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In this series, we are going to look at REITS that offer yields of 10% or higher. We are going to start off by looking at five REITS that offer dividends of 15% or higher. Though many metrics are going to be provided here, no one should treat this as a list of stocks to buy. This list should be used only as a starting point; you need to do your due diligence before you commit any money into these REITS. You would not buy a house simply because your broker or your friend recommended it without going and examining it. On the same token, dig deeper into these stocks before you commit any money.

The extreme volatility of the markets and uncertainty as to what might lie in store in the near future has made dividend investing fashionable again. Investors are taking Jeremy Siegel’s advice to heart; his studies indicated that investing in higher-yielding stocks offers superior returns over time in contrast to very low or zero yield stocks.

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Stock

Dividend

Market Cap

Forward PE

Price/ book

Total Cash

Operating margins

Revenue

Operating

Cash flow

MFA

14.9%

2.28

6.5

0.84

485M

90.88

388M

304M

TWO

17.6%

1.25B

6.8

0.96

188M

86.5

131M

98.7M

CYS

18.9%

1.05B

10

.98

14

87

182

-634B

ARR

23.50%

548M

5.6

1.02

250M

136

-18.98M

77

IVR

24.8%

1.71B

4.62

0.92

58.4M

91

275M

231M

MFA Financial, Inc. (NYSE:MFA)

MFA Financial, Inc has a market cap of $2.28 billion, an enterprise value of $10.85 billion and price/sales value of 6.58. The total cash MFA Financial, Inc has amounts to $1.36 per share. MFA Financial, Inc is trading roughly $1 below book value and has a debt/equity ratio of 36%.

Insider action

On August 9, Director Robin Josephs purchased 8,000 shares at a cost of $7.23 a share for a total outlay of over $57K. Director M. Dahir purchased 45,000 shares at a cost of $6.79-$7.07 a share for a total outlay of $312K. Director A. Freydberg purchased 10,000 shares at $6.81 a share for a total outlay of roughly $68K. Insiders purchase stock for only one reason; they believe the shares are under-priced and feel that there is a good chance of turning a profit. Investors now have the chance of purchasing shares at a lower rate than these three insiders.

  • Short ratio 2.4%
  • Percentage held by institutions 70%
  • ROE 12.4%
  • Quarterly earnings growth (year over year) 8.4
  • Total debt $9.1 billion
  • 200-day moving average $11.94
  • Book value $7.43
  • Dividend yield 5-year Average 11.7
  • Dividend rate $.0.97
  • Payout ratio 104%
  • Dividend growth rate 5-year average 43.9%
  • Consecutive dividend increases 0 years
  • Paying dividends since 1998
  • Total return last 3 years 84.8%
  • Total return last 5 years 30.13%


Two Harbors Investment Corp (NYSE:TWO)

Two Harbors Investment Corp has a market cap of $1.27billion, an enterprise value of $6.42 billion and price/sales value of 9.55. Two Harbors Investment Corp has a positive cash flow from operating activities, and currently this is more than enough to cover the dividend payments. In 2010 dividend payments totalled $27.12 million. Cash flow from operating activities also experienced a significant jump; in 2009 the figure was negative -$11.36 million, but in 2010 it surged to $33.11 million.

Insiders have purchased over 120,000 shares from August-November 2011 at a cost of $.8.95-$9.70; the full list of insider purchases can be accessed here . You now have a chance to purchase shares in Two Harbors Investment Corp at a lower cost than all these insiders.

  • Short ratio 2.7%
  • Percentage held by institutions 40.4%
  • ROE 11.94%
  • Quarterly earnings growth (yoy) 452.70%
  • Total debt $7.35 billion
  • 200-day moving average $11.94
  • Book value $9.30
  • Dividend yield 5-year Average N/A
  • Dividend rate $1.60
  • Payout ratio 104%
  • Dividend growth rate 3-year average 0.00%
  • Consecutive dividend increases 0 years
  • Paying dividends since 2009
  • Total return last 3 years 35.08%
  • Total return last 5 years N/A

CYS Investments, Inc. (NYSE:CYS)

CYS Investments, Inc has a market cap of $1.05 billion, an enterprise value of $8.67 billion and price/sales value of 5.76. The total cash it has amounts to $0.18 per share. CYS Investments, Inc has negative operating cash flow of -$6.34 billion and a Profit Margin (ttm) of 126%. Seven brokerage firms have assigned CYS Investments, Inc with a buy or an outperform rating.

CYS Investments, Inc. (CYS) has been named as a Top 10 Real Estate Investment Trust (REIT), according to Dividend Channel, which published its most recent ”DividendRank” report. The report noted that among REITs, CYS shares displayed both attractive valuation metrics and strong profitability metrics. For example, the recent CYS share price of $12.89 represents a price-to-book ratio of 1.0 and an annual dividend yield of 17.07% — by comparison, the average stock in Dividend Channel’s coverage universe yields 4.3% and trades at a price-to-book ratio of 1.9. The report also cited the strong quarterly dividend history at CYS Investments, Inc., and favorable long-term multi-year growth rates in key fundamental data points.

  • Short ratio 5.7%
  • Percentage held by institutions 39%
  • ROE 28.22%
  • Quarterly earnings growth (yoy) 4,945.60%
  • Total debt 7.64 billion
  • 200-day moving average $11.94
  • Book value $7.43
  • Dividend yield 5-year Average N/A
  • Dividend rate $2.35
  • Payout ratio 189%
  • Dividend growth rate 5-year average N/A
  • Consecutive dividend increases 0 years
  • Paying dividends since 2009
  • Total return last 3 years N/A
  • Total return last 5 years N/A

ARMOUR Residential REIT Inc. (NYSE:ARR)

ARMOUR Residential REIT Inc has a market cap of $584 million, an enterprise value of $5.65 billion and is trading slightly above book value. The total cash it has amounts to $2.96 per share. ARMOUR Residential REIT Inc. has an operating cash flow of $77 million.

ARMOUR Residential REIT Inc has a very handsome net interest spread of roughly 2.19 points; this the difference between what it pays for ARMOUR Residential REIT short-term loans and the money it earns through purchasing mortgages. The higher the spread, the larger the potential income is. Institutions hold a very small position in ARMOUR Residential REIT Inc. and the short percentage of float is a huge 27.30%, which makes it a very good candidate for a short squeeze.

ARMOUR Residential REIT Inc. has been named as a Top 10 Real Estate Investment Trust, according to Dividend Channel, which published its most recent ”DividendRank” report. The report noted that among REITs, ARR shares displayed both attractive valuation metrics and strong profitability metrics. For example, the recent ARR share price of $6.87 represents a price-to-book ratio of 1.0 and an annual dividend yield of 19.21%. By comparison, the average stock in Dividend Channel’s coverage universe yields 4.4% and trades at a price-to-book ratio of 1.9. The report also cited the strong monthly dividend history at ARMOUR Residential REIT, and favorable long-term multi-year growth rates in key fundamental data points.

  • Short ratio 3..6%
  • Percentage held by institutions 6.9%
  • ROE -8.19%
  • Quarterly Earnings Growth (yoy) N/A
  • Total debt 5.32 billion
  • 200-day moving average $7.29
  • Book value $6.75
  • Dividend yield 5-year Average N/A
  • Dividend rate $1.32
  • Payout ratio 135%
  • Dividend growth rate 5-year average N/A
  • Consecutive dividend increases 0 years
  • Paying dividends since 2010
  • Total return last 3 years 9.22%
  • Total return last 5 years N/A

Invesco Mortgage Capital Inc (NYSE:IVR)

Invesco Mortgage Capital Inc has a forward PE of 4.62, an enterprise value of $14.27 billion and price/sales value of 6.36. Even though Invesco Mortgage Capital Inc has a very high yield, the performance to date has been rather dreary. Invesco Mortgage Capital Inc also owns only non agency MBS. As mortgage delinquencies are rising this could be a problem going forward.

There has been a lot insider action since August; the largest purchase was by director Dunn Kelly for 20,000 shares at a cost of $17.90 a share for an outlay of $358K. The full list of insider transactions can be accessed here.

  • Short ratio 2.2%
  • Percentage held by institutions 64.7%
  • ROE 20.25%
  • Quarterly earnings growth (yoy) 209%
  • Total debt $12.57 billion
  • 200-day moving average $18.50
  • Book value $16.45
  • Dividend yield 5-year Average N/A
  • Payout ratio 97%
  • Dividend rate $3.74
  • Dividend growth rate 3-year average N/A
  • Consecutive dividend increases 0 years
  • Paying dividends since 2009
  • Total return last 3 years N/A
  • Total return last 5 years N/A

Disclaimer: Do not treat this as a buying list. It is very important that you check the finer details in each of the mentioned plays before investing any capital in them. It is imperative that you do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies - let the buyer beware.

Source: Explosive Yields: REITS