4 Well-Positioned New York-Based REITs Yielding Over 12%

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Includes: MFA, NLY, NYMT, XAN
by: Matt Schilling

When it comes to a Real Estate Investment Trust or REIT, the most attractive aspect tends to be the company's dividend yield. In this article I will highlight four companies who currently yield 12% or higher annually to their shareholders.

Annaly Capital Management (NYSE:NLY) - Founded in 1996, and based in New York City, Annaly Capital Management currently yields 13.2% and trades at a P/E ratio of 29.17 making the stock very affordable. Investors should note the company recently reduced its quarterly dividend by $0.02/share however I don't think the downward move is that substantial considering it secured $750 million dollars through an offering of senior convertible notes at a principal amount of 5.00% due in 2015. This move signifies Annaly Capital's aggressiveness to not only reinvest the funds in such things as mortgage back securities, but create various income streams that will allow for the possibility of an increased dividend down the road.

With NLY trading in the $16.50/share range I think the time is now for investors to acquire a position in the company. Two months ago I would have steered clear of the company, as I questioned what type of message management was trying to send, but with the $750 million offering and the aggressiveness to once again gain market share, I believe Annaly is beginning to turn things around.

New York Mortgage Trust (NASDAQ:NYMT) - Founded in 1989 and based in New York City, New York Mortgage Trust currently yields 15.1% and trades at a P/E ratio of 9.64 making the stock cheap by most investor's standards. NYMT's first quarter earnings came in at $0.42/share compared to $0.33/share during the same period last year and due largely to an increase of $3.3 million in net income. The tightening of credit spreads and the completion of its third acquisition of multi-family commercial mortgage backed securities, or CMBS also played key roles during the first quarter.

Investors should begin to acquire moderate position in the company for two reasons. First off, the company has had a stellar first quarter, and if they can keep up the pace of CMBS acquisitions, NYMT could begin to grow at a steady 5%-10% pace per quarter. The yield here of 15.1% is very attractive, and if you happen to be a DRIP investor like me, your eyes not only see dollar signs but your portfolio begins to plump up as the number of shares grows each quarter.

MFA Financial (NYSE:MFA) - Founded in 1997, and headquartered in New York City, MFA currently yields 12.6% and trades at a P/E ratio of 8.72 making the stock very cheap. That being said, its high yield makes it much more attractive than the results of its four quarters, which have all lagged substantially. As mentioned during the company's presentation at the 2012 UBS Global Financial Services Conference, "If you reinvested the company's dividend since 2000, you'd find averaging a 14.5% ROI per year over that period."

I think the play for investors in regards to MFA is simply to acquire a moderate position and continue to reinvest the dividends as they are paid out. Being a firm believer in the DRIP theory, I feel that investors benefit more by reinvesting the dividends rather than cashing them out when the company distributes.

Resource Capital Corp. (RSO) - Founded in 2005, and headquartered in New York City, RSO is a specialty finance firm engaging in the business of commercial real estate and commercial finance primarily in the United States. The company currently yields 15.3% and trades at a P/E ratio of 10.12 making it a very affordable addition to any portfolio.

Even though the company reduced the quarterly payout from $0.25/share to $0.20/share investors shouldn't be alarmed. I believe this change is only one for the next 4-6 quarters and a pattern of increased dividends should follow suit. The company had a pretty decent first quarter by most standards earning $0.23/share as revenues increased 23% when compared to the same period from a year ago. Book value increased from $5.38/share to $5.46/share which equated to an increase of just over 1.5%. Investors looking to acquire a position in RSO shouldn't be over aggressive, a conservative approach to RSO and their very attractive yield would be the best bet.

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