Why These Popular Dividend-Payers Slashed Their Payouts

Dividend stocks have gotten increasingly popular in recent years, as alternatives have stopped producing as much income as they once did. Some of the most popular dividend payers in the market were real estate investment trusts specializing in mortgage-backed securities, which produced double-digit dividend yields thanks to their highly leveraged business models. But recently, some popular mortgage REITs have cut their dividends.

In the following video, Fool contributor Dan Caplinger goes through some of the recent dividend cuts among the most popular mortgage REITs, discussing the reasons the dividend favorites are feeling pressure on profits and whether the trend is likely to continue. Dan also points out that some mortgage REITs have managed not to cut dividends, and concludes with a closer look at some of the factors that will affect mortgage REITs in the future.

If you're an investor who prefers returns to rhetoric, you'll want to read The Motley Fool's new free report "5 Dividend Myths ... Busted!" In it, you'll learn which stocks provide premium growth and whether bigger dividends are better. Click here to keep reading.


Read/Post Comments (4) | Recommend This Article (7)

Comments from our Foolish Readers

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  • Report this Comment On June 30, 2013, at 10:33 PM, pace2001 wrote:

    Can you be any more wrong? Your basis of the recent dividend cut due to Fed stopping QE and long term rates increasing?

    Annaly has been cutting dividend since 2009 and this was due to a falling interest rate environment as well as a very active Fed buying Agency MBS.

    Right now only the long term rate is rising, the short term rate is remaining flat as the Fed is keeping the Fed Funds rate near zero. Meaning interest rate spread is widening or income will be increasing.

    Does anyone at Motley Fool understand Finance?

  • Report this Comment On July 01, 2013, at 4:01 AM, bmc007 wrote:

    In fairness, a lot of people get this point wrong - but I certainly agree with your post.

  • Report this Comment On July 01, 2013, at 10:57 AM, skihowie wrote:

    Short term rates are not likely to rise for some time.

    However, the market dictates long term rates and more specifically, rates on agency mortgage securities. With NLY leverered up 7 times the value of the securities in the portfolio go down dramatically.

    This is why the stock has been so volatile and is likely to remain so.

    At a cost of 25 basis point plus the dividend my short at 16.15 remains.

  • Report this Comment On July 05, 2013, at 11:29 AM, JesseJamesFinn wrote:

    Fellow Fool,

    I want to thank you on behalf of some many people who do not understand why these mReits and various hybrid-agency loans are getting clobbered as I post this now.

    IVR is down 7% taking a nice shaving real-time.

    ARR as you mentioned is down 10 %

    ACRE and JMI are both getting smashed and Barcharts shows a list of more getting reduced to All-time Lows and 52 Week Lows, why are the book values being crushed so quick? Is this rational for Wall Street to toss them out after taking this to new highs seven months ago? We had a flood of IPOs, last year in October Bill Gross said "The Cult Of Equities is Dead", how could he be some wrong?

    David and Tom and great contributors like you have helped Main Street keep a edge and we love you my Fool! Please keep up writing more articles, I speak on my fellow fools saying "We dig you!"

    TraderTJF JesseJamesFInn

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