Dividend investing can be a safe haven in an economic storm, and investors are increasingly turning to dividend stocks as yields become tougher to find. One area that has seen particular interest from investors is the mortgage REIT sector, because of the massive yields on offer.
Investors should fully understand the risks involved in buying mortgage REITs. Such high yields suggest that the good times won't continue for too long and are usually a bad sign for a stock. High yields often mean that investors have lost confidence in the company, pushing its stock prices down and raising its yield. But by law, these REITs have to pay out most of their earnings as dividends, so it's normal for their earnings to be higher than usual. Nevertheless, these yields suggest that the market is pricing in bad times ahead for the sector.
Source: Motley Fool
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