High dividend stocks – AGNC analysis of the income account> non-recurrent earnings> profits through repurchase of senior securities at a discount ((tags: high dividend stocks, AGNC, income account, non-recurrent earnings, repurchase of senior securit

At times a substantial profit is realized by corporations through the repurchase of their own senior securities at less than par value. The inclusion of such gains in current income is certainly a misleading practice, first, because they are obviously nonrecurring and, second, because this is at best a questionable sort of profit, since it is made at the expense of the company’s own security holders.

AGNC has not issued any senior securities, so this is not applicable to AGNC.

Key definitions:
Par value – A value set as the face amount of a security, typically expressed as multiples of $100 or $1,000.  Bondholders receive par value for their bonds on maturity.  Source (www.finance.alberta.ca/business/ahstf/glossary.html)

Senior securities – Notes, bonds, debentures, or preferred stocks whose claim on earnings and assets ranks ahead of common stock. Should a company liquidate, the claims of a senior security holders ranks above those of junior security holders because the company's creditors receive recompensation before the owners.  Source (www.bluecollardollar.com/mutualglossaryq_z.html)
Published in: on August 31, 2010 at 9:21 pm  Leave a Comment  

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