With the housing market in an extended slump, the economy still in the midst of a pseudo-recovery, and investors clamoring for dividends, it's a good time to be watching real estate investment trusts. REITs make up one of the most-watched industries among those who have created a watchlist with the Fool, and today we're able to single out the one player that is garnering the most attention.
People watch stocks for different reasons -- they're waiting for a dip in price, watching for a specific catalyst, gathering all the news and information that might affect stocks they already own, or considering a sell. Regardless of their motivation, we can better understand market sentiment by seeing who's watching what. With the Fool's free My Watchlist service now three months old, we have tens of thousands of people telling us the businesses that have, for whatever reason, piqued their interest.
And the most-watched REIT is ...
Looking at the aggregate data, we see that Annaly Capital Management (NYSE: NLY) is the clear leader in terms of watch interest, the percentage of people keeping an eye on REITs in general who are specifically watching each company. And for good reason. As Fool analyst Jordan DiPietro wrote in December:
Companies like Annaly Capital, Chimera (NYSE: CIM), and Hatteras Financial (NYSE: HTS) all pay outstanding dividends above 14%. Because these companies are REITs, they are required to distribute at least 90% of their taxable income to investors, hence their very high dividend yields. It's these huge payouts that attract investors. Who wouldn't want to lock in a great 14% dividend over the next few years while Ben Bernanke and friends keep rates at insanely low levels?
First, we must consider if these dividends are sustainable. Any change in the Fed's interest rate policy could drastically eat away at these companies' business model, as they depend on cheap borrowing to generate earnings. In addition, there's always the chance (slim, though it may be) that legislation will be passed to remove federal guarantees for Fannie Mae- and Freddie Mac-type securities. I'm not saying the above companies are not good investments. In fact, my Foolish colleague Ilan Moscovitz recently suggested readers buy Annaly Capital. I'm just reiterating all the facets one must consider before following the herd into what could be high, yet unstable dividends.
Here are the rest of the most-watched REITs with their watch interest along with their CAPS rating to show the sentiment of our free investing community.
|
Company |
Market Cap |
CAPS Rating |
Watch Interest |
|---|---|---|---|
| Annaly | $11,088 | *** | 22.3% |
| Chimera Investment | $4,285 | **** | 8.9% |
| CapitalSource (NYSE: CSE) | $2,263 | ***** | 7.6% |
| American Capital Agency (Nasdaq: AGNC) | $1,903 | *** | 4.3% |
| Plum Creek Timber (NYSE: PCL) | $6,052 | **** | 3.7% |
| Retail Opportunity Investments (Nasdaq: ROIC) | $404 | **** | 3.2% |
| Hatteras Financial | $1,383 | ***** | 2.6% |
Whether you're keeping an eye on the industry stalwarts or are watching an up-and-comer like tiny Retail Opportunity Investments, it pays to watch. You can make smarter investing decisions with your own version of My Watchlist, free from the Fool. Click below to start following one of the stocks mentioned above:
