I've been warning investors about the risks associated with mortgage REITs (mREITs) such as Annaly Capital Management (NYSE: NLY ) and American Capital Agency (NASDAQ: AGNC ) for more than a year and a half. Finally, regulators are waking up to the the potential problem these companies pose. Last Friday, The Wall Street Journal reported that the Financial Stability Oversight Council mREITs could finger mREITS as an area of vulnerability in financial markets in its annual report.
mREITs borrow money on a short-term basis to invest in mortgage securities and they collect the difference between their borrowing cost and the interest their bond inventory generates. Because they borrow in short-term funding markets, they are continually rolling those borrowings over -- an Achilles' heel in distressed markets. Along with junk bonds, mREITS represent, to my mind, the most obvious example of excess directly attributable to the Fed's ultra-loose monetary policy. At some point, that policy will end, but not before investors have likely suffered significant losses on these frothy vehicles.
Source: Motley Fool
Related Articles:
- 5 Dividend Stocks To Buy And Hold, Not Buy And Forget
- Asset Allocation For Income Investors
- 8 Stocks With Strong Dividend Growth Metrics
- 10 Dividend Stocks Balancing Yield And Growth
- Defense Stocks May Not Be Defensive Stocks
Dividend Growth Stocks News
- 3 Magnificent S&P 500 Dividend Stocks Down 62%, 63%, and 64% to Buy and Hold Forever - MSN - 5/16/2025
- 3 Reliable Dividend Stocks Offering Up To 3.5% Yield - Yahoo Finance - 5/16/2025
- Recession Worries? Here's 1 of the Best Dividend Stocks for Turbulent Times - Nasdaq - 5/11/2025
- 2 Dividend Stocks to Double Up on Right Now - Yahoo Finance - 5/16/2025
- The Best Warren Buffett Dividend Stocks - Kiplinger - 5/15/2025
- Automatic Data Processing Inc. (ADP) Dividend Stock Analysis - 5/16/2025
- Air Products and Chemicals Inc. (APD) Dividend Stock Analysis - 5/9/2025
- Waste Management, Inc. (WM) Dividend Stock Analysis - 5/2/2025
- Wal-Mart Stores, Inc. (WMT) Dividend Stock Analysis - 4/25/2025
- Abbott Laboratories (ABT) Dividend Stock Analysis - 4/18/2025
mREITs: Excess returns or dividend bubble?
Posted by D4L | Tuesday, April 30, 2013 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.