REITs' High Yielding Dividends Look Stable for Now
November 10 2010 - 7:46AM
Marketwired
Following last week's $600 billion "QE2" announcement, consensus is
that interest rates will remain at exceptionally low levels for the
foreseeable future. When interest rates are low investors tend to
put their money into dividend paying stocks. A popular dividend
play is via Real Estate Investment Trusts or "REITs" for short. To
be classified as a REIT, a company must distribute at least 90
percent of its taxable income to shareholders annually in the form
of dividends. While this makes paying its dividend more volatile,
given the current economic conditions, REITs continue to be
appealing. The Bedford Report examines the outlook for diversified
REITs and provides research reports on Chimera Investment
Corporation (NYSE: CIM) and American Capital Agency Corporation
(NASDAQ: AGNC). Access to the full company reports can be found at:
www.bedfordreport.com/2010-11-CIM
www.bedfordreport.com/2010-11-AGNC
This year REITs have been one of the better performing segments
of the financial sector. The Vanguard REIT Index ETF which holds
nearly 100 different REITs, has soared an impressive 31% in
contrast to the Financial sector for the S&P 500, which is up a
mere 8.1% this year.
REITs earn their money on the spread between low-interest
short-term borrowing and purchasing high-interest long-term
securities. Several analysts believe that as long as interest rates
remain low -- which is all the more likely after the QE2
announcement -- REITs should continue posting strong earnings,
which in turn is likely to keep those hefty dividends stable.
The Bedford Report releases regular market updates on various
REITs so investors can stay ahead of the crowd and make the best
investment decisions to maximize their returns. Take a few minutes
to register with us for free at www.bedfordreport.com and get
exclusive access to our numerous analyst reports and industry
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Presently, Chimera pays an annual dividend of 0.72 for yield of
about 17.80%. For the most recent quarter Chimera reported that
core earnings were higher year-on-year- at $139.0 million or $0.16
per share compared with $85.9 million or $0.13 per share last
year.
American Capital Agency pays an annual dividend of 5.60 for a
massive yield of around 19%. While high yielding dividend paying
stocks are appealing, be forewarned that companies can cut, slash,
or suspend dividends at any time, often without notice.
The Bedford Report provides Analyst Research focused on equities
that offer growth opportunities, value, and strong potential
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members. The Bedford Report has not been compensated by any of the
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