This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Highest-Yielding Stock You May Have Never Heard Of

Stocks in this article: ARR

With interest rates falling, the REITs are being forced to settle for far lower yields on their mortgage investments. As mortgage rates fall, so does their income. Mortgage REITs may continue to struggle if rates for new and refinanced mortgages continue to remain low, which at this point, seems likely.

Already, many mortgage REITs have had to cut dividends. In fact, ARMOUR cut its dividend 8% from $0.12 per share each month to $0.11 just a few months ago.

But there could be more cuts on the horizon. Since the start of the year, ARR has announced additional share offerings of 66 million shares. Meanwhile, the share count has risen from 7 million shares to 85 million during the past 18 months.

Risks to Consider: While selling new shares gives the REIT access to cheap capital to invest in more securities, it also dilutes the share base dramatically. At this point, I think the abnormally high yield is the market's way of saying it doesn't believe the current dividend can be sustained with the flood of new shares.

Action to Take: In other words, the 18.6% yield looks nice on paper, but I personally wouldn't buy it right now.

Amy Calistri does not personally hold positions in any securities mentioned in this article.

StreetAuthority LLC does not hold positions in any securities mentioned in this article.

More StreetAuthority Stories:

  • Forget Coca-Cola: Buy This Stock Instead
  • These Stocks are Even More Undervalued than You Think...
  • This "Forever" Stock Just Doubled Its Dividend
  • 2 of 2

    Select the service that is right for you!

    COMPARE ALL SERVICES
    Action Alerts PLUS
    Try it NOW

    Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

    Product Features:
    • $2.5+ million portfolio
    • Large-cap and dividend focus
    • Intraday trade alerts from Cramer
    • Weekly roundups
    TheStreet Quant Ratings
    Try it NOW
    Only $49.95/yr

    Access the tool that DOMINATES the Russell 2000 and the S&P 500.

    Product Features:
    • Buy, hold, or sell recommendations for over 4,300 stocks
    • Unlimited research reports on your favorite stocks
    • A custom stock screener
    • Upgrade/downgrade alerts
    Stocks Under $10
    Try it NOW

    David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

    Product Features:
    • Model portfolio
    • Stocks trading below $10
    • Intraday trade alerts
    • Weekly roundups
    Dividend Stock Advisor
    Try it NOW

    Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

    Product Features:
    • Diversified model portfolio of dividend stocks
    • Alerts when market news affect the portfolio
    • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
    Real Money Pro
    Try it NOW

    All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

    Product Features:
    • Real Money + Doug Kass Plus 15 more Wall Street Pros
    • Intraday commentary & news
    • Ultra-actionable trading ideas
    Options Profits
    Try it NOW

    Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

    Product Features:
    • 100+ monthly options trading ideas
    • Actionable options commentary & news
    • Real-time trading community
    • Options TV
    To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
    Submit an article to us!

    Markets

    DOW 18,053.71 +23.50 0.13%
    S&P 500 2,088.77 +6.89 0.33%
    NASDAQ 4,806.8590 +33.3870 0.70%

    Brokerage Partners

    Rates from Bankrate.com

    • Mortgage
    • Credit Cards
    • Auto

    Free Newsletters from TheStreet

    My Subscriptions:

    After the Bell

    Before the Bell

    Booyah! Newsletter

    Midday Bell

    TheStreet Top 10 Stories

    Winners & Losers

    Register for Newsletters
    Top Rated Stocks Top Rated Funds Top Rated ETFs