Dividends stamp by Olivier Le Moal via iStock

12% Dividend Yield: Bargains or Traps?

Michael Vanloon The REIT Forum Thu Feb 20, 3:55PM CST
Dividends stamp by Olivier Le Moal via iStock

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Investors looking for big dividends often turn to mortgage REITs, where double-digit yields are common. Today, we’re focusing on agency mortgage REITs with some of the highest yields in the sector.  Many agency mortgage REITs are currently trading near 52-week highs. Some hit rock bottom just months ago, in December 2024 or January 2025, before staging impressive rebounds. Our analysis compares price-to-trailing book value. For consistency, we’re sticking with Q3 2024 book values until all of the REITs and BDCs have reported.  Price-to-book ratios are a critical part of the analysis for this sector. I'll include a table below with the current (as of publication) price-to-book ratio for each of the mortgage REITs and BDCs separated by type. Yesterday, I published a huge free article called 12% Dividend Yields Are Not Enough. It contains 9 charts comparing key metrics for the mortgage REITs and BDCs as well as preferred shares and baby bonds for income investors as well as commentary on each of the agency mortgage REITs and some price-to-book value comparison using our internal estimates for current book values.

TickerPrice to BV Q3 2024Subsector
(AGNC)1.19Agency mREIT
(NLY)1.10Agency mREIT
(DX)1.06Agency mREIT
(TWO)0.91Agency mREIT
(ORC)1.06Agency mREIT
(ARR)0.91Agency mREIT
(CHMI)0.89Agency mREIT
   
(EFC)0.96Hybrid mREIT
(MFA)0.75Hybrid mREIT
(CIM)0.61Hybrid mREIT
(RC)0.54Hybrid mREIT
(NYMT)0.61Hybrid mREIT
(MITT)0.69Hybrid mREIT
(PMT)0.87Originator and Servicer
(RITM)0.97Originator and Servicer
   
(BXMT)0.92Commercial Whole Loans
(FBRT)0.86Commercial Whole Loans
(GPMT)0.30Commercial Whole Loans
   
(MAIN)2.05BDC
(CSWC)1.41BDC
(ARCC)1.19BDC
(BXSL)1.26BDC
(GBDC)1.05BDC
(TSLX)1.34BDC
(OBDC)1.02BDC
(SLRC)0.98BDC
(GAIN)1.05BDC
(OCSL)0.89BDC
(TPVG)0.89BDC
(FSK)1.01BDC

Charts

We prepared several charts for readers covering the common shares and preferred shares from the companies listed above:

  • Common shares: Price to Q3 2024 Book Value (because some companies have not reported Q4 2024 results)
  • Common shares: Dividend Yield
  • Common shares: Core Earnings Yield
  • Baby bonds: Prices
  • Baby bonds: Years to maturity
  • Baby bonds: Yield to maturity
  • Preferred shares: Prices
  • Preferred shares: Stripped yield
  • Preferred shares: Floating yield on price

Since this article will be posted across several sites with different coding and some won't embed images, I compiled all the charts here.

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Disclosure: I am long RITM-D, DX-C, EFC-B, RITM, SLRC, GPMT, RC, GBDC. 

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