10 Extreme Dividend Stocks With Upside Potential

6. Dynex Capital, Inc. (NYSE:DX)

Upside Potential as of August 14: 13.6%

Dividend Yield as of August 14: 12.84%

Dynex Capital, Inc. (NYSE:DX) is a real estate investment trust company, based in Virginia, US. The company mainly invests in mortgage-backed securities and other real estate assets. On August 12, the company declared a monthly dividend of $0.13 per share, which was consistent with its previous dividend. It has been paying regular dividends to shareholders since 2008, which places it on our list of the best dividend stocks. The company was able to keep up with its monthly payments consistently thanks to its solid cash reserves. At the end of June, it had over $286 million available in cash and cash equivalents, up from roughly $120 million at the end of December 2023. As of August 14, the stock has a dividend yield of 12.84%.

Dynex Capital, Inc. (NYSE:DX) faced challenges during the 2022-2023 period due to elevated short-term interest rates, which increased its interest expenses and put pressure on the trust’s book value. However, this is about to change as mortgage REITs are likely to become more appealing as passive income options in a lower interest rate environment. The Federal Reserve might soon lower the fed funds rate, with a meeting scheduled for September 17-18, 2024, where they will consider this possibility. Due to this, analysts are presenting a bullish on DX. Wall Street analysts have maintained a consensus Moderate Buy rating on the stock with a $13.80 price target, which represents an upside potential of 13.6%.

In the second quarter of 2024, Dynex Capital, Inc. (NYSE:DX) persisted in executing its strategic plan, focused on delivering consistent dividend income through careful management of its capital. It effectively secured funding at advantageous rates and is set to benefit from the historically wide spreads in the mortgage market. Recognizing the value of human capital, the company made several key decisions to support its future success.