Annaly Capital Management, Inc.
One of the things I really like to do is bury myself in market analysis. I really like examining long-term trends in performance and identifying key behavior in the value of stocks.
The inspiration for value analysis
Buying at a low price-to-earnings multiple should be a cakewalk, right? The difficulty with this is that lower price-to-earnings multiples tend to happen on the bottom of an economic cycle.
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 »
Brighter economic times are ahead, but as the economy rebounds it will probably be necessary for interest rates to rise to keep a lid on inflation. This will be a very gradual process, but it is as close to a sure thing as possible. As long as you keep that in mind, certain investments that seem out of style at the moment become solid long-term choices.
Starting with insurance
Superficially more »
I keep my eyes on a few mREITs, but these use mortgages to make their money. However, not all REITs need to rely on a paper note to generate an income that is paid out to investors. There are a lot of public REITs that buy, sell, and lease properties to earn money.
REITs are dividend investments, because they must pay out 90% of their income. That means that the 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 »
No one, and I mean no one, has the ability to consume Wall Street quite like Ben Bernanke. After an upbeat U.S. jobs report, interest in the bearded Fed Chairman has reached a fever pitch.
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 »
Real estate investment trusts are no strangers to paying high dividend yields, as their incorporation and tax structures entitle them to deduct dividends paid to owners, significantly dodging a large U.S. federal income tax bill every year. Investors looking for high yields shouldn’t turn a blind eye to this industry, and gems with yields north of 9% can be found with a little digging.
We pay attention to more »
Invesco Mortgage Capital (NYSE: IVR) is one of the most attractive dividend stocks, yielding an astounding 14.26%. But it is quite risky, as well. The stock performance is a roller coaster, with numerous dips and jumps for this year. The bottom-line is a loss for this year so far. However, this is offset by its yield, which is higher than its share growth. Shares of Invesco might soar if 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 »
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 »
Like many other real estate investment trusts (REITs), mortgage REITs have sold off of late. That drop, however, doesn't make them buys. Investors should still avoid ARMOUR Residential REIT (NYSE: ARR), American Capital Mortgage Investment (NASDAQ: MTGE), Chimera Investment (NYSE: CIM), and Annaly Capital Management (NYSE: NLY).
The carry trade
Mortgage REITs use equity and, more importantly, debt to buy mortgages. With interest rates at historically low levels, these more »
Slower growth companies with high dividend yields were once considered attractive investments because of low returns on government debt and comparatively lower interest rates driven by central banks. But it seems this trend has come to an end. Recently, the U.S. Treasury bond reached its 13-month high. An improvement can be seen in the U.S. economy, as the Federal Reserve continues investing nearly $85 billion a month on 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 »
For some time, the mortgage real estate investment trust industry has been an attractive safe haven for the yield driven investor. mREITs are companies which specialize in using leverage to buy and/or trade mortgage backed securities. Typically, these companies have offered great dividend yields even during times of extremely low interest rates.
In addition, as a result of loose monetary policy, the net asset value of many of these more »
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