6 Dividend Scorchers With Yields As High As 24.2%: REITs, Part II

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Includes: ANH, ARI, HTS, IVR, NLY, PMT
by: Tactical Investor

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The young man knows the rules, but the old man knows the exceptions -- Oliver Wendell Holmes Sr.

This is part two of the series on Dividend scorchers; the first article, Dividend Scorchers With Yields As High As 20.8%: REITs, was published on September 21st. Due to the extremely volatile nature of the markets and uncertainty as to what the future might hold in store, dividend investing is becoming fashionable again.

Investors appear to be following Jeremy Siegel’s studies, which indicate that investing in higher- yielding stocks offers superior returns over time in contrast to very low or zero yield stocks. This list should serve as a starting point and not be used as “list of stocks to buy” without doing your due diligence. One must remember that with lofty yields come higher risks.

Considering that the 10-year note dipped to a low of 1.77%, the yields offered by these plays appear to be mouth-watering in comparison. However, the basis for opening up a position in a stock should not be based on yield alone; other metrics need to be examined. Dividends are not guaranteed; the first thing one should check to see is if the business is generating enough cash to pay its dividend, otherwise one could be in for an unpleasant surprise.

In general, stocks that offer extremely high yields should be viewed as short-term investments and not places where one should park one’s money for the long haul; there are always exceptions to this rule. For example, Annaly Capital (NYSE:NLY) has paid rather high dividends for years on end. It has been paying dividends since 1997, has a yield of 14.7% and a five year dividend average of 11.7%.

Finally, REITS will not perform well in a rising rate environment; I believe that these low rates are simply unsustainable over the long run; I listed several reasons as to why Treasury bond holders are being fleeced. Investors in Treasuries are earning a negative yield when inflation is factored in.

Anyone who has gone shopping or has filled a gas tank in the past two years has noticed that there is a huge disconnect between published CPI figures and with what is really going on. Now even these manipulated figures cannot hide inflation. The last BLS report showed inflation increasing at an annual rate of 3.8%. One could easily tack on 2% more to get a number that is closer to the real figure.

For investors looking for safer options, these two articles could prove to be useful in your quest. 6 Stocks With Unusually Aggressive Insider Activity and 3 Dividend Stocks With High Yields And Aggressive Insider Action

Stock

Dividend

Debt to Equity ratio

Market Cap

PE

Total Cash

Operating margins

Revenue

Cash flow

IVR

24.20%

N/A

1.41B

3.73

19.2 Million

91.6%

215.44 Million

164.33 Million

HTS

15.7%

N/A

1.94B

6.43

238.58 Million

93.28

225.3 million

214.28 Million

ANH

14.10%

4.8%

903.61M

8

128.61

Million

89.7%

14.49 Million

232.54 Million

NRF

11.7%

334%

319.51

2.16

191 Million

40.68%

306.46 Million

40.47 Million

ARI

11.3%

96%

287.65

13

71.92 Million

68.4%

30.09 Million

26.10 Million

PMT

10.8%

N/A

449

9

2.34

Million

69.57%

71.85 Million

-50.80 Million

Click to enlarge

Invesco Mortgage Capital Inc. ( NYSE : IVR )

Additional Info:

  • Paying dividends since 2009
  • % shares held by institutions: 64.7%
  • % Held by Insiders: 0.3%
  • Short % of Float: 9.4%
  • ROE: 16.58%
  • Book Value: $19.32
  • Forward Dividend: 20.03%
  • Dividend payout ratio: 92%

Hatteras Financial Corp ( NYSE : HTS )

Additional Info:

  • Paying dividends since 2008
  • % shares held by institutions: 42.4%
  • % Held by Insiders: 0.68%
  • Short % of Float: 8.6%
  • ROE: 15.05%
  • Book Value: $26.72
  • Forward Dividend: 14.7%
  • Dividend pay out ratio: 97%

Anworth Mortgage Asset Corp. ( NYSE : ANH )

Additional Info:

  • Paying dividends since 1998
  • % shares held by institutions: 58.6
  • % Held by Insiders : 1.42
  • Short % of Float: 4.4%
  • ROE : 12.07%
  • Book Value : $7.09
  • Forward Dividend: 14.4%
  • Dividend Yield 5 year average: 11.10%
  • Dividend payout ratio: 107%

Northstar Realty Finance Corp ( NYSE : NRF )

Additional Info:

  • Paying dividends since 2005
  • % shares held by institutions: 35.6%
  • % Held by Insiders : 2.12
  • Short % of Float: 8.6%
  • ROE : -38.9
  • Book Value : $9.36
  • Forward Dividend: 11.2%
  • Dividend Yield 5 year Average 15.10%

Apollo Commercial Real Estate ( NYSE : ARI )

Additional Info:

  • Paying dividends since 2010
  • % shares held by institutions: 48%
  • % Held by Insiders : 0.28%
  • Short % of Float: 28.9%
  • ROE : -9.7%
  • Book Value : $16.66
  • Forward Dividend: 11.3%
  • Dividend Yield 5 year Average 15.10%
  • Dividend payout ratio: 145%

Pennymac Mortgage Investment T ( NYSE : PMT)

Additional Info:

  • Paying dividends since 2010
  • % shares held by institutions: 50.08%
  • % Held by Insiders : 4.81%
  • Short % of Float: 4.8
  • ROE : 2.3%
  • Book Value : $18.82
  • Forward Dividend: 11.9%
  • Dividend payout ratio: 96%

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Continue to Part III >>