Anworth Announces 2020 Dividend Tax Information

Rhea-AI Summary

Anworth Mortgage Asset Corporation (NYSE: ANH) announced tax treatment for its dividends for the fiscal year 2020. None of the dividends are classified as ordinary income, meaning they will not be taxed at ordinary income rates. This includes cumulative preferred stocks and common stock distributions, with total dividends per share amounting to $2.695315 for Series A, $1.957650 for Series B, $2.382815 for Series C, and $0.290000 for common stock. Stockholders are advised to consult their tax advisors regarding the tax implications of these distributions.

Positive

• Dividends were maintained across multiple classes of stock, reflecting stability.
• Total dividends for the fiscal year were significant: $2.695315 for Series A, $1.957650 for Series B, $2.382815 for Series C, and $0.290000 for common stock.

Negative

• None of the dividends are treated as ordinary income, potentially limiting tax benefits for stockholders.
• Dividends paid in 2021 from undistributed earnings could impact future income reporting.

Anworth Mortgage Asset Corporation (NYSE: ANH), a real estate investment trust (REIT), announced today the following tax treatment regarding its dividend distributions for the Company’s fiscal year ended December 31, 2020.

Generally, the portion of Anworth’s dividends that are characterized as ordinary income will be taxed at full ordinary income rates. However, for our 2020 fiscal year, none of our dividends are treated as ordinary income. For stockholders that are corporations, Anworth’s dividends are not eligible for the corporate dividends-received deduction.

Stockholders should check the tax statements they receive from brokerage firms to ensure that the Anworth dividend information reported in those statements conforms to the information reported herein. Effective in 2018, the Tax Cuts and Jobs Act generally allows for a 20% deduction of REIT dividends treated as ordinary income. However, for our 2020 fiscal year, we did not have any REIT dividends treated as ordinary income. As each stockholder’s tax situation may be different, and each dividend distribution may have its own separate tax status, stockholders are encouraged to consult their tax advisors to determine the taxes that should be paid on Anworth’s dividend distributions.

The tables below provide detailed tax information relating to the quarterly dividend distributions paid to Anworth’s stockholders with respect to the 2020 tax year:

8.625% Series A Cumulative Preferred Stock (CUSIP 037347 20 0)
						2020
						Total			2020			2020			Short-Term
Declaration		Record		Payable		Distribution			Ordinary			Return of			Capital			Carry-Over
Date		Date		Date		Per Share			income			Capital			Gains			to 2021
11/06/19		12/31/19		01/15/20		$	0.539063		$	-		$	0.539063		$	-		$	-
02/27/20		03/31/20		04/15/20			0.539063			-			0.539063			-			-
05/06/20		06/30/20		07/15/20			0.539063			-			0.539063			-			-
08/05/20		09/30/20		10/15/20			0.539063			-			0.539063			-			-
11/05/20		12/30/20		01/15/21			0.539063			-			-			-			0.539063
				Total:		$	2.695315		$	-		$	2.156252		$	-		$	0.539063

6.25% Series B Cumulative Convertible Preferred Stock (CUSIP 037347 30 9)
						2020
						Total			2020			2020			Short-Term
Declaration		Record		Payable		Distribution			Ordinary			Return of			Capital			Carry-Over
Date		Date		Date		Per Share(1)			income			Capital			Gains			to 2021
11/06/19		12/31/19		01/15/20		$	0.393469		$	-		$	0.393469		$	-		$	-
02/27/20		03/31/20		04/15/20			0.390710			-			0.390710			-			-
05/06/20		06/30/20		07/15/20			0.390789			-			0.390789			-			-
08/05/20		09/30/20		10/15/20			0.392057			-			0.392057			-			-
11/05/20		12/30/20		01/15/21			0.390625			-			-			-			0.390625
				Total:		$	1.957650		$	-		$	1.567025		$	-		$	0.390625

________________________________
(1)		The Series B Preferred Stock is convertible into shares of our common stock. The conversion rate is adjusted per a stated formula when distributions are made to our common stockholders. The value of any conversion rate increase is a deemed distribution for tax purposes and is taxable to holders of our Series B Preferred Stock to the extent supported by earnings and profits and is included in the table above. See Forms 8937 on our Company website for additional details.

7.625% Series C Cumulative Redeemable Preferred Stock (CUSIP 037347 40 8)
						2020
						Total			2020			2020			Short-Term
Declaration		Record		Payable		Distribution			Ordinary			Return of			Capital			Carry-Over
Date		Date		Date		Per Share			income			Capital			Gains			to 2021
11/06/19		12/31/19		01/15/20		$	0.476563		$	-		$	0.476563		$	-		$	-
02/27/20		03/31/20		04/15/20			0.476563			-			0.476563			-			-
05/06/20		06/30/20		07/15/20			0.476563			-			0.476563			-			-
08/05/20		09/30/20		10/15/20			0.476563			-			0.476563			-			-
11/05/20		12/30/20		01/15/21			0.476563			-			-			-			0.476563
				Total:		$	2.382815		$	-		$	1.906252		$	-		$	0.476563

Common Stock (CUSIP 037347 10 1)
						2020
						Total			2020			2020			Short-Term
Declaration		Record		Payable		Distribution			Ordinary			Return of			Capital			Carry-Over
Date		Date		Date		Per Share			income			Capital			Gains			to 2021
12/17/19		12/31/19		01/29/20		$	0.090000		$	-		$	0.090000		$	-		$	-
04/21/20		05/12/20		05/29/20			0.050000			-			0.050000			-			-
06/16/20		06/30/20		07/29/20			0.050000			-			0.050000			-			-
09/16/20		09/30/20		10/29/20			0.050000			-			0.050000			-			-
12/16/20		12/31/20		01/29/21			0.050000			-			-			-			0.050000
				Total:		$	0.290000		$	-		$	0.240000		$	-		$	0.050000

Because Anworth is a REIT, dividends declared in October, November, or December of a calendar year with a record date in that calendar year, but which are payable in January of the following year, are considered paid for Form 1099 reporting purposes on the record date, not on the payable date, to the extent the REIT has any remaining undistributed earnings and profits (as computed for income tax purposes) as of December 31 of that calendar year. The amounts shown above that were declared in the fourth quarter of 2020 but not paid until January 2021 represent the per share amount of the distributions paid which exceeded Anworth’s undistributed earnings and profits for income tax purposes as of December 31, 2020 and which were not included in the 2020 tax year but were carried over to 2021 as ordinary income for income tax purposes.

Dividends may be reinvested through Anworth’s Dividend Reinvestment Plan. Plan information may be obtained from the Plan Administrator, American Stock Transfer and Trust Company, at 877-248-6410, on Anworth’s web site at http://www.anworth.com, or by contacting Anworth at 310-255-4493.

About Anworth Mortgage Asset Corporation

We are an externally-managed mortgage real estate investment trust (“REIT”). We invest primarily in mortgage-backed securities that are either rated “investment grade” or are guaranteed by federally sponsored enterprises, such as Fannie Mae or Freddie Mac. We seek to generate income for distribution to our shareholders primarily based on the difference between the yield on our mortgage assets and the cost of our borrowings. We are managed by Anworth Management LLC (our “Manager”), pursuant to a management agreement. Our Manager is subject to the supervision and direction of our Board and is responsible for (i) the selection, purchase, and sale of our investment portfolio; (ii) our financing and hedging activities; and (iii) providing us with portfolio management, administrative, and other services and activities relating to our assets and operations as may be appropriate. Our common stock is traded on the New York Stock Exchange under the symbol “ANH.” Anworth Mortgage Asset Corporation is a component of the Russell 2000® Index.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This news release may contain forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon our current expectations and speak only as of the date hereof. Forward-looking statements, which are based on various assumptions (some of which are beyond our control) may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “anticipate,” “assume,” “estimate,” “intend,” “continue,” or other similar terms or variations on those terms or the negative of those terms. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including but not limited to, changes in interest rates; changes in the market value of our mortgage-backed securities; changes in the yield curve; the availability of mortgage-backed securities for purchase; increases in the prepayment rates on the mortgage loans securing our mortgage-backed securities; our ability to use borrowings to finance our assets and, if available, the terms of any financing; risks associated with investing in mortgage-related assets; the scope and duration of the COVID-19 (coronavirus) pandemic, including actions taken by governmental authorities to contain the spread of the virus, and the impact on our business and the general economy; changes in business conditions and the general economy; implementation of or changes in government regulations affecting our business; our ability to maintain our qualification as a real estate investment trust for federal income tax purposes; our ability to maintain an exemption from the Investment Company Act of 1940, as amended; risks associated with our home rental business; and our Manager’s ability to manage our growth. Our Annual Report on Form 10-K and other SEC filings discuss the most significant risk factors that may affect our business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

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FAQ

What is the tax treatment of Anworth's dividends for 2020?

For 2020, none of Anworth's dividends are treated as ordinary income.

How much were the total dividends per share for Series A preferred stock in 2020?

The total dividends per share for Series A preferred stock were $2.695315.

Are Anworth's dividends eligible for the corporate dividends-received deduction?

No, Anworth's dividends are not eligible for the corporate dividends-received deduction.

What should shareholders do to understand their tax obligations on dividends?

Shareholders should consult their tax advisors to determine the taxes owed on Anworth's dividend distributions.

What were the dividends declared for common stock in 2020?

The dividends declared for common stock in 2020 totaled $0.290000.