High Yielding REITs Gain Popularity During Market Unrest
August 23 2011 - 8:16AM
Marketwired
In the aftermath of S&P's downgrade to the US' credit rating
investors are looking for safe havens. Traditionally, high yielding
REITs garner attention due to their reliable income. As REITs,
these companies are typically not taxed on their income but are
required to pay out 90 percent of their taxable income in
dividends. The Bedford Report examines the outlook for diversified
REITs and provides equity research on American Capital Agency
Corporation (NASDAQ: AGNC) and ARMOUR Residential REIT, Inc. (NYSE:
ARR). Access to the full company reports can be found at:
www.bedfordreport.com/AGNC www.bedfordreport.com/ARR
Most Mortgage REITs have portfolios made up principally of
mortgages insured by the federal agencies Fannie Mae, Freddie Mac
and Ginnie Mae. They typically borrow at low rates and lend in the
mortgage markets at higher rates, usually by buying mortgage-backed
securities. By purchasing bonds guaranteed by the government,
analysts argue these companies take on no risk of default, with the
principle concern being an interest rate risk. The good news for
REIT investors is that The Fed last week announced that it would
hold its benchmark interest rate near zero for at least through
mid-2013, replacing an earlier promise to keep it there for "an
extended period."
Meanwhile continued housing market weakness has buoyed apartment
occupancy rates and stabilized rental fees to the benefit of the
residential real estate investment trust industry. High
unemployment has also led many homeowners to rent helping to reduce
vacancies.
The Bedford Report releases stock research on REITs so investors
can stay ahead of the crowd and make the best investment decisions
to maximize their returns. Take a few minutes to register with us
free at www.bedfordreport.com and get exclusive access to our
numerous analyst reports and industry newsletters.
Currently American Capital Agency pays an annual dividend of
$5.60 a share for a hefty yield of around 19.6 percent. The company
reported total revenues of $264.7 million in the second quarter as
compared to just $50.6 million in the same quarter a year
earlier
ARMOUR Residential REIT pays an annual dividend of $1.44 per
share for a huge yield of around 19.4 percent. The Company's
portfolio consisted of Fannie Mae, Freddie Mac and Ginnie Mae
mortgage securities and was valued at $5.3 billion as of June 30,
2011.
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