Stonegate Capital Partners Updates Coverage on Armour Residential REIT, Inc. (ARR) 2025 Q4

Rhea-AI Summary

Armour Residential REIT (NYSE: ARR) reported strong 4Q25 results with interest income of $236.5M, net income to common $208.7M, and diluted EPS $1.86. Interest income rose ~55.1% YoY on wider spreads and lower funding costs.

Reported distributable earnings $79.7M ($0.71/share); book value rose 6.5% sequentially to $18.63. The company paid a $0.72/share dividend, a 16.4% annualized yield and a 101% payout ratio versus distributable earnings.

Positive

• Interest income +55.1% YoY to $236.5M
• Book value per share +6.5% sequentially to $18.63
• Distributable earnings of $79.7M ($0.71/share)

Negative

• Payout ratio 101% exceeds distributable earnings, raising dividend sustainability concerns
• 16.4% dividend yield may signal elevated risk or reliance on capital distributions

Key Figures

Interest income: $236.5M Net income to common: $208.7M Diluted EPS: $1.86 +5 more

8 metrics

Interest income $236.5M Q4 2025 interest income

Net income to common $208.7M Q4 2025 net income to common

Diluted EPS $1.86 Q4 2025 diluted EPS

YoY interest income growth 55.1% Year-over-year increase in interest income

Distributable earnings $79.7M Q4 2025 distributable earnings

Distributable EPS $0.71 per share Q4 2025 distributable earnings per share

Book value per share $18.63 Q4 2025 book value, up 6.5% sequentially

Dividend and yield $0.72; 16.4% yield; 101% payout Q4 2025 dividends vs. distributable earnings

Market Reality Check

Price: $17.66 Vol: Volume 2,963,830 vs 20-da...

normal vol

$17.66 Last Close

Volume Volume 2,963,830 vs 20-day average 3,461,301; relative volume at 0.86 ahead of this update. normal

Technical Price 17.655 trades above 200-day MA of 16.54 and is 8.57% below the 52-week high of 19.31.

Peers on Argus

ARR was down 0.11% pre-news while key mortgage REIT peers were mixed: DX up 0.43...

ARR was down 0.11% pre-news while key mortgage REIT peers were mixed: DX up 0.43%, LADR up 0.68%, ARI down 0.09%, EFC down 1.43%, CIM down 0.59%, suggesting stock-specific dynamics rather than a broad sector move.

Historical Context

5 past events · Latest: Feb 18 (Positive)

Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Feb 18	Q4 2025 results	Positive	-0.6%	Strong Q4 GAAP net income, higher book value and portfolio detail.
Feb 17	March dividend	Positive	-2.8%	Announced $0.24 March 2026 common dividend and key dates.
Feb 17	Earnings webcast	Neutral	-2.8%	Scheduled Q4 2025 webcast and timing for earnings release.
Jan 29	February dividend	Positive	-5.3%	Declared $0.24 February 2026 common dividend with record and pay dates.
Jan 02	Jan & preferred divs	Positive	+0.4%	Confirmed January 2026 common and Q1 2026 Series C dividends.

Pattern Detected

Recent dividend and earnings announcements have often coincided with negative next-day moves, even when operational metrics were strong.

Recent Company History

Over the last few months, ARR’s news flow has centered on dividends and Q4 2025 results. The company reported strong GAAP net income of $208.7M and book value of $18.63, yet the stock fell 0.56% after that release. Multiple monthly dividend declarations of $0.24 per share also saw negative reactions, including a 5.28% drop after the February 2026 dividend. Only the early‑January dividend confirmation coincided with a modest 0.44% gain, indicating a recent tendency for the stock to trade soft around otherwise constructive updates.

Market Pulse Summary

This announcement reiterates robust Q4 2025 performance, with interest income of $236.5M, net income...

Analysis

This announcement reiterates robust Q4 2025 performance, with interest income of $236.5M, net income to common of $208.7M, diluted EPS of $1.86, and distributable earnings of $79.7M. Book value per share rose 6.5% to $18.63, while dividends of $0.72 per share implied a 16.4% annualized yield and a 101% payout versus distributable earnings. Investors may track future quarters for persistence of spreads, funding costs, and the balance between dividend policy and book value preservation.

Key Terms

diluted eps, interest-bearing liabilities, distributable earnings, book value per share, +2 more

6 terms

diluted eps financial

"interest income, net income to common, and diluted EPS of $236.5M"

Diluted earnings per share (EPS) shows how much profit a company makes for each share of stock, assuming all possible shares from stock options or convertible securities are used. It provides a more conservative estimate than basic EPS, accounting for potential share increases that could dilute ownership. Investors use diluted EPS to get a clearer picture of a company's true profitability on a per-share basis.

interest-bearing liabilities financial

"while interest cost on average interest-bearing liabilities declined"

Interest-bearing liabilities are debts a company must pay interest on, such as loans, bonds or credit lines, where the borrower pays a regular cost for using the money. Investors care because these obligations determine a firm’s ongoing cash outflows, affect profits and credit risk, and influence how much cash remains for growth or dividends—similar to how a homeowner’s mortgage payments limit personal spending and savings.

distributable earnings financial

"Reported distributable earnings of $79.7M, or $0.71 per share"

Distributable earnings are the portion of a company’s reported profits that management determines is safe to pay out to shareholders after accounting for cash needs, required reserves, and non-cash bookkeeping items. Think of it like the money left in your household budget after paying bills and putting aside savings — it shows what can realistically be handed out as dividends or distributions and helps investors judge how sustainable and reliable future payouts may be.

book value per share financial

"book value per share increased 6.5% sequentially to $18.63"

Book value per share is a company’s net worth on paper — total assets minus liabilities — divided by the number of outstanding shares, showing the equity value attributable to each share. Investors use it like a per-slice estimate of a company’s underlying value to compare with the market price; if the market price is far above the book value, the stock may be priced for strong future profits, and if it’s below, the stock might look undervalued or reflect asset concerns.

annualized yield financial

"Paid $0.72 per share in dividends, resulting in a 16.4% annualized yield"

Annualized yield is the return on an investment expressed as if the current short-term return continued for a full year, converting a partial-period gain into a yearly rate — like turning a short-trip speed into miles per hour. It matters to investors because it makes returns from different timeframes comparable, helping assess income potential and decide between options such as bonds, savings products, or dividend-paying stocks.

payout ratio financial

"and a 101% payout ratio relative to distributable earnings"

The payout ratio measures what portion of a company’s profit is returned to shareholders, usually as cash dividends and sometimes including share buybacks. Investors use it like checking how big a slice of a cake the company gives away versus how much it keeps to fund growth or build a cushion; a very high ratio can signal limited room to sustain payouts, while a very low ratio may mean more reinvestment or potential for higher future payments.

AI-generated analysis. Not financial advice.

Dallas, Texas--(Newsfile Corp. - February 20, 2026) - Armour Residential REIT, Inc. (NYSE: ARR): Stonegate Capital Partners Updates Coverage on Armour Residential REIT, Inc. (NYSE: ARR). The Company ended the quarter with interest income, net income to common, and diluted EPS of $236.5M, $208.7M, and $1.86. This was a year over year increase of 55.1%, $258.1M and $2.69 respectively. This was primarily driven by the strong growth in average interest income on interest earning assets while interest cost on average interest-bearing liabilities declined. Given the current macro environment, we expect this performance to be sustainable.

To view the full announcement, including downloadable images, bios, and more, click here.

Key Takeaways:

• In 4Q25, ARR generated interest income, net income, and diluted EPS of $236.5M, $208.7M, and $1.86, driven by improved interest spreads and lower funding costs.
• Reported distributable earnings of $79.7M, or $0.71 per share, while book value per share increased 6.5% sequentially to $18.63.
• Paid $0.72 per share in dividends, resulting in a 16.4% annualized yield and a 101% payout ratio relative to distributable earnings.

Click image above to view full announcement.

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About Stonegate
Stonegate Capital Partners is a leading capital markets advisory firm providing investor relations, equity research, and institutional investor outreach services for public companies. Our affiliate, Stonegate Capital Markets (member FINRA) provides a full spectrum of investment banking services for public and private companies.

Contacts:

Stonegate Capital Partners
(214) 987-4121
info@stonegateinc.com

Source: Stonegate, Inc.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/284663

FAQ

What were Armour Residential (ARR) 4Q25 key financials reported on February 20, 2026?

Armour Residential reported interest income $236.5M, net income $208.7M, and diluted EPS $1.86 for 4Q25. According to Armour Residential, results were driven by wider interest spreads and lower funding costs, with distributable earnings of $79.7M ($0.71/share).

How did Armour Residential (ARR) interest income change year-over-year in 4Q25?

Interest income increased by approximately 55.1% year-over-year to $236.5M in 4Q25. According to Armour Residential, the gain reflected stronger average yields on earning assets and lower interest costs on funding liabilities.

What did Armour Residential (ARR) report about book value and distributable earnings for 4Q25?

Book value per share rose 6.5% sequentially to $18.63, and distributable earnings were $79.7M ($0.71/share). According to Armour Residential, improved spreads contributed to both book value growth and distributable earnings.

What dividend did Armour Residential (ARR) pay and is it covered by distributable earnings?

Armour Residential paid $0.72 per share, yielding an annualized 16.4%, with a 101% payout ratio versus distributable earnings. According to Armour Residential, the payout exceeded distributable earnings, indicating coverage pressure.

What drove Armour Residential's (ARR) improved 4Q25 profitability and how sustainable is it?

Improved profitability was driven by wider interest spreads and lower funding costs, boosting net income and EPS. According to Armour Residential, given the current macro environment, the company expects this performance to be sustainable.