6. Orchid Island Capital, Inc. (NYSE:ORC)
Number of Hedge Fund Holders: 18
Dividend Yield as of October 23: 25.74%
Orchid Island Capital, Inc. (NYSE:ORC) is a mortgage REIT that invests in residential mortgage-backed securities issued by Fannie Mae and Freddie Mac. It borrows heavily to purchase the securities and makes its income from the spread between the mortgage yields and the cost of borrowing.
The stock’s current dividend yield of 25.7% reflects its $0.10 per share monthly dividend and the low share price. The company is leveraged to enhance returns, but its profits are very much subject to interest rates, mortgage spreads, and hedging costs. Q2 2026 saw ORC generate $0.30 per share in net interest income and pay out $0.30 per share in dividends. Book value also rose by $0.14 per share in the quarter. See how analysts view the company’s dividend polocy.
Insider Monkey’s Q2 2026 hedge fund data is the relevant ownership metric. Millennium Management, Citadel Investment Group, D. E. Shaw, and Arrowstreet Capital are some of the most prominent funds investing in the company. Their holdings could be attributable to quantitative strategies, trading opportunities, or their view on the state of the mortgage market rather than any confidence in the dividend. ORC intends to pay regular monthly cash dividends but has no guarantee of a minimum payout. The dividend was reduced from $0.12 to $0.10 in 2026, which is a clear example of the fact that dividends can be cut depending on the performance of the business and the state of the market. The high yield has to be balanced against the level of leverage, the interest rate risk, and the very real possibility of further dividend cuts.
5. Arbor Realty Trust, Inc. (NYSE:ABR)
Number of Hedge Fund Holders: 25
Dividend Yield as of October 23: 32.19%
Arbor Realty Trust, Inc. (NYSE:ABR) is a mortgage REIT that lends to owners of apartment buildings and other real estate properties. It also earns fees by servicing mortgages, including loans backed by Fannie Mae and Freddie Mac.
ABR has a dividend yield of over 32%, and its high dividend yield reflects serious concerns about its earnings and loan portfolio, not simply generous shareholder returns. In the second quarter of 2026, the company reported distributable earnings of just $0.10 per share, or $0.15 excluding certain realized losses, against a quarterly dividend of $0.17. It also recorded a $37.3 million GAAP net loss and $38.2 million in loan-loss provisions. These figures raise questions about how comfortably earnings can support the payout.
Arbor has also reduced its quarterly dividend from $0.30 in late 2025 to $0.17 in 2026. At the latest declared rate, annualized dividends equal $0.68 per share. The yield looks unusually high partly because the share price has fallen sharply.
Hedge funds still see potential in the stock. Insider Monkey lists Coatue Management, Marshall Wace, Omega Advisors, Scoggin and Citadel among its holders. In the latest data, Omega increased its position by 7% and Citadel by 11%. Investors may be betting on a recovery in real estate lending, improved financing costs, or a rebound in the depressed share price. These positions do not necessarily signal confidence in the dividend, though, and some funds may use hedging strategies. For ordinary investors, the key question is whether Arbor can recover enough earnings to cover its dividend. Its large mortgage-servicing business offers recurring fee income, but rising loan losses and weak distributable earnings make the payout risky.
See what other mortgage finance stocks billionaires are investing in: 10 Best Mortgage Finance Stocks To Buy According to Billionaires
4. Annaly Capital Management, Inc. (NYSE:NLY)
Number of Hedge Fund Holders: 26
Dividend Yield as of October 23: 15.80%
Annaly Capital Management, Inc. (NYSE:NLY) is a well-established mortgage REIT with a clear focus on mortgage-backed securities, residential loans, and mortgage servicing rights. The company’s strategy involves borrowing funds at relatively low rates and investing in higher-yielding mortgage assets, aiming to earn income from the spread between these rates. While the approach is straightforward, investors must understand the underlying risks.
The stock has a dividend yield of nearly 16%, driven by its leveraged business model, which relies on the spread between borrowing costs and investment returns. In the third quarter of 2026, Annaly reported an economic net interest spread of 1.42%, excluding premium amortization. This relatively narrow margin means that even modest changes in interest rates or borrowing costs can significantly impact profitability. Leverage can enhance returns, but it also increases exposure to market volatility. Read the analysis here.
Institutional interest in Annaly remains consistent. Insider Monkey data from the second quarter of 2026 indicates that 26 hedge funds held positions in the company, amounting to approximately $320 million. This ongoing support from professional investors reflects confidence in Annaly’s diversified mortgage portfolio and its ability to deliver income, particularly if market conditions become more favorable.
Annaly declared a dividend of $0.75 per share for the third quarter of 2026, which would total $3 per share annually if maintained. This payout was supported by earnings available for distribution of $0.80 per share, resulting in a coverage ratio of approximately 1.07 times. While this coverage is a positive indicator for shareholders, it does not guarantee that future dividends will remain at this level if market conditions change.
