Annaly Capital Management, Inc. (NLY), ARMOUR Residential REIT, Inc. (ARR): Are Mortgage REITs Bribing Investors to Stay?

Likewise, American Capital Agency CIO Gary Kain spoke to investors at the Morgan Stanley Financials Conference this week, radiating a positive attitude about the mortgage-backed securities market, even in the face of a QE3 tapering or exit.

Noting that a slow exit would still likely entail another $350 to $450 billion of MBS purchases on the part of the Federal Reserve, Kain also pointed out that MBS issuance is steadily declining, as well. In addition, wider spreads, lower MBS pricing and higher yields will probably prompt banks and funds to jump back into the game, entities that Kain feels have backed off over the past few months in the face of a daunting Fed presence in the MBS market.

How has all this pushing back by mREITs been working out? Pretty well, it seems. The sector is lit up nice and green so far today, and I think all of the positivity has had the desired effect. The big question is, of course: Can they keep it up?

There’s no question Annaly Capital Management, Inc. (NYSE:NLY)’s double-digit dividend is eye-catching. But can investors count on that payout sticking around? With the Federal Reserve keeping interest rates at historically low levels, Annaly Capital Management, Inc. (NYSE:NLY) has had to scramble to defend its bottom line.

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Fool contributor Amanda Alix has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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