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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Wondering what Congress's failure to raise the debt ceiling means to you? Wonder no more, dear Fool. If you're a shareholder of mortgage REITs Annaly Capital (NYSE: NLY ) , Invesco Mortgage (NYSE: IVR ) , or Chimera Investment (NYSE: CIM ) , the answer just got painfully obvious.
So what: Shares of each of these companies dropped by 10% and more in early Friday trading, as panic flooded the market over a near-doubling (to 20 basis points) of overnight "repo" financing for government-backed mortgage securities.
Now what: Polled by Bloomberg for comments, most of these companies pooh-poohed the news, pronouncing it "just an equity market event" and "honestly not … a big event." And with shares recovering to lose just a couple percent in most cases, it seems investors agree.
Are they whistling past the graveyard? Perhaps. But valuations like we're seeing in the mortgage REIT industry suggest it may be a good risk. Right now, Chimera and Invesco shares trade hands for less than five times earnings apiece. Industry darling Annaly, meanwhile, costs a mere 6.7 times earnings. Meanwhile, the stocks pay dividend yields ranging anywhere from 15% all the way up to 19%!
Foolish takeaway: If the U.S. government can just be convinced to postpone default by a few more years, these dividend-rich stocks will quickly pay for themselves.
Mr. Market's getting fearful. Are you feeling greedy? Add these stocks to your personal Fool Watchlist, and try before you buy.