What are mortgage REITs?

Mortgage REITs are real estate investment trusts (REITs) that focus on owning mortgages and other loans backed by residential and commercial real estate. Instead of generating rental income from owning equity in a property, they collect interest income.

Are mortgage REITs worth investing in?

Mortgage REITs can be worth investing in. They typically invest in lower-risk loans backed by residential or commercial real estate. However, they often use leverage (i.e., debt and other capital sources) to boost their returns. That strategy can enable mortgage REITs to make a lot of money when the spread between their borrowing costs and the yields they earn on their investment is wide. However, a narrowing of investment spreads, which typically occurs due to changes in interest rates, can significantly affect the returns these REITs earn. They tend to be riskier investment vehicles that often offer higher-yielding dividend payments that can fluctuate significantly.

How are mortgage REITs affected by interest rates?

Changes in interest rates affect both the borrowing costs of mREITs and the yields on their investments. For example, during a falling interest rate environment, borrowers will often refinance their loans. As a result, an mREIT will have to reinvest the repaid debt in the currently lower rate environment, causing its income to decline. Meanwhile, rising rates make it more expensive for an mREIT to borrow money to finance its existing portfolio.

How often do mortgage REITs pay dividends?

Most mortgage REITs pay quarterly dividends. However, some mortgage REITs, including AGNC Investment, pay a monthly dividend.

What are the largest mortgage REITs?

Annaly Capital Management was the largest residential mortgage REIT in April 2026, with a market cap of more than $15.7 billion. Meanwhile, Starwood Property Trust led commercial mREITs with a market cap approaching $6.5 billion.

How are mortgage REIT dividends taxed?

Most dividend payments by REITs (both mortgage and equity) held in a regular brokerage account are considered non-qualified dividends, which are taxed at an investor's ordinary tax rate.

How do economic downturns impact mortgage REITs?

Economic downturns can affect mortgage REITs in many ways. They often cause the Federal Reserve to cut interest rates, which can enable borrowers to refinance at lower rates, forcing mortgage REITs to reinvest their repaid principal at a lower rate. Additionally, real estate loans not backed by government agencies face greater default risk during a recession.

Bars

A close look at the mortgage REIT sector.

By Matthew DiLallo – Updated Apr 9, 2026 at 11:49 AM EST | Fact-checked by Frank Bass

Key Points

Mortgage REITs finance real estate by investing in mortgages and related securities.
Starwood Property Trust has diversified its platform by investing in various real estate sectors.
AGNC Investment has maintained a stable monthly dividend for many years through a focused investment strategy.

Loading paragraph...

Ticker Information Table
Name and ticker	Market cap	Dividend yield
Starwood Property Trust (NYSE:STWD)	$6.3 billion	11.22%
AGNC Investment Corp. (NASDAQ:AGNC)	$12.2 billion	13.55%
Annaly Capital Management (NYSE:NLY)	$16.2 billion	12.64%

Data as of May 14, 2026. Showing 3 of 3 tickers.

Loading ticker_table...

Here's a closer look at these leading mortgage REITs.

1. Starwood Property Trust

Loading paragraph...

NYSE: STWD

Starwood Property Trust

Today's Change

(0.17%) $0.03

Current Price

$17.14

Key Data Points

Market Cap

$6.3B

Day's Range

$17.13 - $17.31

52wk Range

$16.90 - $21.05

Volume

3.2M

Avg Vol

3.2M

Gross Margin

84.44%

Dividend Yield

11.22%

Loading company_card...

Starwood Property Trust (STWD +0.17%) is the largest mortgage REIT focused on commercial financing. The company built a diversified portfolio of $30.7 billion in assets in mid-2026, 54% of which comprised commercial loans. Starwood Property also has residential and infrastructure lending platforms, as well as equity investments in owned properties.

In mid-2025, Starwood expanded its equity investments by acquiring Fundamental Income Properties from Brookfield Asset Management (BAM +3.34%) for $2.2 billion. The deal increased the company's diversification by adding a large-scale global net lease platform to its portfolio.

Starwood's diversification beyond the commercial lending sector has enabled it to generate steadier earnings and provided additional growth opportunities. That has allowed the company to maintain its high-yielding dividend for more than a decade. That dividend security has been hard to find in the mREIT sector, where payouts have generally declined over the years due to interest rate volatility and other factors. It has also generated a strong 9.6% annualized total return since its 2009 IPO.

2. AGNC Investment

Loading paragraph...

NASDAQ: AGNC

AGNC Investment Corp.

Today's Change

(-0.61%) $-0.07

Current Price

$10.56

Key Data Points

Market Cap

$12B

Day's Range

$10.56 - $10.71

52wk Range

$8.65 - $12.19

Volume

324K

Avg Vol

19M

Gross Margin

100.00%

Dividend Yield

13.55%

Loading company_card...

AGNC Investment (AGNC -0.61%) is an mREIT focused on investing in Agency MBS, pools of residential mortgages protected against credit losses by government agencies (Fannie Mae, Freddie Mac, and Ginnie Mae). The REIT invests only in MBS, which it leverages primarily through repurchase agreements. It also uses a dynamic risk management strategy to protect the value of its portfolio from interest rate and other risks. As of early 2026, AGNC Investment's portfolio totaled $94.8 billion in assets and had a 7.3x leverage ratio.

The REIT's simple strategy has enabled it to pay a stable monthly dividend since resetting the payout in early 2020. That dividend stability has made it stand out in a sector where many rivals cut their dividends as interest rates rose. While AGNC has cut its payout several times in the past (including in 2020), it has generated a 559% total return since its IPO in 2008, outperforming its mREIT peers during that time frame.

3. Annaly Capital Management

Loading paragraph...

NYSE: NLY

Annaly Capital Management

Today's Change

(-0.63%) $-0.14

Current Price

$22.02

Key Data Points

Market Cap

$16B

Day's Range

$22.02 - $22.38

52wk Range

$18.43 - $24.52

Volume

162K

Avg Vol

Gross Margin

99.74%

Dividend Yield

12.64%

Loading company_card...

Loading paragraph...

An infographic explaining the risks of investing in mortgage real estate investment trusts (REITs). — Image source: The Motley Fool

Loading paragraph...

FAQ on Mortgage REITs

Loading faq...

About the Author

Matt DiLallo has been a contributing Motley Fool stock analyst specializing in the energy, industrials, and real estate sectors since 2012. He also covers dividend-paying stocks, pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

TMFmd19

@MatthewDiLallo

Matt DiLallo has positions in Brookfield Asset Management and Starwood Property Trust. The Motley Fool has positions in and recommends Brookfield Asset Management and Starwood Property Trust. The Motley Fool has a disclosure policy.

Best Mortgage Stocks for 2026 and How to Invest

A close look at the mortgage REIT sector.

Key Points

1. Starwood Property Trust

NYSE: STWD

Key Data Points

2. AGNC Investment

NASDAQ: AGNC

Key Data Points

3. Annaly Capital Management

NYSE: NLY

Key Data Points

Related investing topics

Best Stocks to Buy Now: Our Buy-and-Hold Picks for May 2026

How Treasury Bonds Work and How to Invest in Them

Best Data Center REITs for 2026 and How to Invest

Best Diversified REITs for 2026 and How to Invest

FAQ on Mortgage REITs

About the Author

Read Next

Stocks Mentioned

Premium Investing Services

FAQ on Mortgage REITs

What are mortgage REITs?

Are mortgage REITs worth investing in?

How are mortgage REITs affected by interest rates?

How often do mortgage REITs pay dividends?

What are the largest mortgage REITs?

How are mortgage REIT dividends taxed?

How do economic downturns impact mortgage REITs?

1. Starwood Property Trust

Benefits and risks of investing in mortgage REITs

Should you invest in mortgage REITs

Related investing topics

FAQ

3 top mortgage REITs for 2026

NASDAQ: AGNC

Key Data Points

NYSE: NLY

Key Data Points

NYSE: STWD

Key Data Points

3. Annaly Capital Management

How to buy mortgage REITs

2. AGNC Investment