Published Wed, 15 Apr 2020 07:02:00 -0400 on Seeking Alpha
Wild swings in preferred share prices created incredible opportunities. Many of those great opportunities exist.
We're looking at several great shares with double-digit dividend yields. Not bad for a preferred share, where the dividend takes priority over the common shares.
A huge rally over the prior week forced us to revamp our price targets again. We won't complain about the work since it pushed our portfolio higher.
The enormous rally comes as ideas of forced liquidations are forcefully put to rest. Some of these shares have their dividends suspended, but several don't.
We tend to warn investors away from any shares with a very high dividend yield, but we've found far more opportunities in high-yield shares lately.
This research report was produced by The REIT Forum with assistance from Big Dog Investments.
Given a wild swing in valuations, we updated targets for the vast majority of the mortgage REIT preferred shares. 100% of the adjustments resulted in higher price targets. There are still a few things that stand out though. We’re going to run through them quickly.
These changes come after a week where most of the mortgage REIT preferred shares rallied by at least 18% and several exceeded 200%. Why did they soar? Because the market realized that a forced liquidation of the mortgage REITs was dramatically less likely than some investors liked to think.
Investors who were predicting forced liquidations throughout the sector failed.
With that theory put to rest by most investors, it was time for a huge rally. If a preferred share's dividends are easily covered by "core earnings" and the company still has enough common equity to cover the preferred shares at least a few times, it's hard to keep pricing the shares for bankruptcy.
For lower risk compared to the sector, AGNCO (AGNCO) ($21.89) or NLY-I (NLY.PI) ($21.72), come in as your top choices. Price volatility on MFO (MFO) ($19.00) has been too... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|ARLINGTON ASSET INVESTMENT||5.55||0.0||-1.21||0.90||16.58|
|CHERRY HILL MORTGAGE INVESTMENT||13.52||0.0||-3.91||1.60||14.40|
|ANNALY CAPITAL MANAGEMENT||8.60||0.0||-3.32||1.20||14.00|
|NEW YORK MORTGAGE TRUST||6.14||12.0||0.51||0.80||12.74|
|AMERICAN CAPITAL AGENCY||15.64||0.0||-1.54||1.92||12.21|
|TWO HARBORS INVESTMENT||13.28||0.0||-2.81||1.60||12.02|
|INVESCO MORTGAGE CAPITAL||15.18||0.0||-1.01||1.80||11.80|
|AG MORTGAGE INVESTMENT TRUST||17.47||6.1||2.87||1.90||10.89|
|PENNYMAC MORTGAGE INV TRUST||22.24||9.5||2.35||1.88||8.50|
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