Daily Stock Analysis– Mortgage-backed REITs, high dividends, and potential perils

Send us Fan Mail

REITs or real estate investment trusts have been around since 1960. REITs allow investors to invest in real estate without direct ownership. This investment vehicle can be simple or incredibly complicated. Many people are attracted to the high current dividends. There can also be an illusion of safety because the mortgages used in some REITs are back by the US Government. In today's show, I discuss the opportunities REITs offer. Plus, I discuss the downside too. Investors can learn a lot from the market crash in mortgage-backed REITs that began with the Coronavirus market crash between February and March of 2020. Some mREITs have not rebounded. 

Today's discussion includes Annaly Capital Management, Starwood Property Trust, AGNC Investment Corp., Two Harbors Investment, and PennyMac Mortgage Investment Trust.

Listen, learn, & subscribe 

This information is for educational purposes only. Not an offer to buy or sell any stock or an offer of advice.

References from today's show:

Mortgage Firm Struggles to Meet Margin Calls as Market Turmoil Continues https://www.wsj.com/articles/mortgage-firm-struggles-to-meet-margin-calls-as-market-turmoil-continues-11584975633

Mortgage REITs Come Under Stress That Even the Fed Might Not Be Able to Ease

https://www.barrons.com/articles/target-stock-is-climbing-after-it-reported-another-banner-quarter-for-earnings-51614694528

Basics of Fannie Mae Single-Family MBS https://capitalmarkets.fanniemae.com/media/4271/display

Freddie Mac—Federal Home Loan Mortgage Corp. (FHLMC) https://www.investopedia.com/terms/f/freddiemac.asp

The Inverse Relationship Between Interest Rates and Bond Prices https://www.investopedia.com/ask/answers/why-interest-rates-have-inverse-relationship-bond-prices/

Two Harbors Investments Corp. Fourth Quarter 2020 Earnings Call https://s24.q4cdn.com/261832436/files/doc_financials/2020/q4/TWO-Q4-2020-Earnings-Call-Presentation-Final.pdf

How Risky Is AGNC Investment Corp.'s Dividend? https://www.fool.com/investing/2021/02/17/how-risky-is-agnc-investment-corps-dividend/#:~:text=AGNC%20cut%20its%20monthly%20payout%20from%20$0.15%20per,conference%20call%20that%20the%20dividend%20cut%20was%20%22unnecessary.%22

Capital Destruction, Inc. A look at mortgage REITs. https://www.morningstar.com/articles/641458/capital-destruction-inc

Two Harbors Investment Sees Unusually Large Options Volume https://www.marketbeat.com/instant-alerts/nyse-two-options-data-report-2021-02/

Commercial Properties' Ability to Repay Mortgages Was Overstated, Study Finds https://www.wsj.com/articles/commercial-properties-ability-to-repay-mortgages-was-overstated-stu