REIT Dividends Look Stable for 2011
07 January 2011 - 3:25AM
Marketwired
In 2010, Real Estate Investment Trusts were one of the darlings of
Wall Street and were one the strongest performing segments of the
financial sector. REITs' ability to generate this significant
capital appreciation is one of the industry's main allures, as most
investors flock to REITs for their hefty dividends and stability.
In fact, 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. 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/2011-01-AGNC
www.bedfordreport.com/2011-01-NLY
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. While this makes paying its dividend more
volatile, given the current economic conditions, REITs continue to
be appealing.
Analyst consensus is that interest rates are likely to stay at
the current low levels for at least the first half of 2011. Federal
Reserve Chairman Ben Bernanke says that he is prepared to keep
rates in the range of 0 - 0.25 percent for an extended period if
the unemployment numbers don't drop significantly. At the end of
2010 the unemployment rate was around 9.7 percent.
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.
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. Presently, American Capital pays an annual
dividend of 5.60 for yield of about 19.50%. Annaly, meanwhile, pays
an annual dividend of 2.56 for a yield of 14.30%. While high
yielding dividend paying stocks are appealing, be forewarned that
companies can cut, slash, or suspend dividends at any time, often
without notice.
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members. The Bedford Report has not been compensated by any of the
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