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In the past several months, mortgage real estate investment trusts have been under particularly strong pressure, which resulted in mini flash-crashes in some cases. The range of concerns varied from general market weakness that took down almost every stock, to concerns that a Lehman-like moment would freeze the credit markets and cause funding issues for mREIT companies, to an SEC inquiry into the leverage and tax status of REIT stocks.

The latest cause for concern has to do with election year politics. Speculation is heating up that the Obama Administration might be planning to juice the slumping housing market and economy by introducing a mass refinancing program that would greatly expand the level of refinancing that the "Home Affordable Refinance Program" (HARP) has enabled. The concern for mREIT investors is that the current loan portfolio would be refinanced at lower rates, which could result in lower returns and yields for investors. All this speculation over a possible mass refinance program caused mREIT stocks to drop, and many bank stocks to rise in recent days. A recent article from Bloomberg details the situation by stating:

“There’s a lot of speculation about the big refinance wave coming from Washington,” said Todd Hagerman, an analyst in New York with Sterne Agee Group Inc., in a telephone interview. “That being said, there are a lot of existing roadblocks to the refinance boom occurring in the near future.” For now, even if there is a change in public policy, “you’re not going to see any impact whatsoever on the banks,” he said.

Once again, it looks like any plan for a mass refinance program is unlikely to gain traction-- even if the Obama Administration wants it to happen. Many Americans are tired of bailouts, and the program would cost U.S. taxpayers dearly, just as debt is reaching alarming levels. This and other concerns have caused mREIT stocks to drop sometimes precipitously in 2011, and investors who bought those drops did not have to wait long before seeing solid gains in a rebound.

In a market that pushes the sell button first and asks questions later, we are likely to see more volatility and buying opportunities in this sector. Buying on dips has paid off for investors in 2011, and that strategy is likely to continue into 2012. Many investors are hungry for yield, and these stocks are providing dividends that are unmatched by almost any other investment. Here are some mREIT stocks to consider buying on dips throughout 2012:

Invesco Mortgage Capital (NYSE:IVR) is a mortgage real estate investment trust (REIT) company, based in Georgia. Invesco shares appear cheap based on the book value which is $16.45 per share. It also offers one of the highest dividend yields in the sector. The dividend looks safe as earnings estimates exceed the payout by a wide margin. Buying this stock on dips has worked well in 2011, and that is likely to continue in 2012.

Here are some key points for IVR:

  • Current share price: $14.11
  • The 52 week range is $12.55 to $24.07
  • Earnings estimates for 2011: $3.44 per share
  • Earnings estimates for 2012: $2.93 per share
  • Annual dividend: $2.60 per share which yields 18.6%

Annaly Capital Management, Inc., (NYSE:NLY) is a mortgage real estate investment trust (REIT) company, based in New York. Annaly is perceived by many investors as being well-managed, and perhaps the "best in breed" mortgage REIT stock. It has been less volatile than other stocks in this sector and could be one of the safest stocks for high yield income investors. Annaly looks cheap as well, and trades just below book value, which is $16.22.

Here are some key points for NLY:

  • Current share price: $16.06
  • The 52 week range is $14.05 to $18.79.
  • Earnings estimates for 2011: $2.41 per share
  • Earnings estimates for 2012: $2.29 per share
  • Annual dividend: $2.28 per share which yields 14.3%

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. Chimera offers a generous yield and the shares trade below book value of $3.27. This company is managed by a subsidiary of Annaly Capital Management. As such, by investing in Chimera you might be getting similar management strategies and receive a higher yield than Annaly offers.

Here are some key points for CIM:

  • Current share price: $2.64
  • The 52 week range is $2.38 to $4.34
  • Earnings estimates for 2011: 47 cents per share
  • Earnings estimates for 2012: 45 cents per share
  • Annual dividend: 44 cents per share which yields 16.7%

American Capital Agency (NASDAQ:AGNC), is a real estate investment trust (REIT) that invests in residential mortgage-backed securities, and both commercial and residential mortgage loans. The book value is $26.91. Back in October 2011, this stock experienced a mini flash crash and plunged to $22.84 but it quickly rebounded. With a yield close to 20%, this stock is likely to rebound from any rumour based sell-offs.

Here are some key points for AGNC:

  • Current share price: $28.37
  • 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 19.9%

Hatteras Financial Corp (NYSE:HTS) is a mortgage real estate investment trust (REIT) company, based in North Carolina. HTS trades very close to book value which is $26.32. In late November, this stock dropped to about $24.50 which provided another great buying opportunity for investors. Since the yield is not as high some stock listed here, I would wait for another large pullback before considering a buy.

Here are some key points for HTS:

  • Current share price: $26.43
  • The 52 week range is $22.33 to $31.98.
  • Earnings estimates for 2011: $4.20 per share
  • Earnings estimates for 2012: $4.17 per share
  • Annual dividend: $3.60 per share which yields 13.7%

MFA Financial (NYSE:MFA) is a real estate investment trust (REIT) that invests in residential mortgage-backed securities. MFA trades at a discount to book value which is $7.43. The earnings estimates appear to fall short of the current dividend payout, so this could be a red flag. Still, a dividend cut might be priced into the stock already. If the stock dips to about $6.30 or less, that would be a more enticing buying opportunity.

Here are some key points for MFA:

  • Current share price: $6.76
  • The 52 week range is $6.23 to $8.64
  • Earnings estimates for 2011: 97 cents per share
  • Earnings estimates for 2012: 98 cents per share
  • Annual dividend: $1 per share which yields 15%

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: Buying These 6 High-Yield Stocks On Dips Will Pay Off In 2012