7 Mortgage REITs Digging Out of Dump Fires

Like most of the market, these top mortgage REITs to buy are beaten. Most of this can be traced back to rising interest rates. After all, higher interest rates typically reduce net interest margins, lower the value of mortgage-backed securities, and raise concerns that people with variable-rate mortgages won’t be able to make payments. But don’t write off these REITs yet. Many companies are still paying excellent dividend yields even after a significant price drop.

Plus, these REITs are so unpopular and feared right now that it may be time to start buying when there’s blood in the streets. The possibility must also be considered. Now financial institutions, the International Monetary Fund and the United Nations are putting pressure on the Federal Reserve to slow the pace of rate hikes. Even billionaire Barry Sternlicht said,economy collapseIf rates are not lowered, as Fortune points out.

Furthermore, according to FXEmpire.com: “A long list of Wall Street banks, including Goldman Sachs, JP Morgan, and Bank of America, have seen an overly aggressive Fed tightening policy, combined with a strong US dollar, wreck global financial markets and put other currencies at risk. It warns of the risk of serious instability.”

If the Federal Reserve takes up this advice, everything, including mortgage REITs, could hit new highs.

AGNC AGNC Investment $7.74
CIMs chimera investment $5.81
ABRMore arbor real estate $12.30
ants apollo commercial real estate $9.50
STWDMore starwood properties $19.21
Rem iShares Mortgage Real Estate ETF $21.35
Mote VanEck Mortgage REIT Income ETF$ $10.93

AGNC Investment (AGNC)

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The dividend yield is a staggering 18.6%. AGNC Investment (Nasdaq:AGNC) is certainly one of the top mortgage REITs to buy. This particular REIT focuses on mortgage-backed securities guaranteed by the US government. In my view, this is one of the top mortgage REITs to buy.

These securities are considered to have little risk of default, but are more susceptible to rising interest rates. However, the AGNC could be done if the Fed suggests it may stop raising rates soon. In October, the company declared his cash dividend of $0.12 per share, and on November 9 he will be paid to record common stockholders as of October 31.

pointed out by Motley Fool Contributor Brent Nitley“AGNC investments are not for the faint of heart. Income investors should put this name on their shopping list.”

Chimera Investments (CIM)

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With a yield of 16.3%, chimera investment (New York Stock Exchange:CIMs) is also one of the best-selling hybrid mortgage REITs. This REIT invests in both non-agency and agency mortgage assets. At the moment, CIM stock is in oversold territory after falling from around $10 to double bottom support at around $5 per share.

Since then, CIM has rebounded, but hopes the stock will close the bearish gap near $7.50. The company also announced his cash dividend of 23 cents in the third quarter. It will be paid on October 31st to shareholders of record as of September 30th.

“Despite the challenging market environment of rising interest rates and widening credit spreads, Chimera remained committed to effectively and efficiently managing its liquidity, liabilities and capital structure during the quarter. ” Mohit Maria, Chief Executive Officer and Chief Investment Officer In August. “Securitizations and secured financing agreements provide stable long-term funding for Chimera’s credit assets. Chimera also repurchased 5.4 million shares of common stock during this period.”

Arbor Realty Trust (ABR)

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Arbor Realty Trust (New York Stock Exchange:ABRMore) has a dividend yield of 12.68% and is also a REIT to be in the oversold camp. In the short term he expects to first close the bearish gap around $13.50 per share after falling from about $15.50 to his current $12.30.

Like many other mortgage REITs on this list, the company increased its cash dividend to 39 cents, marking the ninth straight quarter of an increase. Over the past few years, the REIT’s dividend distribution has jumped about 105% from 19 cents to 39 cents.

The company’s performance is also solid. The REIT’s second-quarter earnings were $94.261 million, well above expectations for his $82.38 million. This top-line figure is also up significantly from his $58.77 million in the same period last year. Even better, earnings per share were 52 cents, beating expectations of 43 cents. This is also up from last year’s 45 cents.

Apollo Commercial Real Estate (ARI)

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With a yield of 14.74%, apollo commercial real estate (New York Stock Exchange:ants) is another mortgage REIT to consider adding to your portfolio. After dropping from about $11 to $8, the stock began to rebound, last trading he was $9.50. I want you to challenge $11 again from here. The company also announced on Oct. 14 a 35-cent dividend to be paid to shareholders on his Sept. 30.

The company is also well positioned for recent rate hikes. This is because approximately 98% of the company’s portfolio is made up of variable rate loans, with higher interest rates available.As pointed out by putnam.com“In floating-rate loans, the coupon is adjusted to the higher interest rate scenario, and the resulting higher income increases the value of the security.”

Starwood Properties (STWD)

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With a yield of about 10%, starwood properties (New York Stock Exchange:STWDMore) is the largest commercial mortgage REIT in the United States. As Starwood pointed out,“The company’s core business is focused on structuring, acquiring, financing and managing commercial mortgages and other commercial real estate debt investments.”

In September, Starwood declared a dividend of $0.48 per common share for the quarter ending September 30, 2022. This dividend will be paid on October 14, 2022 to shareholders of record as of September 30, 2022.

The company continued to discuss its business outlook, which remains bright. “We completed nearly $4 billion in new investments and grew our portfolio to a record $27 billion. LTV of our commercial loan portfolio is now only 61%, a major buffer against potential adverse equity cap rate movements. It has a 99% floating rate and offers a positive side to rising interest rates.” Barry Sternlicht, Chairman and CEO of Starwood Property Trust, said:.

iShares Mortgage Real Estate ETF (REM)

Diagram of ETFs in multiple sectors.

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With an expense ratio of 0.48%, iShares Mortgage Real Estate ETF (Bat:Rem) tracks an index composed of US REITs holding US residential and commercial loans. This relatively low expense ratio gives access to a diverse portfolio of companies in this sector at a very low cost.

The ETF’s top holdings include: Annalee Capital Management (New York Stock Exchange:NLY), Starwood Properties, AGNC Investments, Chimera Investments, and Two Harbors Investment (New York Stock Exchange:2) to give some examples. The low-cost diversification profile of this ETF is no exaggeration to say the least. If you want to buy 100 shares of REM and gain exposure to dozens of shares, it costs about $2,100. On the other hand, his exposure to 100 shares of Starwood Properties, for example, costs him $1,900, and he only has exposure to STWD shares.

Technically, REM is also oversold. After plummeting from around $29 to his current $21.35, it looks like REM has finally bottomed out. We hope to see REM challenge $26 again in the near future.

VanEck Mortgage REIT Income ETF (MORT)

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of VanEck Mortgage REIT Income ETF (New York Stock Exchange:Mote) is one of the top mortgage REITs to buy. It’s also oversold at $10.93 and he could try $13 a share in the short term.

The MORT ETF also seeks to replicate the price and yield performance of the MVIS US Mortgage REIT Index, which aims to track the overall performance of US mortgage real estate investment trusts. Van EckWith an expense ratio of 0.41%, the ETF comprises Annalee Capital, Starwood Property Trust, AGNC Investments, Apollo 0 Commercial Real Estate, Arbor Realty, Chimera Investments, ladder capital (New York Stock Exchange:LADR) When Lady Capital Co., Ltd. (New York Stock Exchange:RC), to name a few of the fund’s 26 holdings.

As of the issuance date, Ian Cooper did not have any positions (directly or indirectly) in the securities mentioned. The opinions expressed in this article are those of the subject author of InvestorPlace.com. Publication guidelinesInvestorPlace.com contributor Ian Cooper has been analyzing stocks and options with web-based advisory since 1999.

InvestorPlace.com contributor Ian Cooper has been analyzing stocks and options with web-based advisories since 1999.

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