SOURCE: Paragon Financial Limited
NEW YORK, NY--(Marketwire - Oct 24, 2012) - Shares of high yielding REITs have experienced a little pull back this month. During the five days through October 15 mortgage real-estate investment trusts have fallen 5.9 percent, which was the largest decline since October of last year. The Paragon Report examines investing opportunities in diversified REITs and provides equity research on Chimera Investment Corporation (NYSE: CIM) and CYS Investments Inc. (NYSE: CYS).
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Mortgage REITs have been successful in the past as the cost to borrow money to buy bonds and securities have been far less than the yields they receive. But there have been some concerns regarding the current spread REITs earn on their purchases. As the Federal Reserve has pledged to keep interest rates near-zero till at least mid-2015, yields of bonds and mortgage backed securities have been pressured lower. The yield on the Barclays U.S. MBS Conventional 30 Year Index has fallen from 2.9 percent, in January, to 2.4 percent. "The spread between yields and funding is abnormally low," says Sean Kelleher, president of Shay Asset Management.
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Chimera offers investors an annual dividend of $0.36 per share for a yield of around 14.7 percent. The company has lowered its quarterly dividend from $0.11 per share to $0.09 per share. The company in August reported details on their restatement. Chimera has failed to report financial results since the third quarter of 2011.
CYS Investments lowered their third quarter 2012 dividend to $0.45 per share from $0.50 per share in the second quarter of 2012. The company's annualized dividend yield is approximately 13.7 percent. For the third quarter of 2012 CYS Investments reported a net income of $241.9 million, compared to a net income of 101.7 million in the second quarter of 2012.
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