How mREITs Make Money (And 2 Keys for a Stable Dividend)

Over the past few months, popular mREITs -- mortgage real estate investment trusts, that is -- have been pummeled in the markets.

For these mREITS, the market has ignored the rebounding real estate market, the explicit backing of Fannie Mae  (NASDAQOTH: FNMA  ) and Freddie Mac  (NASDAQOTH: FMCC  ) by the U.S. government, strong performances from mortgage originators this year, and the impressive dividends offered by leading companies like American Capital Agency (NASDAQ: AGNC  ) , CYS Investments (NYSE: CYS  ) , and Hatteras Financial (UNKNOWN: HTSI.DL  ) . 

To understand what's driving this sector ever lower, Motley Fool contributor Jay Jenkins dives into the most basic question for mREITs: How do they actually make money?

The answer is fundamentally simple, but the nuance becomes complex when analyzing the future of these company's dividends.

Make no mistake, dividend stocks can make you rich. It's as simple as that. But only if they will pay out over the long term. As mREITs struggle to maintain earnings sufficient to pay the dividend, there are other opportunities in the market to grow your investment income portfolio. And with stability over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Read/Post Comments (1) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 08, 2013, at 9:11 AM, ferdiefor wrote:

    Geez don't you think an article like this is a wee bit late. There are investors who have ridden Mreits down to the tune of multiple years of interest income they won't even get that are now capital losses and total returns so negative that are the stuff of nightmares.

    The Mreit cycle is over so you have to wait for a future stabilization point before re-entering and it sure isn't at these super cycle interest rate lows.

    Probably need to wait for 10 year to get closer to 4% before re-entering otherwise investors are looking at a never ending cycle of pain... lower stock price followed by lower dividends for at least a couple of quarters. Even if Mreits have built up earnings they are not an offset for the huge losses in book value because of forced sales.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2584352, ~/Articles/ArticleHandler.aspx, 9/27/2016 3:01:51 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 5 hours ago Sponsored by:
DOW 18,094.83 -166.62 -0.91%
S&P 500 2,146.10 -18.59 -0.86%
NASD 5,257.49 -48.26 -0.91%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/26/2016 4:00 PM
AGNC $19.82 Up +0.12 +0.61%
American Capital A… CAPS Rating: ***
CYS $8.79 Up +0.02 +0.23%
CYS Investments CAPS Rating: ****
FMCC $1.61 Down -0.03 -1.83%
Freddie Mac CAPS Rating: ***
FNMA $1.71 Down -0.05 -2.84%
Fannie Mae CAPS Rating: ***
HTSI.DL $0.00 Down +0.00 +0.00%
Ruddick Corp CAPS Rating: ***