Capstead Mortgage Corporation (CMO): This Mortgage REIT Benefits From Higher Rates

Competition

Since Capstead Mortgage Corporation (NYSE:CMO) has concentration in Agency RMBS, its closest competitors could be CYS Investments Inc (NYSE:CYS) and Annaly Capital Management, Inc. (NYSE:NLY). Both have a different set of investment portfolios and therefore are exposed to changes in interest rates differently.

CYS Investments has already reported its first quarter EPS of $0.32 per share, $0.02 ahead of the average estimate. However, the company reported disappointing figures as far as its net interest rate spread was concerned. It plunged 19 bps sequentially due to a 17 bps decline in asset yields.

Annaly Capital Management stands to be the largest mortgage REIT that invests in Agency RMSB. According to Yahoo Finance, the company is scheduled to report its first quarter performance on April 29. Analysts covering the stock are expecting it to report $0.34 per share on earnings on revenues of $424.6 million. The earnings estimate is down 3% compared to the actual earnings of the linked quarter.

Conclusion

It appears that Capstead Mortgage Corporation (NYSE:CMO) was able to benefit from the relatively higher mortgage rates during the first quarter, but the slowdown in refinancing activity did not prove to be advantageous. Still, I believe the company presents an excellent opportunity to expand your regular income. Therefore, I recommend you invest in Capstead Mortgage.

The article Capstead Benefits From Higher Rates originally appeared on Fool.com.

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