Low Interest Rates Make High Yield REITs Irresistible
02 December 2010 - 3:25AM
Marketwired
Real Estate Investment Trusts or "REITs" for short have become
darlings of Wall Street this year and have been one the strongest
performing segments of the financial sector. The Vanguard REIT
Index ETF which holds nearly 100 different REITs, has increased
close to 24% this year in contrast to the Financial sector for the
S&P 500, which has hardly moved in 2010. REITs' ability to
generate this significant capital appreciation is an added bonus,
as most investors flock to REITs for their hefty dividends and
stability. The Bedford Report examines the outlook for diversified
REITs and provides research reports on American Capital Agency
Corporation (NASDAQ: AGNC) and Annaly Capital Management, Inc.
(NYSE: NLY). Access to the full company reports can be found at:
www.bedfordreport.com/2010-12-AGNC
www.bedfordreport.com/2010-12-NLY
Most of the success of the industry in the last year can be
attributed to low interest rates. When interest rates get this low
the return on dividends can far exceed that of bonds. Following
last month's $600 billion "QE2" announcement, consensus is that
interest rates will remain at low levels for the foreseeable
future.
The Bedford Report releases regular market updates on various
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 for free at www.bedfordreport.com and get
exclusive access to our numerous analyst reports and industry
newsletters.
Another reason low interest rates make REITs appealing is how
some of them make their money. Companies such as American Capital
Agency and Annaly earn their money on the spread between
low-interest short-term borrowing and purchasing high-interest
long-term securities, which leads to solid profits given the
current conditions. Solid profits for a REIT keep those dividend
payments stable because in order to be classified as a REIT, a
company must distribute at least 90 percent of its taxable income
to shareholders annually in the form of dividends.
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that offer growth opportunities, value, and strong potential
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members. The Bedford Report has not been compensated by any of the
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