the dividend is paid out of. Dynex reports GAAP net income, which swings with the fair value of its bonds and hedges, and a non-GAAP measure, earnings available for distribution (EAD). EAD takes comprehensive income and strips out the change in fair value of investments and of derivatives; it keeps net interest income, net periodic interest on swaps and TBA drop income, and subtracts operating expenses and preferred dividends. The release warns that “Non-GAAP financial measures are not a substitute for GAAP measures.” Here are the last eleven quarters as reported:

The ratio column is our arithmetic. Total economic return is the company’s measure: the change in book value plus dividends declared, over beginning book value. The EAD figures are those printed in each quarter’s release. The first four are negative: the Q1 2024 release, for example, shows net interest expense of $3.2 million on a portfolio funded by $5.3 billion of repo. The Q4 2024 release repeats Q3 2024 at $(0.10). Over 2025 the four quarters add up to $0.90 of EAD against $2.00 declared, 0.45 (our arithmetic).

GAAP and EAD point in different directions in different quarters. In Q1 2026 GAAP was a $0.41 loss per share and a $83.2 million comprehensive loss to common shareholders, yet EAD was positive at $61.8 million; in Q2 2026 GAAP was $177.3 million and EAD $80.7 million. The release attributes the Q2 book value gain mainly to “a net gain of $102 million on the Company's investment portfolio, net of hedges” and says spread tightening late in the quarter helped.

The same coverage in dollars

EAD per share divides by average shares; the dividend is declared per share on the shares outstanding. When the share count is growing as fast as Dynex’s, the dollar view is a cleaner test. These come from the common equity rollforward and EAD reconciliation in each release:

Dollar dividends rose from $22.4 million in Q4 2023 to $115.8 million in Q2 2026, 5.2 times (our arithmetic), because the dividend per share rose and the share count quadrupled. EAD rose faster in the last two quarters: net interest spread on the Agency portfolio went from 0.33% (GAAP) in Q2 2025 to 1.16% in Q2 2026, and the economic net interest spread (which adds net swap interest) was 1.17% in Q2 2026 and 1.15% in Q1. The trend in the company’s own numbers is toward coverage; the level is still below one.

What fills the gap: taxable income and deferred hedge gains

Dynex says outright that EAD is not what sets the dividend. The 10-Q says the board, “When declaring dividends,” considers “the Company’s taxable income, management’s view on long-term returns, the REIT distribution requirements of the Tax Code, and maintaining compliance with dividend requirements of the Series C Preferred Stock.” A REIT must distribute at least 90% of its REIT taxable income. The difference between GAAP income and taxable income matters here because of tax hedges: the 10-Q explains that gains or losses when designated derivatives mature or are terminated “are included in GAAP earnings in the same reporting period” but “are generally not recognized in REIT taxable income until future periods.” Those gains are “not included in the Company’s current or future” EAD, but they will count toward future distribution requirements.

The balance moves with new hedge gains and losses, so it does not fall in a straight line; it rose from $546.0 million to $609.9 million in Q2 2026. On the same date the company reported $475 million of capital loss carryforwards, $293 million of which expire by December 31, 2027 and the rest by December 31, 2028. The 10-Q concludes: “Due to these amounts and other temporary and permanent differences between GAAP net income and REIT taxable income, coupled with the uncertainty inherent in the forward interest rate curve, we cannot reasonably estimate how much the deferred tax hedge gains to be recognized will impact our dividend declarations during 2026 or in any given period.” It also says: “We fund dividend distributions through portfolio cash flows, existing cash balances, or through the return of principal from our investments (either through repayment or sale).”

An illustration, not a company figure: for 2025, EAD of $112.0 million plus the $100.1 million of tax hedge gain recognition the company projected for 2025 at December 31, 2024 is $212.1 million, against $257.1 million of common dividends declared (our arithmetic). Taxable income also differs from this in other ways, and the 10-K does not give a taxable income figure per share; treat the sum only as a sense of scale.

The tax character of what was paid is in the 10-K. Of the common dividends of $1.98 treated as declared for tax in 2025, $1.84334 was ordinary income and $0.13666 return of capital (93.1% ordinary, our arithmetic). In 2024 it was $1.27707 ordinary and $0.30293 return of capital of $1.58 (80.8%), in 2023 $0.74112 and $0.81888 of $1.56 (47.5%), and in 2022 $0.86186 and $0.69814 of $1.56 (55.2%). The 10-K also notes the monthly dividend declared for December is a GAAP expense in that year but taxable only when paid in January.

A dividend that has only gone up, on a growing share count

Common equity here is the company’s rollforward figure: total shareholders’ equity less the preferred stock’s liquidation preference. The share count went up 89% in the 12 months to June 30, 2026 (125.4 million to 237.4 million, our arithmetic) and 316% from the end of 2023. Book value per share is where that issuance can be judged: it was $11.95 at June 30, 2025 and is $12.90, up 8.0%, but it fell from $13.45 to $12.60 in Q1 2026, 6.3%, a quarter in which the portfolio grew to $24.8 billion. Book value is a quarter-end mark, and the Q3 figure was due with the release scheduled for October 19.

The company calls the method “raise-and-deploy.” In the Q2 release its co-chief executive said the quarter “reflected continued progress in executing our disciplined raise-and-deploy strategy.” The sales agreement shows the room left: on July 28, 2026 Amendment No. 10 raised the shares available to 301,292,973, of which 99,326,438 remained. In May 2026 shareholders approved raising authorised common shares from 360,000,000 to 720,000,000. In the six months to June 30, 2026 Dynex issued 62,149,933 shares through the program for about $0.8 billion net.

Dynex is internally managed, which the company states in its release boilerplate: “a leading internally managed REIT.” That is a point of comparison with agency REITs that pay a manager a fee, covered on our AGNC and Annaly page.

Leverage, repo and what the portfolio is

At June 30, 2026 Dynex held $27.6 billion of MBS including TBAs at fair value: $26.1 billion of Agency residential MBS (95%) and $1.4 billion of Agency CMBS (5%). The release says 99.99% of the investment portfolio is Agency. By coupon, 5.5% pools were 33% and 5.0% pools 29%; 2.0% and 2.5% pools, bought years ago and held at a loss, were 5% and 2%. In Q2 the company bought $2.8 billion of MBS and the portfolio grew 11%.

All of the repo matures within six months and 44% within 30 days (our arithmetic), the normal shape for a repo-funded agency REIT, with lenders that can change haircuts at each rollover. The 10-Q says amounts were outstanding with over 25 counterparties and none held more than 10% of equity at risk. Liquidity (cash plus unpledged Agency MBS) was about $1.6 billion, 51% of total equity. The hedge book was $14.1 billion notional of interest rate swaps, $4.3 billion of short Treasury futures and $750 million of swaptions.

Asset yield on Agency RMBS was 4.98% in Q2 against a repo cost of 3.79%. Net interest income was $93.8 million on $302.8 million of interest income and $209.0 million of interest expense, with operating expenses of $16.2 million. At 8.1 times leverage a small change in spread or in book value moves the result a lot, which the rate table shows:

These are model estimates of parallel shifts holding the portfolio constant, in the company’s words “limited in usefulness”; they are not forecasts. Note that in this model both a fall and a rise in rates reduce common equity.

Buyback and preferred stock

On April 21, 2026 the company announced a new program authorising the repurchase of up to $300 million of common stock and up to $50 million of preferred stock, through April 30, 2028, replacing one that was due to expire on April 30, 2026. The 10-Q says the company “did not repurchase any shares of its common stock or Series C Preferred Stock during the three months ended June 30, 2026.” With the shares issued in the same quarter, the buyback is authority, not activity.

The preferred stack grows. Series C is 4,460,000 shares of 6.900% fixed-to-floating preferred with a $111.5 million liquidation preference; it cost $2.65 million of dividends in Q2 2026. On September 22, 2026 Dynex priced 4,800,000 shares of 9.375% Series D at a $25.00 liquidation preference, with a 30-day option for 720,000 more, and expected about $116.2 million of net proceeds before expenses if the option is not exercised; the offering closed on September 29. The dividend is $2.34375 a share a year, so the 4.8 million shares carry about $11.25 million a year, or $12.9 million if the option is taken (our arithmetic). Series D is not redeemable before October 15, 2031 except on a change of control, its first dividend is payable January 15, 2027, and it ranks equally with Series C and ahead of the common. The 10-Q lists compliance with the Series C dividend requirements among the factors the board weighs for the common dividend.

What changed in the latest quarter

• Dividend $0.51 (unchanged since Q2 2025); EAD $0.36 per share, up from $0.31; EAD to common $80.7 million, up from $61.8 million.
• Book value up $0.30 to $12.90; GAAP income $0.80 per share against a $0.41 loss in Q1; total economic return 6.4%.
• Leverage down to 8.1 times from 8.6; repo $22.6 billion, up from $21.0 billion; portfolio $27.6 billion, up 11%.
• $391 million of common equity raised (about 30 million shares) and $2.8 billion of MBS bought.
• After quarter-end: a new ATM amendment (July 28) and the Series D issue (September 22 to 29).

When the next filing arrives

Dynex announced on October 5, 2026 that it would release third-quarter results before the market opened on Monday, October 19, 2026, with a call at 10:00 a.m. Eastern. When we checked EDGAR on October 19 the earnings 8-K and the Form 10-Q for the quarter ended September 30, 2026 had not been filed; the last filing was the Series D 8-K of September 29. Last year the Q3 release was on October 20, 2025 and the 10-Q on October 27, 2025, so the 10-Q should follow within about a week (our inference from past dates, not a company statement). Check four numbers in it: book value against $12.90, EAD to common in dollars against dividends declared, repo and leverage against $22.6 billion and 8.1 times, and whether the deferred tax hedge gains balance is above or below $609.9 million.

How DX compares with the other mortgage REIT pages

Dynex is an agency REIT without an outside manager, and its dividend is paid monthly. Our AGNC and Annaly page puts book value and economic return side by side for two larger peers, and the Annaly page shows how a larger agency REIT with credit and servicing businesses reads on the same test. The ARMOUR and Orchid Island pages cover two smaller agency REITs. Compared with a non-traded REIT or interval fund, Dynex’s book value is marked every quarter and its shares trade daily; the filings give the book value, not what anyone would pay.

What a shareholder can do with this

• Read the dividend against two numbers. EAD per share was $0.36 against $0.51 in Q2; in dollars 0.70. The rest of the distribution rests on taxable income, helped by deferred tax hedge gains the company cannot project for dividend purposes.
• Watch the share count with the book value. The count rose 89% in a year and book value per share rose 8.0%; the company describes its approach as raise-and-deploy.
• Check leverage and repo in each filing. 8.1 times and $22.6 billion at June 30; the Q3 10-Q will show whether Q2’s drop in leverage held.
• Know the tax side. Common dividends were 93.1% ordinary income in 2025 and 80.8% in 2024; your Form 1099-DIV governs. See our pages on return of capital, the Section 199A deduction and the 1099-DIV due date.
• Price is outside this page. This page does not say whether to buy, hold or sell.

If you want to know when Dynex files again, the alert below emails you when it does. Dynex Capital (CIK 826675) filed its most recent document on EDGAR on September 29, 2026 (an 8-K on the Series D closing); Q3 results are due October 19 and the 10-Q within about a week.

FAQ

Sources, read and saved on October 19, 2026: Dynex Capital, Inc. (CIK 826675) earnings releases (Form 8-K Exhibit 99.1) for Q4 2023 (accession 0000826675-24-000002), Q1 2024 (0000826675-24-000047), Q2 2024 (0000826675-24-000091), Q3 2024 (0000826675-24-000120), Q4 2024 (0000826675-25-000006), Q1 2025 (0000826675-25-000053), Q2 2025 (0000826675-25-000110), Q3 2025 (0000826675-25-000148), Q4 2025 (0000826675-26-000004), Q1 2026 (0000826675-26-000035) and Q2 2026 (0000826675-26-000074); Forms 10-Q 0000826675-24-000051, 0000826675-24-000093, 0000826675-24-000128, 0000826675-25-000056, 0000826675-25-000118, 0000826675-25-000153, 0000826675-26-000039 and 0000826675-26-000078; Forms 10-K 0000826675-24-000011, 0000826675-25-000021 and 0000826675-26-000017; Forms 8-K 0000826675-26-000037 (April 2026 repurchase program), 0000826675-26-000047 (authorised shares), 0000826675-26-000085 (ATM Amendment No. 10), 0000826675-26-000104 (Series D pricing) and 0000826675-26-000112 (Series D closing); and the Business Wire release of October 5, 2026 on the Q3 results date, read on finviz.com. Ratios, sums, growth rates and the tax-gain illustration are our arithmetic. Each company measure uses its own definition. This is analysis of public documents, not investment, legal or tax advice.