Huge yields have made the mortgage REIT sector a favorite for dividend investors. The sector is expanding as two new mortgage REITs are completing IPOs: Orchid Island Capital and Apollo Residential Mortgage (AMTG). These will be the second and third mortgage REIT IPOs completed, following AG Mortgage (MITT), of the seven that were filed in the spring. Of these two newbies, one is worth watching, while investors should avoid the other.
1 to watch. Apollo Residential Mortgage looks interesting. The company is a mortgage REIT and will be managed by ARM Manager, a subsidiary of Apollo Global Management run by the famous Leon Black. Mortgage REITs make money by borrowing money and then using that money to buy mortgage-backed securities. The companies make the difference between the rate they lend at and the rate they borrowed.
Source: Motley Fool
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