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IShares Mortgage Real Estate ETF Has The Highest REIT Yield, But The Lowest Performance

Published Wed, 08 May 2019 13:41:08 -0400 on Seeking Alpha

Investment Thesis
iShares Mortgage Real Estate ETF (REM) provides access to U.S.-based real estate and provides a higher dividend yield than similar real estate ETFs. However, REM's higher expense ratio and lower long-term performance make it a less attractive option than other real estate ETFs.
Note: Before jumping into the weeds of my analysis, I wanted to disclose that I held positions in REM during the latter half of 2018. It was at that time the highest-yielding large REIT ETF that I could find. As you probably figured out from my other articles, I eventually selected another lower-cost ETF over REM. However, it performed well when I held it and paid out some monster dividends!
Fund Introduction
REM is an ETF that provides exposure to U.S. residential and commercial mortgage real estate companies, including REITs. Per the fund's website, its investment objective is to "track the investment results of an index composed of U.S. REITs that hold U.S. residential and commercial mortgages." Established on 05/01/2007, REM just completed its 12th year of operations and currently reports net assets of $1.27 billion as of 05/06/2019, trading an average of 248,000 shares per day (courtesy of Yahoo! Finance). REM's current expense ratio is 0.48%.
REM pays quarterly dividends as shown below:

As you can see, dividends have been steady for the last eight quarters and all dividends have been classified as income (instead of return of capital), which... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
NEW RESIDENTIAL INVESTMENT 15.04   10.6 1.42 2.00 13.01
ANNALY CAPITAL MANAGEMENT 9.34   0.0 -1.59 1.20 12.89
AMERICAN CAPITAL AGENCY 17.34   1.0 0.01 1.92 11.05
STARWOOD PROPERTY TRUST 23.11   17.9 1.29 1.92 8.32