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Perry Capital Joins the Battle at CommonWealth REIT

Income investors willing to consider REITs have a number of options. Other office-focused trusts include Liberty Property Trust (NYSE:LRY) and Mack Cali Realty Corp. (NYSE:CLI). Dividend yields are higher here- about 5% for Liberty and over 6% for Mack Cali- and these companies’ dividend payments have not dropped in the last couple quarters. As such they could make better income prospects, though investors would have to be watchful of complexities. For even higher yields, we can also look at other segments of the REIT market. The highest yields are found in companies which invest in mortgages or mortgage securities, including Annaly Capital Management, Inc. (NYSE:NLY) and American Capital Agency Corp. (NASDAQ:AGNC). The dividend yield is over 10% in each of these two cases, though certainly we would be wary of putting too much capital at risk in companies tied to mortgages. We’d also note that dividend payments have been on the decline at Annaly.

There is also the prospect that activism will create shareholder value at CommonWealth, allowing for an increase in the stock price which will make its total returns more competitive with these higher-yielding stocks. Of course, some investors might want to avoid the company entirely, either because they are not sure about the situation or because they believe that the management has in fact been doing a poor job but may be retained.

Disclosure: I own no shares of any stocks mentioned in this article.

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