7 Mortgage REITs With Liquidity, Currently Yielding Over 10%

 |  Includes: AGNC, ANH, CIM, CYS, HTS, MFA, NLY
by: Zvi Bar
The fall of securitized mortgages caused a major financial crisis just a few years ago. After their ballistic rise, which was fueled by the low rate environment that followed the bursting of the Internet bubble and lax mortgage practices by a historically strict group, their consequent collapse brought down almost everything else, including interest rates. Now, the companies that hold these securitized mortgages occupy the highest yielding corner of the market.

There are many REITs that manage portfolios of these securitized mortgages. These companies buy the mortgage paper as an investment, or in order to re-securitize them and sell them to another REIT or some other entity that is investing in real estate loans. Many of these mortgage REITs that have a longer track record performed very poorly through and following the real estate collapse, largely due to their using leverage to purchase paper and make money off the spread, due to their low borrowing costs.

The following list is of 7 REITs that yield well over 10% and have reasonably high volumes and market valuations, listed in alphabetical order:

Market Cap
American Capital Agency Corp.
$3.92 B
Annaly Capital Management, Inc.
$14.98 B
Anworth Mortgage Asset Corporation
$919 MM
Chimera Investment Corporation
$3.67 B
Cypress Sharpridge Investments, Inc.
$1.08 B
Hatteras Financial Corp.
$2.15 B
MFA Financial, Inc.
$2.8 B
Click to enlarge

2010 was a fairly stable year for the group, though they've since become more volatile. These REITs now offer some of the highest yields one can find in the open market.
Yield hungry investors might be salivating at the concept of payouts that are nearing 20% on some of these institutions. Nonetheless, many currently fear a second fall in real estate is coming and that it will hurt the values of these companies.
One must also note that these REIT dividends will be taxed as regular income, and not at the dividend rate, making them considerably superior performing products when held in tax-free accounts.

Disclosure: I am long NLY, CIM.