Buy This 9% Yielding mREIT – MFA Financial, Inc. (MFA): Two Harbors Investment Corp (TWO), Invesco Mortgage Capital Inc (IVR)

Page 1 of 2

MFA Financial, Inc. (NYSE:MFA) reported its fourth quarter performance on March 6, 2013. This article will review the latest earnings by this 9% dividend yielder and compare it with its closest peers.

Company Business

Incorporated in 1997, MFA Financial, Inc. (NYSE:MFA) started operations in 1998 as a hybrid mortgage REIT. The company is classified as hybrid mortgage REIT as it is invested in both Agency and non-Agency mortgage backed securities. As a company policy, 50% of its investment portfolio consists of Agency and non-Agency MBS while the remainder is other types of MBS and residential mortgage loans, other real estate related debt and equity and other yield instruments in compliance with its qualification as a REIT.

The charts above summarize the company’s holdings as of December 31, 2012. Figure 1 shows that the company is largely invested in Agency mortgage backed securities as they form 57% of the entire MBS portfolio. Within the Agency portfolio, adjustable rate securities are 68% while the remainder is fixed rate. MFA Financial only has 15-year fixed rate mortgage backed securities in its Agency portfolio.

In comparison, Invesco Mortgage Capital Inc (NYSE:IVR) and Two Harbors Investment Corp (NYSE:TWO) have similarly diverse investment portfolios. Around 69% of Invesco Mortgage Capital Inc (NYSE:IVR)’s portfolio is invested in Agency MBS while 17% is non-Agency. Over 81% of Two Harbors Investment Corp (NYSE:TWO)’ portfolio is Agency MBS while the remainder is non-Agency.

Recent Quarter Performance Review

MFA Financial, Inc. (NYSE:MFA) reported its fourth quarter performance on March 6, 2013. The core earnings per share of $0.20 per share remained in line with the expectations while the book value grew by 2.16% to $8.99 per common share over the prior quarter.

The fourth quarter of 2012 was characterized by decreasing interest rates and increasing refinancing as a result of the Fed’s efforts to revive the US housing sector. However, despite the challenging environment, MFA Financial was able to increase its 79 bps year over year to $124.9 million. The appreciation in interest income was a result of higher interest income from non-Agency MBS, partially offset by lower interest income accruing from Agency MBS and non-Agency MBS transferred to consolidated VIEs.

of $43.1 million increased 11% over the prior year. As a result, the fourth quarter net interest income came in at $81.9 million, down 4% over the same time period.

During the fourth quarter, MFA Financial, Inc. (NYSE:MFA) earned 4.24% yield on its interest earning assets while it paid 1.71% on its interest bearing liabilities. This resulted in a net interest rate spread of 2.53%, up 9 bps from the linked quarter but down 16 bps from a year ago. Compared to the linked quarter, MFA Financial’s cost of funds dropped 11 bps.

In comparison, Two Harbors Investment Corp (NYSE:TWO) reported 20 bps declined in its fourth quarter net interest rate spread while for Invesco Mortgage Capital Inc (NYSE:IVR), the sequential decline was only 2 bps.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!