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The mortgage REIT sector is lit up green following Western Asset Mortgage's (WMC +7.3%) big...

  • Friday, September 21, 2012, 10:04 AM ET
    The mortgage REIT sector is lit up green following Western Asset Mortgage's (WMC +7.3%) big dividend increase last night and the upping of its book value by 12% since June 30. That jump in book value could have investors wondering what other mREITs might be harboring such good news.
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This news story has 26 comments:

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    In retirement, nearly all my investments are now a mix of bond and stock REITs with an average dividend of 9.5%. All have had significant share price growth over the past year. OHI, a health care REIT with a yield of 7%, has grown 44% including the dividend!

    Look out, Apple!

    If you research well and don't go nuts buying highly volatile micro-caps in trying to make a fast buck, you can find lots of Apple-growth investments that are true SWAN.(sleep well at night) winners.
    21 Sep 2012, 10:16 AM Reply Like
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    "Apple- growth....SWAN investments..." Any suggestions, Bob?
    21 Sep 2012, 10:30 AM Reply Like
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    V and MA are relative sleeper stocks with solid moats and good growth. It's even better because they hardly get a mention on Cramer's mad money.
    21 Sep 2012, 10:34 AM Reply Like
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    Uhhh, The Apple Growth Boat has already sailed. They are now an operating company coming out with "New Versions" and not "New Products". New Products drive growth. New Versions drive sustained revenues.
    21 Sep 2012, 10:35 AM Reply Like
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    Excellent point! Also a very aggravating and insulting practice played on Apple customers to keep them spending 100s, 1000s of $$ to get the latest 18 month upgrade. Planned obsolescence personified in greed.
    21 Sep 2012, 07:18 PM Reply Like
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    a very enviable portfolio bbw----many of us would appreciate your sharing ideas----------
    21 Sep 2012, 07:20 PM Reply Like
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    eggs all in one basket: AGNC. watching basket very carefully.
    21 Sep 2012, 10:24 AM Reply Like
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    You have bigger balls than me. I'm only 1/3rd in AGNC. The other 2/3rds are split between ARR and NYMT. All paying me 14%-15%.
    At this rate, I'll double my money in 5/yrs.
    21 Sep 2012, 10:37 AM Reply Like
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    All three of your "eggs" are really in the same basket. That's balls!
    21 Sep 2012, 06:04 PM Reply Like
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    I sold most of my mREITS before the Fed announcement -its now increasing asset values. But, as these bonds mature, they have to be replaced and the coupons will be lower. Mortgage rates have again hit its low. Housing sales are increasing. This is good news for the economy but the risk taken on by these funds has increased with their use of leverage.

    Having all your eggs in one basket is not wise. I too am enjoying the high rates of return on 4 of these: AGNC, NLY, HTS and TWO. But, they only comprise 1.7% of my total traditional IRA portfolios.

    One thing to keep an eye on if your fund is getting most of its revenue from the sale of appreciated bonds and distributing the proceeds as dividends, they could suffer a future sharp decline in earnings and distributions.
    21 Sep 2012, 10:36 AM Reply Like
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    Chow you finally did it!
    Good Luck and as you say watch it closely.

    I did something similar 2nd Qtr with MTGE and it worked out well, I even slept well, but there were days that I shuddered but held on tight.
    Finally took a year's worth of Dividends and Gains within 60 days.
    Got back into mtge late last Qtr again & seeing nice Capital Gains and the dividends. Also MITT has been treating me nicely so far today I'm back in the black with that fat dividend being paid out next week.
    21 Sep 2012, 10:37 AM Reply Like
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    I think you have the wrong Chow. Above guy is ChowZer, not Chowder.
    21 Sep 2012, 08:11 PM Reply Like
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    LOOK at ARR!

    Capt. Brian
    The Lost Navigator
    21 Sep 2012, 11:06 AM Reply Like
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    For everyone who has all their investments in REITs and mREITs, I'd caution that while the rates of return are great, there is huge risk in concentrating all your eggs in one basket. Don't let greed get in the way of rational decision making. A management change at AGNC would likely hit the stock hard, as would a change in the mortgage interest tax deduction, or a further flattening of the yield curve. These things have double digit yields for a reason, there is risk.

    Long AGNC, ACAS
    21 Sep 2012, 11:14 AM Reply Like
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    When the day comes that mREITs are no longer ideal, you can sell out. It's not like they will collapses overnight. It will be a long term downward spiral with plenty of time to exit.

    Until then, its better than Gold. Don't let fear keep you from profits.
    Remember the Old Saying, "Scared Money Don't Win None."
    22 Sep 2012, 08:11 AM Reply Like
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    I agree! Interesting how my portfolio has shifted over the years from "hot" "sky-rocket" small caps, to mutual funds, to ETF & REIT. And when you look over time the REIT with yield and growth equal the averaged roller coaster of the others! And the SWAN isanadded benefit!
    21 Sep 2012, 11:24 AM Reply Like
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    NLY HAS SERVED ME WELL FOR YEARS. LESS EFFECTED IN MKT DOWNTURNS THAN MANY WELL-CAP CORPS.
    WITH TODAYS MKT INTEREST RATES IT CAN CONTINUE TO MAKE MONEY. REFI CAN EFFECT EARNINGS BUT THE FUNDAMENTAL PLAN IS STILL GREAT.
    21 Sep 2012, 01:02 PM Reply Like
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    I am a retired hospital administrator and manage my money myself because history has shown brokers are horrible. For the past two years I have allocated about tho thirds to agnc,two,and cys and the balance to a "risk" stock, e.g., I made a six figure profit on BIDU, and have sold it all and put it into DEO. Why people talk about 3-5% dividend yields as being great is beyond me. Alan in Boca Raton
    21 Sep 2012, 02:02 PM Reply Like
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    Alan I would tend to agree with most of what you have said.
    21 Sep 2012, 03:17 PM Reply Like
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    Having a broker is like giving a friend YOUR money to gamble at the Casino and expecting them to bring you back a profit.
    22 Sep 2012, 08:15 AM Reply Like
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    So Western hasn't even been in the market a year! Anyone can leverage a simple spread to produce a yield. They haven't said what they've done - maybe luck, maybe skill, maybe BS, but certainly not experience. Why should that news move other REITs.

    Don't get me wrong - I'm long NLY and love mREITs, but what's the point? There are few if any day-traders here, so...
    21 Sep 2012, 02:06 PM Reply Like
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    Agg I just checked the wif'e and my portfolios and YTD we are both over 20% in returns. Mostly in MReits and BDCs common and preferred ranging from 7.65% to about 16% in dividend returns, coupled with some sales to capture Capital Gains and further overall appreciation it.s been a very good year.
    21 Sep 2012, 03:20 PM Reply Like
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    Agg

    WMC is managed by Western Asset Management Co., who has been in the fixed income business since 1971 and is a well respected investment house, especially in the CEF area.
    21 Sep 2012, 08:16 PM Reply Like
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    I bought into WMC about a month ago. The key is that LEGG MASSON is the manager....that's ALL I needed to know.
    21 Sep 2012, 04:31 PM Reply Like
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    I've been in and out of the market over the last 55 years but mostly out for the last 44 as I was dealing entirely with corporate stock but I got tired of cash on hand in bank accounts at zero returns. So I have been back in the market since March, entirely different and new. I have a spread of ARR, NCT and NRF which is <10% of our retirement portfolio. So far NCT is up 21.4%, ARR is up 2.9% and NRF is up 14.0%. I haven’t taken any caps and reinvested dividends but if I sold out today my ROI (do they still use this?) would be 11.72%. I am nervous about the mREITs but love the return so far. I monitor daily, have stop orders in, etc. I sleep well but am I doing things right?
    21 Sep 2012, 05:27 PM Reply Like
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    i have to ask where is the beef these days in these stocks, seems they are difting downward , in part I think shorts covering as if you look a a number of them they raise until the ex div date then they drop big becuase the markets adjust the price on the ex div date, a great play for shorts 4 times a year to make money..............I keep also hearing with qe3 they will all get squeesed unless they move into non agency so which one can and will make the move
    25 Sep 2012, 02:35 PM Reply Like
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