Over the past several years, monthly dividend stocks have been highly sought after. As a result of increased investor enthusiasm, prices of the most well-known monthly dividend payers have already been bid up, causing their yields to drop. So when you come across a monthly dividend stock with a double-digit yield in this day and age, it’s only natural to ask, “Is the payout safe?”
Let’s take a look at Orchid Island Capital Inc (NYSE:ORC), a specialty finance company that invests in real estate mortgages. Trading at roughly $7.90 apiece, ORC stock offers an annual dividend yield of about 12.1%. In particular, ORC invests in residential mortgage-backed securities (RMBSs). Here’s how they work: When banks lend out mortgages to residential homeowners, they can package them into pools of mortgages and sell them to investors as RMBSs. The principal and interest payments of the underlying mortgages then get passed on to the investors of the RMBSs.
Source: Income Investors
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