Lock In High Dividend Yields While Prices Are Still Down On These 7 REITs

It’s entirely possible to receive much higher dividend yields on certain real estate investment trusts (REITs) than on the 10-year Treasury Note rate right now if you’re willing to accept more risk. In alphabetical order, these six real estate investment trusts pay big dividends:

AGNC Investment Corp. AGNC is a mortgage REIT paying an 11.85% dividend. It uses leverage to invest mostly in agency-backed securities. According to the website, it finances offerings “primarily through collateralized borrowings structured as repurchase agreements.” The Bethesda, Maryland-based company has been in business since 2008. On June 9, 2022 investment analysts at Keefe Bruyette moved their rating on AGNC from “market perform” to “outperform.” Piper Sandler analysts upped the REIT from “neutral” to “overweight” on May 5, 2022.

Annaly Capital Management Inc. NLY is a mortgage REIT paying a 13.66% dividend, one of the highest yields in the entire sector. The company has been around for more than 20 years, a sign of stability in a world of change. Annaly says it started as “a pure play agency mortgage REIT” and developed into “the large cap diversified manager” that it’s become. 

In recent trading sessions, the REIT has broken above the downtrend line that had connected the January high price with the early July high price. While there is no guarantee that continued upward price movement is imminent, it’s good to see a steady dose of more buyers than sellers.

ARMOUR Residential REIT Inc. ARR pays a 16.85% dividend. The Maryland-based company invests “primarily in residential mortgage-backed securities issued or guaranteed by a United States government-sponsored entity, such as the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) or guaranteed by the Government National Mortgage Administration (Ginnie Mae) (collectively, “Agency Securities”). Analysts at investment firm B. Riley lowered their price target on the REIT from $9.50 to $8.00 on July 21, 2022.

Chimera Investment Corp. CIM pays a 13.95% dividend. Headquartered in New York City, the company is focused on residential mortgage loans, asset securitization and mortgage-related securities. REIT analysts at Barclays recently (July 21, 2022) cut their price target for Chimera from $11.00 to $9.00.

Ellington Residential Mortgage REIT EARN pays a dividend yield of 11.90%. Its portfolio is invested mostly in residential mortgage-backed securities (RMBS).” Management mixes in non-mortgage-backed securities to balance objectives and risks, according to its website. The most recent investment analyst report on Ellington is from JMP Securities on April 1t, 2022 with a downgrade from “market outperform” to “market perform.”

New York Mortgage Trust Inc. NYMT pays a 13.79% dividend. The Big Apple-based firm buys, finances and manages mortgage-related and financial assets. The company has a $4.1 billion investment portfolio. The allocation of capital is 51% in residential mortgage loans, 30% in structured family investments and the rest in commercial mortgage-backed securities (CMBSs), non-agency RMBSs and other items. On July 18, 2022, investment firm Keefe Bruyette downgraded its assessment of New York Mortgage Trust from “outperform” to “market perform.”

Orchid Island Capital Inc. ORC pays a dividend yield of 17.59%. From corporate headquarters in Vero Beach, Florida, this REIT uses borrowed money to create a portfolio of mortgage-backed securities. According to the company website, “income generated for distribution to our shareholders is based primarily on the difference between the yield on our mortgage assets and the cost of our borrowings.” The most recent analyst report was initiated on January 12, 2022, by JMP Securities with a “market perform.”

A Word of Caution

REITs can lower dividends when they feel it’s necessary to do so. There is no guarantee that high yields like this will continue for years even if purchased now. Investors should keep an eye on REITs and consider what leading analysts are saying about them.

Looking for ways to boost your returns? Check out Benzinga's coverage on Alternative Real Estate Investments:

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Or browse current investment options based on your criteria with Benzinga’s Offering Screener.

Not investment advice. For educational purposes only.

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