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Find What You Are Missing With Diversified REITs

Since 2008, investors have steered clear of the housing and property markets especially with the new fears around the fiscal cliff. However, low interest rates and rising home prices have helped the real estate market claw back from its lows and offer solid returns with investment vehicles such as REITs.

REITs are a pool of properties and mortgages bundled together and offered as a security in the form of unit investment trusts. REITs pay out at least 90% of their earnings to shareholders and are seldom taxed at the trust level, allowing them to offer higher yields than equities. REITs are also great for diversifying your portfolio.

We screened for Diversified REITs using the same metrics as we use for normal equities. Our goal was to find REITs that offer above average returns on equity and have high yields. The industry averages ROE and dividend yield for Diversified REITs are 9.10% and 4.71% respectively.

Business Solutions: Investing Ideas

Screening for Diversified REITs with an ROE above 25% and yields above 10% produced the results below:

 

1. AG Mortgage Investment Trust, Inc. (MITT): Focused on investing in, acquiring and managing a diversified portfolio of residential mortgage assets. Market cap at $540.09M, most recent closing price at $23.35.ROE: 32.53%   Dividend Yield: 13.61%

 

2. American Capital Mortgage Investment Crp (MTGE): Formed to invest in and manage a leveraged portfolio of agency mortgage investments, non-agency mortgage investments and other mortgage-related investments. Market cap at $864.08M, most recent closing price at $23.83.ROE: 38.95%   Dividend Yield: 14.88%

 

3. Newcastle Investment Corp. (NCT): Operates as a real estate investment and finance company that invests in and manages a portfolio consisting primarily of real estate securities. Market cap at $1.47B, most recent closing price at $8.51.ROE: 72.51%   Dividend Yield: 10.17%

Analyze These Ideas: Getting Started

Written by Nick Sousa

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