The dividend king

If you are on the hunt for income, you must consider allocating a portion of your portfolio to the mortgage real estate investment trusts (mREITs). Along with some business development corporations, they are kings among men when it comes to dividends. In 2013, a lot of capital was lost in these names when interest rates spiked in mid-2013 (Figure 1), wreaking havoc on the share prices of most mREITs. In fact, I was one who like many others, lost a good chunk "on paper."

As we can see, the spike in rates was dramatic, crushing the holdings of nearly all mREITs, particularly those concentrated in agency mortgage backed securities. American Capital Agency (NASDAQ:AGNC) and Annaly Capital (NYSE:NLY), two of my largest holdings were crushed, shaving approximately 25% of their value in a matter of weeks. Now, many of my prior analyses have suggested that the long-term investor who has been in these names for a while is likely still well ahead on their investment given the high dividends paid by mREITs. Those bought around the time when I made my bottom call in Annaly Capital are doing quite fine now. The astute investor in this space likely averaged down as well and the environment is .....................READ MORE