Dividend Scorchers With Yields As High As 20.8%: REITs, Part I

Includes: AGNC, CIM, CYS, RSO
by: Tactical Investor

We are made wise not by the recollection of our past, but by the responsibility for our future. ~George Bernard Shaw

Debt to Equity Ratio
Market Cap
Total Cash
Operating Margin
Cash Flow
16.08 Million
621.4 million
369.21 million
549.19 million
268.07 Million
390 million
79.24 million
85.07 million
26.97 million
21.52 million
137.47 million

This is the first issue in a series of articles we intend to write on this subject. As the yields are rather lofty, the risk associated with some of these plays might be higher than normal. Hence, it is of the outmost importance that investors do their due diligence before initiating any positions in the mentioned stocks.

For investors looking for firms that have long histories of paying healthy dividends and where the risks are much lower, these two articles could serve as a starting point, 3 Dividend Stocks With High Yields And Aggressive Insider Action and 5 Dividend Sizzlers In The S&P 500 With Yields As High As 10.9%

Chimera Investment Corporation (NYSE:CIM)

CIM was founded in 2007 and is located in NY, NY. It operates as a real estate investment trust in the United States. CIM invests in residential mortgage-backed securities, residential mortgage loans, commercial mortgage loans, real estate-related securities, etc.

Additional Info

  • Paying dividends since 2007
  • % shares held by institutions 58.9%
  • % Held by Insiders 4.47%
  • Short % of Float 2.1%
  • ROE 17.76%
  • Trading below book value; current book value is $3.35

American Capital Agency Corp. (NASDAQ:AGNC)

Founded in 2007, AGNC is located in Bethesda Maryland. It operates as a REIT. It invests in agency pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by U.S. Government sponsored entities. It funds its investments through short-term loans.

Additional Info

  • Paying dividends since 2008
  • % shares held by institutions 17.2%
  • % Held by Insiders 0.04%
  • Short % of Float 0.7%
  • ROE 18.3%

Resource Capital Corp. (NYSE:RSO)

RSO operates as a speciality finance company and is structured as REIT. It focuses primarily on commercial real estate and commercial finance in the United States. The company was founded in 2005 and is based in New York, New York.

Additional Info

  • 5 year dividend average of 19.3%
  • Paying dividends since 2006
  • % shares held by institutions 27.4%
  • % Held by Insiders 9.73%
  • Short % of Float 6.5%
  • ROE 7.36%
  • Dividend Growth Rate 5-yr Avg: 17.97%

CYS Investments Inc (NYSE:CYS)

CYS Investments, Inc., formerly Cypress Sharpridge Investments, Inc., is a specialty finance company created with the objective of achieving consistent risk-adjusted investment income. The Company conducts all of its business through and holds all of its assets in Cypress Sharpridge Investments, Inc. It focuses on achieving its objective by investing, on a leveraged basis in Agency residential mortgage-backed securities (RMBS). It invests in Agency RMBS collateralized by fixed rate single-family residential mortgage loans (typically 15, 20 or 30 years), adjustable-rate mortgage loans (ARMs), which typically have coupon rates that reset monthly, or hybrid ARMs, which typically have a coupon rate that is fixed for an initial period (typically three, five, seven or ten years) and thereafter resets at regular intervals. It is managed by Cypress Sharpridge Advisors LLC.

Additional Info

  • Paying dividends since 2009
  • % shares held by institutions 39.5%
  • % Held by Insiders 3.5%
  • ROE 19.3%
  • Trading slightly above book value. Book value is $12.35


With exceptionally high yields comes more risk. Hence, investors need to do their due diligence. All the stocks listed above have a limited dividend payment history; only one of them, (RSO), has a payment history of five years. In a previous article, I mentioned that a possible way to enhance one’s returns would be through the sale of covered calls just before the ex-dividend date. The trick is to sell calls that are slightly in the money as 90% of options generally expire worthless. Thus, your odds of success are relatively high. That way you still get to keep your premium and your dividend payment.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Continue to Part II >>

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