I recently took to social media and lambasted talking heads who claim that mortgage real estate investment trusts (mREITs) are too difficult to understand. To me, it's not that hard to understand, and it won't be for you either. Some of my institutional money management friends said they have no place in a portfolio. Really? Just going to lump them in with penny stocks? No place? Well, everyone is entitled to their opinion. However, I disagree. I not only think mREITs are not that difficult to understand but I also believe that they serve a good purpose in tax favorable accounts such as IRAs and ESAs. Now, many of you are reading this and probably thinking "ok, but hasn't this sector been crushed?" The answer is yes, it has been. My followers who own American Capital Agency (NASDAQ:AGNC) have been most concerned. Specifically, the concern rests with a declining share price (figure 1) and a reduction in historical dividends (table 1). I maintain that yes, in the short-term it's painful, but the reason we own these stocks is to collect income, our compound our investments. In that regard, I think they have a place in a portfolio, especially if you dollar cost average or pyramid down into the stocks and plan to hold for 10 to 30 years as a long-term investment.
Figure 1. Historical Share Price Of American Capital Agency in 2013
Table 1. American Capital Agency's Common Stock Dividend History, Dividends Paid Since 2008.
Ex-Dividend Date | Dividend Paid Date | Dividend |
6/30/2008 | 7/29/2008 | $0.31 |
9/25/2008 | 10/10/2008 | $1.00 |
12/29/2008 | 1/26/2009 | $1.20 |
3/31/2009 | 4/27/2009 | $0.85 |
6/30/2009 | 7/27/2009 | $1.50 |
9/30/2009 | 10/27/2009 | $1.40 |
12/29/2009 | 1/26/2010 | $1.40 |
3/29/2010 | 4/28/2010 | $1.40 |
6/28/2010 | 7/28/2010 | $1.40 |
9/24/2010 | 10/27/2010 | $1.40 |
12/29/2010 | 1/27/2011 | $1.40 |
3/21/2011 | 4/27/2011 | $1.40 |
