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Zero Interest Rate Blues? +7% Yield Preferred To Hold Forever: Anworth

Published Thu, 26 Nov 2020 08:35:00 -0500 on Seeking Alpha

Seeking AlphaDividend IdeasZero Interest Rate Blues? +7% Yield Preferred To Hold Forever: AnworthNov. 26, 2020 8:35 AM ET|| About: Anworth Mortgage Asset Corporation (ANH), ANH.PA, ANH.PB, ANH.PC, Includes: AGNC, ARR, DX, NLY, NLY.PD, NLY.PF, NLY.PG, NLY.PI, PCIby: Rida MorwaRida Morwa High Dividend OpportunitiesThe #1 Service for Income Investors and Retirees, 9-10% dividend yield.SummaryMortgage fundamentals remain very strong.
We have talked about agency and non-agency mREITs, now we look at a hybrid.
Agency MBS provides a solid foundation, non-agency mREITs create upside opportunity.
We look at two fixed-rate preferred shares and one convertible preferred.
Co-produced with Beyond Saving
(This article was first published to HDO subscribers on November 18th, and all data is from that date.)
One of the greatest buying opportunities of 2020 has been mortgages. When COVID first started impacting the market, mortgages sold off like we were on the verge of a repeat of 2008. This created substantial opportunities among mortgage REITs (mREITs) that were pressured by volatility in the mortgage market.
It has become increasingly clear that we are not going to see another foreclosure crisis. The housing market is strong and is firing on all cylinders. Coming into 2020, Americans had significant amounts of equity in their homes, default rates were very low and mortgage payments as a percentage of income had been dropping.
Wall Street ran from mortgages in fear. No doubt, many remembered the pain of the mortgages crisis and had no wish to hold through another one. However, the American consumer remembers those dark times as well. It is no small thing for a person to lose their home. As a result, home owners have been much more responsible about paying down their mortgages and not overextending themselves compared to the days leading up to 2008.
We have identified several opportunities to benefit from the disconnect between the market's fear and the... Read more