These 2 Mortgage REITs With Yields Over 10% Are Trading For Less Than They're Worth

During Fed tightening cycles due to inflation, real estate investment trusts posted positive total returns in 85% of periods with rising Treasury yields from the first quarter of 1992 to the fourth quarter of 2021, according to Nareit. Furthermore, REITs outperformed the S&P 500 in half of the periods when Treasury yields were rising.

According to SP Global, mortgage real estate investment trusts (REITs) posted a 10- ear trailing return of 8.2% using data gathered prior to Sept. 30, 2019. Mortgage REITs do not actually own properties — rather, they lend money directly or indirectly to the owners or operators of the real estate, generating profits from the interest.

This may interest an investor looking to invest in real estate without actually owning the physical property.

Not to mention, both of these REITs mentioned below are down substantially, and have dipped below their book value. This is signaling the market price is trading below what the firm is worth on its balance sheet.

Read more about two high-yielding mortgage REITs trading below book value below. 

See Also: 3 REITs With The Largest Recent Dividend Hikes
MFA Financial Inc. MFA is offering a forward dividend yield of 15.58% or $1.76 per share annually, making quarterly payments, with an inconsistent track record of increasing its dividends.

MFA Financial is a real estate investment trust that invests in residential mortgage assets, including residential mortgage-backed securities and residential whole loans.

As of Sept. 30, 2022, MFA Financial has an $8.2-billion residential whole loan portfolio, and saw its GAAP book value decrease to $15.31 per common share from $16.42 per share as of June 30.

Dynex Capital Inc. DX is offering a forward dividend yield of 11.89% or $1.56 per share annually through monthly payments, with an infrequent track record of increasing its dividends.

Dynex Capital is a financial services company structured as a REIT that primarily invests in agency mortgage-backed securities (MBS), including residential MBS and commercial MBS.

As of Sept. 30, 2022, Dynex Capital had an average balance of its mortgage-backed securities and loans of roughly $3.214 million. Dynex Capital had a book value of $14.23 per share during the third quarter, compared to $16.79 per share in the previous quarter.

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