Orchid Island Capital Declares $0.12 Monthly Dividend—RMBS Portfolio Remains Heavily Weighted to 30-Year Fixed Mortgages

Monthly Dividend Stability Continues

Orchid Island Capital (NYSE: ORC) has declared its November 2025 monthly dividend of $0.12 per share, with payment slated for December 30, 2025. The ex-dividend and record dates fall on November 28, 2025. This announcement aligns with the company’s practice of providing consistent monthly cash distributions to shareholders—critical for income-focused investors relying on REIT payouts.

With 167.76 million shares outstanding as of November 12, the commitment to regular distributions remains strong, although management reiterates no minimum payout guarantee and notes distributions depend on qualifying as a REIT by distributing at least 90% of taxable income annually.

Portfolio Tilted to 30-Year Fixed-Rate Agency RMBS

The latest intra-quarter update (as of October 31, 2025) shows Orchid Island's portfolio continues to emphasize 30-year fixed-rate Agency residential mortgage-backed securities (RMBS), especially in the 5.5% and 6.0% coupon segments. The company's total mortgage assets stood at $9.19 billion (fair value: $9.24 billion), with 97% in pass-through RMBS and just 0.15% in structured securities like interest-only (IO) and inverse interest-only (IIO) tranches.

Most assets are Agency-backed, with 56.8% from Fannie Mae and 43.2% from Freddie Mac. The pool is heavily concentrated in higher-coupon bonds, with the largest notional exposure to 30-year 5.5% ($2.20 billion face value) and 6.0% ($2.97 billion) paper, aiming to capture attractive yield while managing prepayment risk.

Rate Sensitivity Managed Through Derivatives and Hedges

To help offset the effects of potential interest rate swings, Orchid Island maintains an active hedge book with over $6.1 billion in notional balances across instruments like SOFR futures, Treasury futures, swaps, and TBA shorts. Modeled rate sensitivity data shows the following impact from instantaneous parallel yield curve shifts:

These results suggest the portfolio would be negatively impacted in both rising and falling rate scenarios—an indicator of deliberate risk management via matched hedging rather than directional interest rate bets.

Borrowing Profile Reflects Broad Counterparty Base

Borrowings to finance the asset base total $8.33 billion as of October 31, 2025. Orchid Island diversifies its counterparty exposure among major dealers like J.P. Morgan, Citigroup, and Wells Fargo, with a weighted average repo rate of 4.18% and an average maturity of 43 days. No single counterparty exceeds 6.1% of total borrowings, reflecting a conservative approach to liquidity risk.

Agency RMBS Exposure Supports Predictable Income, But Prepayment and Rate Risks Persist

Orchid Island’s preference for Agency pass-through securities (backed by Fannie Mae and Freddie Mac) provides principal and interest payment guarantees, lowering credit risk but exposing the company to prepayment and reinvestment risk as rates shift. Weighted average coupons on the main pass-through pool are 5.51%, while three-month prepayment speeds for 30-year pools vary from 7.2% to 29.5%, depending on the coupon.

What’s Next for Investors?

The next dividend announcement is anticipated on December 9, 2025. Investors monitoring ORC should focus on continued portfolio allocation trends, changes in rate sensitivity, and prepayment activity—critical levers in REIT income performance. With consistent distributions and disciplined risk management, Orchid Island appears committed to steady shareholder returns amid shifting macroeconomic conditions.

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