SOURCE: The Bedford Report

The Bedford Report

May 18, 2011 08:16 ET

High Yielding REITs Brace for Changing Economic Environment -- Danger to Dividends

The Bedford Report Provides Analyst Research on Chimera and Annaly

NEW YORK, NY--(Marketwire - May 18, 2011) - High yielding Real Estate Investment Trusts (REITs) have been a popular investment since the low interest rate environment set in two years ago. Several REITs earn their money on the spread between low-interest short-term borrowing and purchasing high-interest long-term securities, making the present economic climate highly lucrative for REITs. On the downside, with the Federal Reserve ending its $600 billion Treasury bond-buying program in June as planned, analysts have begun to warn the Fed may begin boosting interest rates to prevent inflation from getting out of control. This could shrink bottom lines for REITs, which would shrink dividend payments. The Bedford Report examines the outlook for diversified REITs and provides research reports on Chimera Investment Corporation (NYSE: CIM) and Annaly Capital Management, Inc. (NYSE: NLY). Access to the full company reports can be found at:

Economists think the Fed will start raising rates later this year or early next year. Higher rates would reduce borrowing. Even though the bond-buying program is scheduled to end in June, the Fed said it's continuing a separate support program. It is reinvesting about $17 billion a month in proceeds from its portfolio of mortgage securities to buy Treasury debt. That should help keep rates low on mortgages and other consumer loans.

High yielding REITs must pay out 90 percent of their taxable income in dividends. With the risk of higher interest rates potentially shrinking profits in the industry, making dividend payouts could become more volatile.

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 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. Earlier this month Chimera reported $0.15 earnings per share for its fiscal first quarter, missing the Thomson Reuters consensus estimate of $0.16. During the same quarter in 2010, the company posted $0.19 earnings per share. Presently, Chimera pays an annual dividend of 56 cents for a yield of around 14.50 percent.

Annaly Capital Management pays an annual dividend of $2.48 for a healthy yield of around 14 percent. Net income for the quarter ended March 31, 2011, was $530.6 million or $0.70 per average share as compared to $397.8 million or $0.71 per average share for the quarter ended March 31, 2010.

The Bedford Report provides Analyst Research focused on equities that offer growth opportunities, value, and strong potential return. We strive to provide the most up-to-date market activities. We constantly create research reports and newsletters for our members. The Bedford Report has not been compensated by any of the above mentioned publicly traded companies. The Bedford Report is compensated by other third party organizations for advertising services. We act as an independent research portal and are aware that all investment entails inherent risks. Please view the full disclaimer at

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