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)
Advertisements
Published in: on August 31, 2010 at 9:21 pm  Leave a Comment  

The URI to TrackBack this entry is: https://myhighdividendstocks.wordpress.com/2010/08/31/high-dividend-stocks-%e2%80%93-agnc-analysis-of-the-income-account-non-recurrent-earnings-profits-through-repurchase-of-senior-securities-at-a-discount-tags-high-dividend-stocks-agnc-inco/trackback/

RSS feed for comments on this post.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: