REITs Remain the Top Destination for Dividend Investors
January 31 2011 - 10:25AM
Marketwired
In the past year Real Estate Investment Trusts (REITs) have been
one of the most popular investments in the financial sector. Since
the start of 2010, the Vanguard REIT ETF has surged more than 30
percent while the overall financial sector has been relatively
neutral. REITs' ability to generate this significant capital
appreciation is one of the industry's main allures, as most
investors flock to REITs for their hefty dividends and stability.
In fact, most of the success of the industry in the last year can
be attributed to low interest rates. When interest rates get this
low the return on dividends can far exceed that of bonds. The
Bedford Report examines the outlook for diversified REITs and
provides research reports on Annaly Capital Management, Inc. (NYSE:
NLY) and American Capital Agency Corporation (NASDAQ: AGNC). Access
to the full company reports can be found at:
www.bedfordreport.com/2011-01-NLY
www.bedfordreport.com/2011-01-AGNC
The Vanguard REIT index had been stagnant for most of January,
however it surged last week as investors bought up a number of the
fund's top components on speculation of a wave of M&A activity
in the industry.
M&A speculation in the REIT sector increased after ProLogis
confirmed it is in talks with rival AMB Property about a possible
merger. The two industrial REIT giants have a combined market cap
of $13.9B, and are considering an "all-stock, at-market
transaction, based upon the unaffected trading prices of the two
companies' stock prior to media reports of a possible merger."
The Bedford Report releases regular market updates on 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 free at www.bedfordreport.com and get exclusive access to
our numerous analyst reports and industry newsletters.
Companies such as American Capital Agency and Annaly earn their
money on the spread between low-interest short-term borrowing and
purchasing high-interest long-term securities, which leads to solid
profits given the current conditions. Federal Reserve Chairman Ben
Bernanke says that he is prepared to keep rates in the range of 0 -
0.25 percent for an extended period if the unemployment numbers
don't drop significantly.
Solid profits for a REIT keep those dividend payments stable.
Presently, American Capital pays an annual dividend of 5.60 for
yield of about 19.60%. Annaly, meanwhile, pays an annual dividend
of 2.56 for a yield of 14.40%. 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
return. We strive to provide the most up-to-date market activities.
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