Steadily Improving U.S. Housing Market Continues to Increase Appeal of High Yielding REITs
http://media.marketwire.com/attachments/201212/107982_FSE_Logo.gifhttp://at.marketwire.com/accesstracking/AccessTrackingLogServlet?PrId=985177&ProfileId=051205&sourceType=1NEW YORK, NY -- (Marketwire) -- 02/13/13 -- Shares of high yielding Mortgage REITs have performed well this earnings season. The iShares FTSE NAREIT Mortgage REITs Index ETF (REM) has gained nearly 10 percent year-to-date, outperforming the Dow Jones Industrial Average gain of 6.5 percent over the same period. Five Star Equities examines the outlook for diversified REITs and provides equity research on Invesco Mortgage Capital Inc. (NYSE: IVR) and Two Harbors Investment Corp. (NYSE: TWO).
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In a low interest rate environment investors have flocked to the high yielding dividend of REITs, as many companies offer yields in excess of 10 percent. REITs are not taxed at the corporate level but in return are required to distribute at least 90% of their taxable income as dividends to investors. A steadily improving U.S. housing market helped boost investors' appetite for REITs. The Dow Jones Equity All REIT Index, which tracks the performance of all the publicly traded U.S. REITs, gained nearly 20 percent in 2012, making it the fourth consecutive year REITs have bested the broader Standard & Poor's 500 Index.
"Despite vacillation in stock markets, investors haven't lost their appetite for a steady diet of real estate," says Jeff Tjornehoj, a Lipper analyst.
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Invesco Mortgage Capital currently offers investors an annual dividend of $2.60 per share for a dividend yield of approximately 12.2 percent. The company reported that their net income grew to $90.6 million in the fourth quarter of 2012, from a net income of $84.1 million in the previous quarter. Shares of Invesco have gained over 8 percent year-to-date.
Two Harbors Investment currently offers investors an annual dividend of $2.20 per share for a dividend yield of approximately 17.75 percent. The company's book value per diluted share was $11.54 as of December 31, 2012, compared to $11.44 as of September 30, 2012. Shares of Two Harbors have gained over 12 percent year-to-date.
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