With the commercial and residential real estate markets bottoming out, now is an opportunity to ride the wave on up with REITs. Additionally, given the nature of REITs, collecting dividend payments is an added bonus. By law, REITs have to pass on 90 percent of their taxable income to stockholders.
Below are 5 REITs that you should consider for your fixed-income portfolio. And if REITs aren’t your thing, we came up with 5 safe dividend ideas you can read about here and 10 other cheap, high-yielding dividend “kings” for 2011.
Annaly Capital Management (NLY) has been around since 1997, and has paid a healthy quarterly dividend going back 10 years. The most recent dividend was $0.64, which is a 14.7 percent current yield. The Company also beat 2010 earnings expectations, reigning in $2.60 per share compared with $2.44 in analyst estimates. The Company invests primarily in mortgage pass-through certificates, collateralized mortgage obligations and other mortgage-backed securities representing interests in or obligations backed by pools of mortgage loans, and certificates guaranteed by Ginnie Mae, Freddie Mac or Fannie Mae.
Apollo Commercial Real Estate Finance (ARI) is a young company that came into being in the post-2008 world. It made all dividend payments in 2010, and the current yield is 8.9 percent. The 52 week low is $15.75, 52 week high is $18.49, 200 day moving average is $16.58, and trades currently in the upper 16s. The Company originates, acquires, invests in and manages performing commercial first mortgage loans, commercial mortgage-backed securities, mezzanine financings and other commercial real estate-related debt investments in the US.
Starwood Property Trust (STWD) reflects that the commercial and residential real estate market has turned a corner. 2010 Q1, Q2, and Q3 net incomes came in as positives. With this optimism and because Q4 earnings will be announced on March 1, investors should consider looking into adding a position. By the way, the current yield is a robust 5.25 percent. The Company is focused primarily on originating, investing in, financing and managing commercial mortgage loans and other commercial real estate debt investments. It also invests in residential mortgage-backed securities and residential mortgage loans.
Colony Financial (CLNY) pays out a healthy current yield of 4.3 percent. Four out of six analysts rate it as a market outperform or buy, while the other two suggest holding onto it. Just like Starwood, the company turned a profit in 2010. The 52 week range is $16.50 to $21.03. Since August 2010, there is a strong and technically upward trend. The Company acquires, originates and manages commercial mortgage loans in the US and Europe.
Chimera Investment (CIM) is the little engine that could. Trading in the low 4s, it beat earnings estimates for 6 of the last 9 quarters, and pays out an aggressive current yield of 16.5 percent. The share price has been consistently above $4 since September 2010, and the median target price is $4.50 a share. Again, the play is not capital appreciation, it is for the dividend payments. The Company invests in US government and private residential mortgage-backed securities representing interests in obligations backed by pools of mortgage loans.
As always, we believe these names are a good starting point for your own research. Please do your own due diligence before you consider adding a position in any of the REITs above..