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Mortgage real estate investment trust "REIT" stocks have been providing investors with exceptional dividend yields that are often around 12 to 16%. In a very low interest rate world, that is extraordinary. Mortgage REIT companies are able to achieve these outsized dividends because real estate investment trusts are required to pay a high percentage of any earnings, (at least 90%) out to shareholders and also because of leverage. By borrowing money at low rates and investing it in higher-yielding mortgage securities, these companies are able to amplify returns for shareholders.

These stocks have risks like any investment and one of those downside risks is when mortgages are refinanced at lower rates. When this happens, mortgages with higher rates are replaced with lower rate mortgages and this reduces profits for these companies. However, investors are well-rewarded for taking some risk in mortgage REIT stocks. It is worth noting that mortgage securities are relatively stable assets which reduces some of the risk that comes with using leverage.

While yields of about 12 to 16% are already enough to make most investors happy, there is a new way to just about double those returns. The ETRACS Monthly Pay 2x Leveraged Mortgage REIT ETN (NYSEARCA:MORL) is a new investment offering that uses two times leverage and tracks the same index that is the basis of the Market Vectors Mortgage REIT ETF (NYSEARCA:MORT). As the top two holdings, this fund has Annaly Capital (NYSE:NLY), and American Capital Agency (NASDAQ:AGNC). It also owns Two Harbors Investment (NYSE:TWO) and Chimera Investment (NYSE:CIM). Investors who already own stocks like Annaly Capital, American Capital Agency and the others might want to consider this investment since they already are exposed to these companies and the sector risks. While the leverage increases the risks, the diversification it offers reduces the risk of investing in a single company.

This investment product started trading on October 16, 2012, and it has already bounced between $22.45 and $28.10, which is quite a range in a short time. Since it uses two times leverage, it will be twice as volatile as the underlying assets. That means investors need to be more risk tolerant, however with a yield that roughly doubles most mortgage REIT stocks, investors are well-rewarded for the risks and the dividend payments should help smooth out the volatility. Here is a look at the data for this ETN and some of its top holdings:

Key Data Points For ETRACS 2x Leveraged Mortgage REIT From Yahoo:
Current Price: $23.74
52-Week Range: $22.45 to $28.10
Dividend: 2 times Market Vectors Index, which yields 24.82%
2012 Earnings Estimate: n/a

Key Data Points For Annaly Capital From Yahoo Finance:
Annaly Capital is a top holding in the portfolio with about a 19% weighting
Current Price: $14.98
52-Week Range: $14.25 to $17.75
Dividend: $2 annually, which yields 13.4%
2012 Earnings Estimate: $1.83 per share

Key Data Points For American Capital Agency From Yahoo Finance:
American Capital is a top holding in the portfolio with about a 15% weighting
Current Price: $30.82
52-Week Range: $27.61 to $36.77
Dividend: $5 annually, which yields 16.2%
2012 Earnings Estimate: n/a

Key Data Points For Two Harbors Investment From Yahoo Finance:
Two Harbors is a top holding in the portfolio with about a 5% weighting
Current Price: $10.98
52-Week Range: $8.89 to $12.20
Dividend: $1.44 annually, which yields 13.1%
2012 Earnings Estimate: n/a

Key Data Points For Chimera Investment From Yahoo Finance:
Chimera is a top holding in the portfolio with about a 5% weighting
Current Price: $2.55
52-Week Range: $1.81 to $3.16
Dividend: 36 cents annually, which yields 14.1%
2012 Earnings Estimate: 45 cents per share

Data sourced from Yahoo Finance. No guarantees or representations are made. Please consult a financial advisor before making investments.

Source: This New Mortgage REIT Investment Is Worth Buying For 25% Yields