S&P 500's Dividend Growth Needs To Pick Up To Beat REM's 9.35% Yield
Summary
- The iShares Mortgage Real Estate Capped ETF invests in 33 US mREITs but holds a significant 65% concentration in its top ten holdings.
- Muted year-to-date performance has resulted in REM trading at a significantly higher dividend yield relative to the SPY.
- REM's dividend is well-covered considering the valuations of its top ten holdings.
- While dividend growth for REM is likely muted going forward, SPY's current yield and dividend growth indicate mREITs provide value at the moment.
- The key risk to consider is the excessive leverage employed by mREITs which amplifies all other risks faced by investors in fixed-income real estate backed securities.
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