REIT Dividends Begin to Show Instability
23 Mars 2011 - 12:35PM
Marketwired
With the markets showing signs of volatility this month, investors
are once again looking for safe havens. Dividend paying stocks
traditionally get plenty of attention during hectic times in the
market believing in the companies' security and real earnings
power. Typically this is the case, but there are some risky
exceptions. High yielding REITs (Real Estate Investment Trusts)
must pay out 90 percent of their taxable income in dividends,
meaning that making their dividend payouts will be more volatile.
The Bedford Report examines the outlook for diversified REITs and
provides research reports on Chimera Investment Corporation (NYSE:
CIM) and American Capital Agency Corporation (NASDAQ: AGNC). Access
to the full company reports can be found at:
www.bedfordreport.com/2011-03-CIM
www.bedfordreport.com/2011-03-AGNC
Earlier this month, Federal Reserve Chairman Ben Bernanke said
the Fed will leave interest rates unchanged "for an extended
period" to provide liquidity to the economy. Companies such as
Chimera and American Capital Agency earn their money on the spread
between low-interest short-term borrowing and purchasing
high-interest long-term securities. Given the current economic
conditions, analysts argue that REITs' profits will remain
stable.
The Bedford Report releases regular market updates on REITs so
investors can stay ahead of the crowd and make the best investment
decisions to maximize their returns. Take a few minutes to register
with us free at www.bedfordreport.com and get exclusive access to
our numerous analyst reports and industry newsletters.
Chimera Investment Corporation invests in residential mortgage
loans, residential mortgage-backed securities, real estate-related
securities and various other asset classes. On Monday, Chimera's
board announced that it would pay a 14-cent dividend for the first
quarter, an 18 percent drop from the prior quarter's payout. The
announcement caused a noticeable drop in shares of the company.
Currently, American Capital Agency pays an annual dividend of
5.60 for a yield of around 18.50 percent. Yesterday, the company
said it plans a public offering of 27 million shares of common
stock and said it expects to use the net proceeds from the offering
to acquire additional agency securities as well as for general
corporate purposes.
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