Seeking Alpha
Profile| Send Message|
( followers)

It seems like each week there is a new crisis for mortgage REIT stocks, only to be quickly followed by a rally when the "crisis" dissipates. A few weeks ago almost all stocks in this sector saw a "flash crash" whereby there was a huge drop on one day and in the course of that same day, most of the stocks recovered almost all of the losses. The flash crash was due to concerns related to the debt downgrade by S&P, interest rates, as well as other issues. Since then, the stocks have been on a roller coaster depending on the headlines and mood of the markets. These stocks dropped again on Thursday, along with the markets, over concerns about Europe, and what Federal Reserve policy might be after Ben Bernanke speaks on Friday.

All this volatility has turned these usually more boring stocks into trading vehicles for some. I think it makes sense to at least trade a portion of my holdings around the headlines. When these stocks are weak I buy, and when they rally I sell, while keeping a core position. The dividend payouts from these companies will beat almost every investment for investors seeking income and they are also trading below book value in some cases. If you can boost your returns by taking advantage of the market volatility it makes sense, especially in tax deferred accounts. The high dividend yield makes these stocks great for investors and the volatility makes them great for traders. Here are some top mortgage REIT picks:
Annaly Capital Management, Inc., (NYSE:NLY) is trading around $17.29. Annaly is a mortgage real estate investment trust (REIT) company, based in New York. These shares have traded in a range of $14.05 to $18.79 in the last 52 weeks. The 50-day moving average is $17.86 and the 200-day moving average is $17.02. NLY is estimated to earn about $2.63 per share in 2011. The book value is stated at $16.55 so these shares are trading at a small premium to book. The dividend is very generous at $2.60 per share, which is equivalent to a 14.2% yield.
Hatteras Financial Corp (NYSE:HTS) is trading around $26.61. Hatteras is a mortgage real estate investment trust (REIT) company, based in North Carolina. These shares have traded in a range of $23.80 to $31.98 in the last 52 weeks. The 50-day moving average is $27.90 and the 200-day moving average is $27.63. HTS is estimated to earn about $4.23 per share in 2011. The dividend is very generous at $4 per share, which is equivalent to about a 14.4% yield. With that kind of payout, and when yields in other investments are still very low, it's easy to see why this is an attractive investment.
Chimera Investment Corporation (NYSE:CIM) is trading around $2.95. Chimera is a real estate investment trust, and is based in New York. These shares have traded in a range of $2.62 to $4.36 in the last 52 weeks. The 50-day moving average is $3.25 and the 200-day moving average is $3.65. CIM is estimated to earn about 60 cents per share in 2011. Insiders have been buying. CIM pays a solid dividend of 52 cents per share, which is equivalent to a 16.7% yield. The book value is stated at $3.45.
MFA Financial, Inc., (NYSE:MFA) is trading around $7.15. MFA is a mortgage real estate investment trust (REIT) company, based in New York. These shares have traded in a range of $6.71 to $8.64 in the last 52 weeks. The 50-day moving average is $7.66 and the 200-day moving average is $7.68. MFA is estimated to earn about $1.04 per share in 2011. The dividend is very generous at $1 per share, which is equivalent to a 13.4% yield.
iShares FTSE NAREIT Mortgage ETF (NYSEARCA:REM) is trading around $13.10. REM is a mortgage real estate investment trust (REIT) ETF, which has holdings that include the other REIT stocks mentioned here. This gives investors a way to invest in this sector with some diversification These shares have traded in a range of $12.54 to $16.07 in the last 52 weeks. The 50-day moving average is $14.22 and the 200-day moving average is $14.60. The dividend is about $1 per share annually, which is equivalent to about a 10% yield.
American Capital Agency Corp (NASDAQ:AGNC) is trading around $27.76. AGNC is a mortgage real estate investment trust (REIT) company, based in Maryland. These shares have traded in a range of $22.03 to $30.76 in the last 52 weeks. The 50-day moving average is $29.02 and the 200-day moving average is $27.42. The dividend is very generous at $5.60 per share, which is equivalent to a 19.4% yield.
Capstead Mortgage (NYSE:CMO) is trading around $12.66. CMO is a mortgage real estate investment trust (REIT) company, based in Texas. These shares have traded in a range of $10.78 to $13.95 in the last 52 weeks. The 50-day moving average is $13.11 and the 200-day moving average is $12.31. CMO is estimated to earn about $1.81 per share in 2011. The dividend is very generous at $1.92 per share, which is equivalent to a 14.7% yield.
The data is sourced from Yahoo Finance and Stockcharts.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclosure: I am long CIM, REM.
Disclaimer: Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes.
Source: Mortgage REIT Stocks: Great For Traders - And Investors