Dividend Scorchers With Yields As High As 21%: REITS, Part III

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 |  Includes: ARR, CMO, CXS, DX, NLY, NYMT
by: Tactical Investor

<< Return to Part II

Common sense is not so common. --Voltaire

Some of the REITs featured in this list are new, with less than two years worth of dividend payment history. Traders need to take this into consideration before committing money into these REITS. However, some of them have rather high levels of insider ownership and strong y-o-y quarterly earnings growth. CXS is a good example; it has a quarterly earnings growth (y-o-y) rate of 825%, and insiders own 25.63% of the shares. CXS also happens to be trading $3 below book value.

ARR and CXS are being shorted rather aggressively. The short position is extremely large in comparison to their peers. The number of shares short as a percentage of float in ARR and CXS is 29.4% and 22.4% respectively. On one hand this could be viewed as a sign that all is not well, but on the other hand a small piece of good news could lead to a large move as the bears are forced to cover their shorts. CMO is sitting on a hefty amount of cash. It has $11.23 billion in cash, which amounts to $133 per share, though investors should also keep in mind that it has roughly $10.5 billion in debt.

Stock

Dividend

Debt to Equity ratio

Market Cap

PE

Total Cash

Operating margins

Revenue

Cash flow

ARR

21.2%

__

562M

5.25

188.2M

64.8%

12.52 M

39.3 M

DX

12.5%

27%

341M

6.28

34.41M

79.23%

44.55 M

50.34 M

CMO

12.4%

9%

1.05B

7.29

11.23B

89.73%

149.05

206.79M

NYMT

13.9%

431%

81.38M

6.7

39.56M

48.32%

18.83M

1.77M

CXS

10.0%

___

724M

9.1

37.13M

74.73%

28.17M

20.87M

Click to enlarge

M= million; B= Billion

ARMOUR Residential REIT Inc.

  • Paying dividends since 2010
  • % shares held by institutions 6.9%
  • % Held by Insiders 2.9
  • % Short % of Float 29.4%
  • ROE 2.81%
  • Book Value 7.14
  • Forward Dividend 18.4%
  • Payout ratio 99%

Dynex Capital, Inc. (NYSE:DX)

  • Paying dividends since: 2008
  • % shares held by institutions: 33.4%
  • % Held by Insiders : 5.66%
  • Short % of Float: 5.26%
  • ROE : 14.4%
  • Book Value : 9.67
  • Forward Dividend: 12.3%
  • Dividend payout ratio: 75%
  • Qtrly Earnings Growth (y-o-y): 87.1%

Capstead Mortgage Corp.

  • Paying dividends since 2001
  • % shares held by institutions 56.4%
  • % Held by Insiders 1.24%
  • % Short % of Float 5.7%
  • ROE 12.3%
  • Book Value 12.51%
  • Forward Dividend 14.6%
  • Payout ratio 99%
  • Dividend Yield 5yr average 12.4%
  • Dividend Growth Rate 5yr Avg 303%
  • Qtrly Earnings Growth (y-o-y): 43%

New York Mortgage Trust Inc (NASDAQ:NYMT)

  • Paying dividends since 2008
  • % shares held by institutions 36.8%
  • % Held by Insiders 7.72%
  • % Short % of Float 0.2%
  • ROE 11.86%
  • Book Value $8.62
  • Forward Dividend 13.9%
  • Payout ratio 95%
  • Dividend Yield 5yr average 19.2%
  • Consecutive dividend increases 2years
  • Qtrly Earnings Growth (y-o-y): 174%

CreXus Investment Corp

  • Paying dividends since 2010
  • % shares held by institutions 65.3%
  • % shares held by Insiders 25.36%%
  • Short % of Float 22.5%
  • ROE N/A
  • Book Value $11.72
  • Forward Dividend 13%
  • Payout ratio 91%
  • Qtrly Earnings Growth (y-o-y): 825%

Conclusion

While investing in high-yielding stocks leads to superior returns over time, one should not base one’s selection on yield only. Sometimes companies offer lofty yields to entice new investors because they might be going through a tough phase. This is not always the case; NLY is a perfect example of a company that has offered high yields for an extended period and has always made timely payments. PBI and CTL also fall under this category. The best approach is to spread your money in a host of stocks across a range of sectors. For example, in the REITs sector, you could select 4-6 companies, with yields ranging from 9%-20%. The same approach could be used when investing in other sectors.

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