American Capital Agency
Unless you have been living in a cave for the past half year, you will have heard that mortgage REITs, and REITs in general are not doing terribly well in the current market. As the Federal Reserve hints that it could soon begin tapering its asset purchases, the value of assets held by mREITs is in for a decline, wiping out months of asset value gains.
Having said that …
However more »
Mortgage REITs are among the favorite asset classes for income investors thanks to their attractive dividend yields as well as modest capital appreciation over the past few years. However, with an uncertain interest rate environment thanks to the ever looming threat of the Fed’s tapering of QE3, mREITS are giving investors some sleepless nights. A few weeks ago, I had stated that Capstead Mortgage (NYSE: CMO) is the safest more »
REITs have been on income investors' radar for the past few years, as traditional income sources like bonds yielding record-low levels. With mortgage REITs like Annaly Capital Management (NYSE: NLY) and American Capital Agency (NASDAQ: AGNC) paying out dividends over 15%, and at times well above 20% for American Capital, it’s a tempting place to invest.
Warren Buffett and Mae West have both said that too much of a more »
As the world readies for a tapering of QE3, interest rates have adjusted for an eventual Fed exit. The 10-year US Treasury yield sits at 2.53%, up from 1.6% in May.
Long-dated maturities see the biggest change. Mortgage-backed securities took a beating on the Fed’s words of a taper, but yields have since come off their highs.
Let’s examine more »
Many investors are looking for high income-paying stocks that also offer a level of capital protection. I recently ran a screener to try and identify a handful of worthwhile candidates. This is exactly the kind of search that, say a retiree could be doing; looking for dividend payers but also protection against loss of capital. I ran a screener based on the following three criteria:
- P/E (TTM) ratio of more »
Last week was extremely tough for mREITS in general, and Annaly Capital Management (NYSE: NLY) in particular. The 10-year Treasury yield was up another 22 basis points in Friday trading, exceeding the 2.7%.level. This equates to a jump of 8.5% in the yield. Normally, such a move can take months, if not years. But today's economy is on steroids. Everything happens at a furious pace.
Whether more »
As the US economy continues to recover from the disaster of 2008, investors concerned with macroeconomics have positioned their portfolios to benefit from the recovery. Many have dashed into REITs. As a value investor for the most part, I find macroeconomics to be unpredictable, but I do understand what these investors are doing. REITs have served investors well these past few years, as their current yields suggest.
Recently however, many more »
Thanks to the improving job scenario and rebounding real estate sector in the U.S., the Federal Reserve recently announced that it could “consider” tapering off its monthly liquidity injections sooner than expected. While this may come as a shocker, I believe that this is a great time to buy REITs.
This is because in its press release, the Fed had stated that it will keep a close eye on more »
Despite the speculation about the Fed's exit, some mREITs are poised to benefit from their management structures and the positioning of their investment portfolios. Let's see which mREITs fit the bill and how they will benefit under the prevailing challenges.
The business model and its risks
Mortgage REITs are complicated and dependent on changes in interest rates. They loan money for mortgages or the acquisition of existing residential more »
Investors often love to quote Warren Buffett’s timeless mantra, “Be fearful when others are greedy and greedy when others are fearful.” However, very few investors ever put those wise words to good use. Instead, they sell at the bottom of bear markets and buy at the top of bull markets, with their investing decisions dictated by irrational fear or exuberance.
Recently, the market was dragged down by several major more »
According to section 16 of the SEC, a company's management and any other person who holds more than 10% stake in a company's equity are considered an insider. Transactions by these insiders are not always illegal, but activity is considered illegal if it occurs prior to any important news not yet published.
To make the transaction legal, insiders must file Form 4 with the SEC regarding any change more »
I normally like to organize my stock ideas by theme, usually by industry. However, sometimes you do not care about what a company does, but rather what it does for your portfolio. The whole market has risen so high lately that there is a general worry that it could tumble, even if the decline is only temporary. That is the reason I tend to like dividend stocks as a part more »
mREITS make their living by borrowing money at low, short-term interest rates and then buying government-guaranteed mortgage bonds that pay higher, long-term rates. They earn money on the "spread" between those two rates. They're basically a form of a bank, only without branches, bankers, and bank commissions. As of late, shares of companies in the mREIT sector such as Annaly Capital (NYSE: NLY), American Capital Agency (NASDAQ: AGNC) and more »
The mortgage REITs space is in a lot of trouble right now as speculation regarding the Fed’s tapering off of its quantitative easing program has led to an increase in long term interest rates. Investor favorites like American Capital Agency (NASDAQ: AGNC) and ARMOUR Residential (NYSE: ARR) have witnessed the sharpest price declines in recent weeks due to fears about the decreasing value of the MBS securities held by more »
A combination of falling dividend payouts and concerns about future Federal Reserve policy have hit the shares of highly levered mortgage REITs hard in recent months.
This selling has been compounded in the last few weeks as the yield on US government debt has started to rise back up to realistic levels, which has spurred investors to dump mREIT stocks in favor of the relatively risk free government debt.
Having more »
In recent years, REITs have gained tremendous favor as stable investments that produce high but predictable yields. Many REITs distribute at least 10 percent of their total NPV on an annual basis, and many have yields that exceed 15 percent. In exchange, REITs generally trade within narrow ranges and rarely participate in equity-market rallies without catalysts specific to the real estate market.
Three firms have caught the attention of observers more »
American Capital Agency (NASDAQ: AGNC) has been one of the star performers in the mortgage REIT sector since its inception in 2008. However, the recent performance of this mREIT is something to worry about as the stock price has dropped rapidly over the past few weeks.
What’s going on in the mREIT Sector?
Agency mortgage REITs like American Capital Agency invest in long duration mortgage backed securities (MBS) that more »
Most income-oriented investors are hardly convinced about the safety of their investments in stocks, given the highly volatility in trading. However, the investment risk is substantially reduced in large-cap dividend companies due to their relatively solid and stable financials. Investing in dividend stocks may not make someone rich overnight, but it can help provide a good retirement portfolio. So, for conservative investors looking for safer investments for their retirement, high-yielding more »
In light of the sell-off in Mortgage Real Estate Investment Trusts (mREIT) over the past month, now might be a good time to take a look at three ideas within the sector. In this post, I will take a look at total returns, dividend yields, and current trading valuations of three mREITs.
For those who are not acquainted with the Real Estate Investment Trust industry, unlike Hybrid mREITs, Agency mREITs more »
A screen for high-yield stocks will send you to two very different levered business models: business development companies and mortgage REITs, both of which are known for double-digit annual distribution yields. But the threat of a less active Federal Reserve has recently left the latter class of stocks under attack.
Why mREITs are diving
Mortgage REITs use inexpensive short-term financing to purchase (with leverage) long-term mortgage-backed securities. The name of more »
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