It has been less than five years since Fannie Mae was taken under conservatorship, and because of the multiple draws from the Treasury, the government's preferred stake in the company has been less than the current $117.1 billion during this time. But if we base our dividend yield calculation on five full years and the entire $117.1 billion, the government's annual dividend yield on the Fannie Mae preferred shares has been 16.23%.
Not a bad investment, considering that the government managed to ensure the continued liquidity of the U.S. mortgage market, while eventually raking in a huge return.
While further DTA releases will be small ones, by the end of the year, assuming Fannie Mae remains as profitable as it was during the first quarter, the government will have earned dividends on its Fannie Mae investment close to or even exceeding its total investment, in just over five years.
No matter how much in dividends Fannie Mae manages to pay the federal government, there is no mechanism in place for Fannie to repurchase the outstanding preferred shares.