Mortgage-backed real estate investment trusts [mREITs] usually yield higher compared to other income stocks. This is due to the fact that these companies get a tax shield if their distribution of profits is at least 90%. However, income from dividends is not tax-free. Thus, investors don’t get to fully enjoy the tax-free benefit. The dividend earnings will be treated as income. Nevertheless, they are still better than having no dividend at all.
So if you want to maximize the earnings from your investment, then REIT stocks are among the best options. Your earning opportunities are not only from share price fluctuations, but you will also earn income from yearly dividends. Here are five of mREITs with good share performance while giving higher yields.
Annaly Capital Management, Inc. (NYSE:NLY)
Annaly Capital Management, Inc. (NYSE:NLY) is a good mREIT for investment with relatively stable market capitalization of $13.6 billion. It is profitable, posting net income of $1.73 billion from $3.26 billion revenue. The profit margin is high at 80%.
Annaly Capital Management, Inc. (NYSE:NLY) pays an annualized dividend of $1.80 per share, while its current yield is 12.58%. This year’s quarterly dividend was declared at $0.45 per share for the first quarter. The quarterly dividends had been decreasing since the second quarter of 2011.
Last year, there were 3 dividend cuts. The 1st and 2nd quarters have the same dividend amount at $0.55 per share. This was reduced to $0.50 in the 3rd quarter, and finally reduced to $0.45 in the last quarter.
Despite the decreasing dividend, Annaly Capital Management, Inc. (NYSE:NLY) has still paid out yearly dividends to all shareholders for the past decade. Annaly Capital Management, Inc. (NYSE:NLY) shares peaked at $16.09 on March 26, gaining 12% YTD before retreating towards their current trading price.
Another attractive mREIT stock is Two Harbors Investment , which performed better than Annaly Capital Management, Inc. (NYSE:NLY). Shares of Two Harbors Investment Corp (NYSE:TWO) gained 9.6% year-to-date from $10.48 to $11.49 per share.
Two Harbors Investment Corp (NYSE:TWO) is a medium cap company with market capitalization of $4.1 billion. Last year it reported net income of $291 million from total revenue of $455 million. Its profit margin is 80% while its operating margin is 88.75%. Two Harbors Investment Corp (NYSE:TWO) has outstanding quarterly growth year-over-year in both revenue and earnings. Its revenue quarterly growth is 233%, while the quarterly earnings growth is 177%.