The 10 Highest-Yielding Mortgage REITs

Typically, mortgage REITs borrow short-term funds and buy long-dated mortgage-backed securities. The companies then pocket the interest-rate spread. Some companies invest in safer, less lucrative government-backed securities, while others invest in more risky offerings in exchange for a greater spread. In whatever case, the huge dividend yields you see below are the result of using leverage to boost returns. What are the risks of the mortgage REIT space? These players are subject to interest-rate risks, of course, but their high leverage exacerbates -- for good or ill -- any move in interest rates. So leverage and interest rates are good things to keep an eye on in this space. In particular, pay attention to a company's interest-rate spread, which is reported in its quarterly filings.... Read more