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Mortgage REITs in the green as averages dive

  • Ports in a storm on a tough day for the major averages (S&P 500 -1.4%), the mREIT sector is mostly in the green, with sector giants Annaly (NLY +1.1%) and American Capital (AGNC +1.1%) leading the way.
  • The 10-year Treasury yield is off eight basis points to 2.65%.
  • Earlier: Dividend hikes at mREITs? Capstead (CMO +0.9%) and Ellington Residential (EARN +1.9%) boost payouts by 10%.
  • Others: Armour (ARR +0.9), CYS Investments (CYS +0.9%), Dynex (DX +0.8%).
Comments (9)
  • starcorral
    , contributor
    Comments (333) | Send Message
     
    When my high dividend Reits declined in a regular or Roth IRA, I did not sell despite a double digit drop. I expected the distressed property inventory would taper off to near flat as we approach 2016 - to the extent that elevating interest rates and higher housing costs would actually paint a brighter picture before real estate markets begin suffering later in the decade. I figure of counting on the likelyhood that the prices will recover after three years of 10% dividends. I'm already ahead. Housing will be recoverying during a larger portion of the next 24 months, regardless of interest rates and not necessarily "in spite" of them. 2 Step Arms may become an industry standard, but whatever happens, the stage is set for Reits to climb modestly through 2015. Interest = income, and the Fed wil keep "easing easing".
    13 Mar, 03:35 PM Reply Like
  • tstreet
    , contributor
    Comments (560) | Send Message
     
    This note was about MREITs but thanks for the interesting analysis anyway on REITs

     

    Maybe this is just my filter, but I am seeing more and more articles that are cautioning investors against a coming crash. Not sure about housing, but would it do well assuming that is the case?
    13 Mar, 03:53 PM Reply Like
  • Darren McCammon
    , contributor
    Comments (846) | Send Message
     
    And this is why mREIT's make a good diversifier as part of an overall portfolio. They behave differently than the broader market.

     

    The correlation between SPY and either REM or MORL is negative.
    13 Mar, 04:18 PM Reply Like
  • surfgeezer
    , contributor
    Comments (6680) | Send Message
     
    EXACTLY. Great yield AFTER the div cuts and go up when the market is scared. A Treasury Bond Fund with Superman yields.
    15 Mar, 01:55 AM Reply Like
  • arun dutt
    , contributor
    Comments (18) | Send Message
     
    I am a retired Civil / Structural engineer, specialized in the analysis, design, cost estimate, construction, O & M, of nuclear power plant structures, systems and components. Additionally, I am also a infrastructure design engineer.
    13 Mar, 06:03 PM Reply Like
  • Dividends#1
    , contributor
    Comments (2232) | Send Message
     
    One of the best feelings is when the major indexes take a hit and my portfolio is in the green. Last year, 2013, the S&P 500 was + 30% approximately and my portfolio was - about 2.5% . Considering I had a large position in AGNC to start the year and it dropped 20% ( including dividends) in 2013 and I only had an unrealized loss of 2.5% on my entire portfolio, I was OK with the outcome. Not only did I get to reinvest dividends at low prices and build a very large position at a very nice discounted cost basis to the current BV, but I also have a portfolio that is very defensive in 2014.

     

    My confidence continues to strengthen as I see how my portfolio has performed over the last several years.

     

    I am looking foward to AGNC declaring their dividend, and so far this current quarter is shaping up nicely. Also, the mREITs that have declared are showing positive signs.
    13 Mar, 09:35 PM Reply Like
  • njbother
    , contributor
    Comments (189) | Send Message
     
    I'm long both NLY and AGNC. Have been for years. One needs to understand that book value will decline, unless the return on capital is reinvested. Lately both have widely not done so, but "distributed" that capital. Mortgages eventually go to zero, but that does not mean one lost money.

     

    So be prepared for declines in these stocks, but I believe eventually we will make some good money with them.

     

    Meanwhile enjoy the cash flow.
    14 Mar, 04:56 AM Reply Like
  • Urbannek
    , contributor
    Comments (559) | Send Message
     
    Only started buying MREITS after they crashed this summer. All are up nicely except ARR which is just up a little. Bought MORL too late in December 2013 and it is also up nicely. Very satisfied with my MREITS and looking forward to them doing well as housing recovers.
    16 Mar, 06:00 PM Reply Like
  • efactor
    , contributor
    Comments (225) | Send Message
     
    Scratching my head as to what caused Dynex Cap to cut it's dividend by 7.4% when declaring it's first qtr div today. Anybody? This is the second recent cut and more could be on the way. I love the yield but a declining dividend, even a high div doesn't work for me as I've got several years to go in the accumulation phase. May unload my entire position at the opening bell Wed.
    18 Mar, 07:43 PM Reply Like
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