After Dismal Earnings, 3 Hybrid REITs I Am Considering To Replace American Capital

Following American Capital's (AGNC) dismal quarterly performance, I have been on a hunt for a replacement for this beloved dividend paying real estate investment trust [REIT]. For my followers not familiar with a REIT, a REIT is simply any corporation, trust or association that acts as an investment agent specializing in real estate and real estate mortgages under Internal Revenue Code section 856. The rules for federal income taxation of REITs are found primarily in Part II (sections 856 through 859) of subchapter M of chapter 1 of the Internal Revenue Code. The advantage of being a REIT is that the company is entitled to deduct dividends paid to its owners, and thus a REIT may avoid incurring all or part of its liabilities for U.S. federal income tax. To meet the qualifications, REITs are required to distribute 90% of its earnings to shareholders. Although I still like AGNC, its earnings report (links to a pdf file) was worrisome. For the first quarter, it reported comprehensive loss per common share of $1.57. This included $0.64 net income per share with a $2.21 loss per common share in other comprehensive areas (such as unrealized losses on investments). AGNC also reported a $0.78 net income spread per share (that is, the income made after cost of borrowing, expenses and interest income). The book value of the company dipped 9% to $28.93, down from $31.64 at the end of 2012. In searching for a replacement