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Current historically low interest rates have caused investors to seek higher yielding opportunities. Stocks with high yields provide current income and a cushion against capital depreciation. Due to the looming fiscal cliff, I recommend investing in tax preferential accounts if at all possible. Dividend stocks tend to have a strong financial position but it is always critical to check the liquidity and solvency ratios before considering an investment. This dividend strategy generally works in one of two ways: either you buy before the ex-date to receive the dividend or buy after if the stock declines far below the after-tax amount of the dividend. Regardless of your short-term strategies, these equities can be attractive longer-term investments depending on your individual circumstances. For details of my methodology and screener criteria, please consult my most recent article.

I utilized the screen below to focus on attractive investment opportunities:

  • Dividend Yield ≥ 4.0%
  • Ex-Dividend Date = Next Week
  • Market Capitalization ≥ $1B
  • P/E Ratio: 0-20
  • Institutional Ownership ≥ 15%
  • Ideally Modest S&P 500 Underperformance
  • Real Estate Focus

After applying this screen I arrived at the equities discussed below. Please consult my other recent ex-dividend articles for potential trades on more traditional companies. Although I envision these as short-term trading ideas, you still need to exercise caution. The information presented below should simply be a starting point for further research in consultation with your professional financial advisor before you make any investment decisions. My goal is to present new companies to you and provide a brief overview of their recent developments and this should not be considered a substitute for your own due diligence.

Note that many companies have been shifting the dates of their dividend payments into December to avoid higher dividend tax rates in January 2013. The dates presented are accurate to the best of my knowledge but are subject to change at any time without warning.

From mreit.com: an "mREIT is a Mortgage REIT ... which is an entity that specializes in investing solely in mortgage products (e.g. purchasing and selling mortgage-backed securities). Like other REITs (Real Estate Investment Trusts), an mREIT can only deal with mortgages and 90% of earnings must be paid out to its investors annually." Not all mREITs are created equal as the mortgages can be for residential, commercial, healthcare, or many other underlying purposes. Since these companies are required to distribute such a high percent of earnings to investors, the yields are much higher than you find with more traditional companies; however, the stock prices and dividends can both be quite volatile. Additionally, this makes some traditional metrics, such as payout ratios, less meaningful.

Real estate oriented investments are still one of the most potent segments of the market but naturally entail significant risk. Most equities in this space invest in mortgage backed securities ("MBS") that are either issued by US governmental agencies or other financial institutions. Other firms specialize in commercial real estate and other subsets of the real estate market so it is important to know exactly what you are investing in. These companies generate income primarily from the net spread between the interest income earned on these securities/investments and the cost of borrowing as well as hedging activities. This has been an extremely lucrative business as borrowing rates have remained very low while the interest earned on the bonds has declined at a slower rate. There are concerns that returns will narrow as more investors refinance their loans which would put pressure on the investment spread; however, I do not anticipate any drastic changes in the near future. Naturally yields will start to decline but these securities will continue to offer yields unmatched elsewhere in the market.

This short week there are nine real estate equities going ex-dividend with an average yield of 11.57%. Not only is the yield more than double that of the S&P 500 but the average P/E sits at only 9.35. With this many choices I will employ a systematic approach and provide an overview of the company and its strategy, discuss any recent firm-specific news, consider financial performance and related metrics, and finally consider the recent dividend history. With a screen your objective is to find things wrong with companies and look for a reason to not invest. Once you have narrowed down the potential population, then you can conduct further research.

Two Harbors Investment Corp. (TWO): 18.98% Yield; Ex-Dividend 12/27

Overview And Strategy - $3.4B mREIT that invests in agency and non-agency residential MBS. As of September 30, 2012, approximately 83% of the portfolio was invested in agency securities with 17% in non-agency securities.

Firm Specific News -

Financial Performance And Metrics -

  • Book Value: 11.48
  • Price/Book: 1.01
  • Leverage (Debt/Equity): 4.1
  • Performance YTD: 39.64%

Dividend History ($.55 per Share Quarterly) - The current dividend payment represents a $.19 increase over the prior quarter and $.15 versus 2011's quarterly payment. The dividend payment was flat at $.40 per share dating back to late 2010 but has exhibited recent volatility.

American Capital Agency Corp (AGNC): 16.05% Yield; Ex-Dividend 12/24

Overview And Strategy - $10.6B mREIT that invests in agency residential MBS.

Firm Specific News -

Financial Performance And Metrics -

  • Book Value: 33.00
  • Price/Book: 0.94
  • Leverage (Debt/Equity): 7.26
  • Performance YTD: 24.3%

Dividend History ($1.25 per Share Quarterly) - AGNC reduced the dividend payment in the first quarter of 2012 from $1.40 to $1.25 where it has remained for the entire year. Since the third quarter of 2011 it appears that management has favored a strategy of consistent dividend payments rather than allowing them to fluctuate in the first year following the initial public offering.

Chimera Investment Corporation (CIM): 13.64% Yield; Ex-Dividend 12/27

Overview And Strategy - $2.7B mREIT that invests in agency and non-agency residential MBS. Chimera has not filed a 10-Q since September 2011 but the last reported portfolio was divided nearly equally between agency and non-agency securities.

Firm Specific News -

Financial Performance And Metrics -

  • Book Value: 3.31 (estimated by the firm as it is delinquent on filings)
  • Price/Book: 0.80 (based upon estimated book value)
  • Leverage (Debt/Equity): 1.85
  • Performance YTD: 16.81%

Dividend History ($.09 per Share Quarterly) - The dividend has been declining steadily since 2010 and has since stabilized at $.09. Given the company's failure to release audited financial statements, it is difficult to assess the sustainability of the payouts.

Annaly Capital Management, Inc. (NLY): 12.20% Yield; Ex-Dividend 12/26

Overview And Strategy - $14.4B mREIT that invests primarily in agency residential MBS. Annaly has announced its intentions to diversify into commercial real estate securities (see below).

Firm Specific News -

Financial Performance And Metrics -

  • Book Value: 17.53
  • Price/Book: 0.84
  • Leverage (Debt/Equity): 6.04
  • Performance YTD: 1.86%

Dividend History ($.45 per Share Quarterly) - The dividend has been declining precipitously since the further quarter of 2012 and declined another $.05 quarter-over-quarter.

Newcastle Investment Corp (NCT): 10.20% Yield; Ex-Dividend 12/26

Overview And Strategy - $1.49B REIT that invests in residential (residential mortgage servicing rights and non-agency MBS) and commercial debt. Newcastle is a very diverse corporation so I recommend reviewing its portfolio of investments.

Firm Specific News -

Financial Performance And Metrics -

  • Book Value: 5.99
  • Price/Book: 1.44
  • Leverage (Debt/Equity): 2.42
  • Performance YTD: 103.54%

Dividend History ($.22 per Share Quarterly) - The dividend declined substantially during the financial crisis and has generally stayed between $.15 and $.25 per quarter. The dividend was recently increased 10% and has not fallen below $.20 since late 2011.

Capstead Mortgage Corporation (CMO): 10.01% Yield; Ex-Dividend 12/27

Overview And Strategy - $1.2B REIT that invests in agency residential MBS.

Firm Specific News -

Financial Performance And Metrics -

  • Book Value: 15.80
  • Price/Book: 0.76
  • Leverage (Debt/Equity): 8.54
  • Performance YTD: 5.18%

Dividend History ($.30 per Share Quarterly) - The dividend has declined each of the past three quarters and the yield is in danger of falling to single digits.

MFA Financial Inc. (MFA): 9.64% Yield; Ex-Dividend 12/26

Overview And Strategy - $3.0B REIT that invests in agency and non-agency residential MBS. As of September 30, 2012, approximately 59% of the portfolio was invested in agency securities with 41% in non-agency securities.

Firm Specific News - No material news recently.

Financial Performance And Metrics -

  • Book Value: $9.07
  • Price/Book: 0.92
  • Leverage (Debt/Equity): 2.99
  • Performance YTD: 34.74%

Dividend History ($.20 per Share Quarterly) - The dividend has exhibited volatility throughout MFA's history and has rarely stayed the same quarter-over-quarter. The dividend has been sliding throughout 2012 and is a penny shy of a low set in July 2010.

Starwood Property Trust, Inc. (STWD): 7.54% Yield; Ex-Dividend 12/27

Overview And Strategy - $3.2B commercial real estate firm that specializes in originating, investing, financing and managing mortgage loans.

Firm Specific News -

  • $368M Capital Offering: Starwood offered 16M common shares at approximately $23 per share.
  • Special Dividend: $.10 per share extraordinary dividend declared for December 2012 ahead of the fiscal cliff.

Financial Performance And Metrics -

  • Book Value: $19.64
  • Price/Book: 1.19
  • Leverage (Debt/Equity): 0.61
  • Performance YTD: 33.91%

Dividend History ($.44 per Share Quarterly plus extraordinary $.10 dividend) - The dividend was increased modestly in mid-2011 and has remained constant at $.44 since that time.

Lexington Realty Trust (LXP): 5.90% Yield; Ex-Dividend 12/27

Overview And Strategy - $1.8B investor in single-tenant commercial properties for lease to corporations.

Firm Specific News -

Financial Performance And Metrics -

  • Book Value: $7.35
  • Price/Book: 1.38
  • Leverage (Debt/Equity): 1.74
  • Performance YTD: 42.04%

Dividend History ($.15 per Share Quarterly) - The dividend was increased in September to $.15 and has increased 50% since 2010 without a single decrease. Prior to the financial crisis the dividend payment was consistently greater than $.30.

The information presented has been summarized below.

(click to enlarge)

Please refer to profile page for disclaimers.

Source: Must Read Information On Popular REITs For 2013

Additional disclosure: Please refer to profile page for disclaimers.