Next Move For Fannie Mae (FNM), Freddie Mac (FRE): Cut Dividends

Fannie Mae (FNM) and Freddie Mac (FRE) may have to cut their dividends in order to preserve capital as their share prices and balance sheets continue to deteriorate. Bloomberg:

Freddie Mac will probably halt its 25-cents-a-share quarterly payment and Fannie Mae will likely eliminate dividends after more than $11 billion in combined losses since last year, according to Bloomberg dividend forecasts.

Washington-based Fannie Mae has paid shareholders for three decades, while Freddie Mac, located in McLean, Virginia, increased its payout every year since 1990 before lowering the awards in November.

Both stocks tumbled again yesterday as investors lost confidence in Treasury Secretary Hank Paulson’s bailout plan and Moody’s cut its financial strength ratings. Freddie Mac payed $1.55 billion in dividends last year, while Fannie Mae payed out $2.48 billion.

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