SOURCE: The Bedford Report

The Bedford Report

June 01, 2011 08:16 ET

Invesco Mortgage and Anworth Brace for QE2 End -- Dividends in Danger

The Bedford Report Provides Analyst Research on Invesco Mortgage & Anworth

NEW YORK, NY--(Marketwire - Jun 1, 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 Invesco Mortgage Capital, Inc. (NYSE: IVR) and Anworth Mortgage Asset Corporation (NYSE: ANH). 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.

Invesco Mortgage Capital pays an annual dividend of $4 for a hefty yield of approximately 17.6 percent. In its most recent quarter, Invesco Mortgage Capital said yield curves and low financing costs powered the company to approximately $53 million in its first quarter net income compared to $12 million the year earlier period.

Anworth presently pays an annual dividend of $1 for a yield of approximately 13 percent. The company recently posted core earnings available to common stockholders of $29.7 million, or $0.24 per diluted share, for the quarter ended March 31, 2011.

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