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Though they offer some of the highest yields in the market, mREIT (Mortgage Real Estate Investment Trust) stocks have been extremely volatile over the past several weeks. Part of this was due to the market correction; however, another big concern for many investors was the idea that the Obama Administration could introduce new plans that would allow for a massive refinance program for many home loans. If many homeowners were to refinance at lower rates, it could impact the profits of mREIT companies.

It now seems like those fears were overblown, as the Federal Housing Finance Agency (FHFA) just announced what looks to be only modest changes to the current Home Affordable Refinance Program (HARP). Douglas Harter of Credit Suisse, in a recent interview on CNBC, said that this modification will have "modest impact", and that he considers Invesco Mortgage Capital (NYSE:IVR), American Capital Agency (NASDAQ:AGNC), and Two Harbors Investment Corp (NYSE:TWO) to be "best positioned".

While mREIT stocks have rebounded off recent lows, they still offer incredibly rich yields. Now that investor concerns over refinance plans are fading, the stocks below could continue to advance, especially as shorts cover their positions:

Invesco Mortgage Capital (IVR) is a mortgage real estate investment trust (REIT) company based in Georgia. This is one of the highest yielding mREIT stocks and it is also trading at a very large discount to book value. The stock yields about 21% and the discount to book value is about 15%.

Here are some key points for IVR:

  • Current share price: $16.13
  • The 52 week range is $12.55 to $24.07
  • Earnings estimates for 2011: $3.74 per share
  • Earnings estimates for 2012: $3.55 per share
  • Annual dividend: $3.20 per share which yields 20.8%
  • Book value: $19.32 per share

Two Harbors Investment Corp (TWO) is a real estate investment trust (REIT) that invests in residential mortgage-backed securities, and residential mortgage loans. With a yield of about 18%, and a share price below book value, this looks like a bargain. Douglas Harter of Credit Suisse has stated this company is "best positioned".

Here are some key points for TWO:

  • Current share price: $9.07
  • The 52 week range is $7.72 to $11.51
  • Earnings estimates for 2011: n/a on Yahoo Finance
  • Earnings estimates for 2012: n/a on Yahoo Finance
  • Annual dividend: $1.60 per share which yields 17.7%
  • Book value: $9.73 per share

Chimera Investment Corporation (NYSE:CIM) is a real estate investment trust (REIT) that invests in residential mortgage-backed securities, and both commercial and residential mortgage loans. With a yield of about 17%, and a share price below book value, this looks undervalued.

Here are some key points for CIM:

  • Current share price: $3.04
  • The 52 week range is $2.38 to $4.36
  • Earnings estimates for 2011: 60 cents per share
  • Earnings estimates for 2012: 59 cents per share
  • Annual dividend: 52 cents per share which yields 17.3%
  • Book value: $3.35 per share

American Capital Agency (AGNC) is a real estate investment trust (REIT) that invests in residential mortgage-backed securities, as well as both commercial and residential mortgage loans. On Tuesday, October 4, 2011, this stock plunged to $22.84 on heavy volume. It has rebounded sharply since then and that could indicate we have seen the bottom for this stock. Douglas Harter of Credit Suisse has stated this company is "best positioned".

Here are some key points for AGNC:

  • Current share price: $27.71
  • The 52 week range is $22.03 to $30.76
  • Earnings estimates for 2011: $4.02
  • Earnings estimates for 2012: $5.47
  • Annual dividend: $5.60 per share which yields about 20.3%
  • Book value: $26.76 per share

Annaly Capital Management, Inc. (NYSE:NLY) is a mortgage real estate investment trust (REIT) company based in New York. Annaly pays a dividend of about $2.60 annually which is equivalent to a yield of around 14%. Many investors (like Jim Cramer) believe that Annaly is one of the best managed companies in this sector.

Here are some key points for NLY:

  • Current share price: $16.98
  • The 52 week range is $14.05 to $18.79.
  • Earnings estimates for 2011: $2.53 per share
  • Earnings estimates for 2012: $2.38 per share
  • Annual dividend: $2.60 per share which yields 14.2%
  • Book value: $16.55 per share

Hatteras Financial Corp (NYSE:HTS) is a mortgage real estate investment trust (REIT) company based in North Carolina. HTS trades at a substantial discount to book value. On Tuesday, October 4, 2011, this stock plunged to $22.33, (a new 52 week low) on heavy volume and has started to recover.

Here are some key points for HTS:

  • Current share price: $26.23
  • The 52 week range is $22.33 to $31.98.
  • Earnings estimates for 2011: $4.20 per share
  • Earnings estimates for 2012: $4.23 per share
  • Annual dividend: $4 per share which yields 15.4%
  • Book value: $26.72 per share

Armour Residential REIT (NYSE:ARR) is a real estate investment trust (REIT) that invests in residential mortgage-backed securities. ARR trades at a small discount to book value, and offers a very high yield at about 19%. On Tuesday, October 4, 2011, this stock dropped to a new 52 week low of $5.40, but has rebounded sharply since.

Here are some key points for ARR:

  • Current share price: $7.23
  • The 52 week range is $5.40 to $8.33
  • Earnings estimates for 2011: $1.01 per share
  • Earnings estimates for 2012: $1.06 per share
  • Annual dividend: $1.44 per share which yields 19.1%
  • Book value: $7.14 per share

Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.

Source: 7 High-Yield mREITs With Room For Further Gains