SOURCE: The Bedford Report

The Bedford Report

May 18, 2011 08:16 ET

Interest Rate Concerns Weigh on High Yielding REITs

The Bedford Report Provides Analyst Research on American Capital Agency and ARMOUR Residential REIT

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 REITs and provides research reports on American Capital Agency Corporation (NASDAQ: AGNC) and ARMOUR Residential REIT, Inc. (NYSE: ARR). 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.

ARMOUR invests primarily in hybrid adjustable rate, adjustable rate and fixed rate residential mortgage-backed securities, or RMBS, issued or guaranteed by US Government-chartered entities. The company believes that adjustable rate mortgages should allow it to withstand the impact of higher interest rates. In the most recent quarter ARMOUR declared dividends of $0.12 per each share outstanding for each month of the quarter. The dividend payments totaled $9.7 million as compared to taxable REIT income available to pay dividends of $9.2 million.

Many companies in the industry are focused on raising capital and expanding their portfolios. American Capital Agency recently announced plans for a public offering with total estimated gross proceeds of around $780 million which is intended for the acquisition of agency securities and general corporate purposes. Currently, American Capital Agency pays an annual dividend of $5.60 for a massive yield of around 18.90 percent.

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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