What Analysts Think About These High-Dividend Mortgage REITs

You would be hard-pressed to find a worse-performing real estate investment trust (REIT) class in 2022 than mortgage REITs (mREITs). With over 8% inflation and the Federal Reserve raising interest rates multiple times, the mREIT group has been trounced. 

Many mREITs are still maintaining dividends without cuts, and with the substantial price declines this year, many of these stocks are now paying high single-digit and even double-digit dividend yields. But what do analysts think about the future of these beaten down, high-yielding mREITs? Here are four with recent analyst ratings.

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AGNC Investment Corp. AGNC is a Bethesda, Maryland-based mREIT that invests in U.S.-government guaranteed pass-through securities and collateralized mortgage obligations.

AGNC Investment Corp. has a 52-week range of $8.39 to $16.75 and pays a $1.44 annual dividend, which yields 16.6%.

On September 30, Piper Sandler analyst Barker maintained an Overweight position on AGNC Investment, even though in 11 months the stock has declined from near $15 to a recent price of $8.60. However, Barker did lower his price target from $13 to $9, which is not exactly a ringing endorsement for AGNC Investment stock.

Franklin BSP Realty Trust Inc FBRT is a New York City-based real estate finance company that acquires and manages U.S. commercial real estate debt that is secured by the properties that carry the debt.

Franklin BSP Realty Trust has a 52-week range of $10.49 to $17.74 and pays a $1.42 annual dividend, which yields 13.2%.

This past week, B. Riley Securities analyst Howlett initiated coverage on Franklin BSP Realty Trust with a Buy rating and announced a $16 price target. From its recent price of $10.70, that represents an upside of nearly 50%. Unfortunately, Franklin BSP Realty Trust has only paid shareholders a dividend since last December, so it is difficult to assess its safety going forward. But with a 13% yield, a new Buy rating and a higher target price, Franklin BSP Realty Trust could be a winner down the road for risk-tolerant investors.

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Claros Mortgage Trust Inc. CMTG is an mREIT that originates loans on commercial real estate in larger markets across the U.S.

Claros Mortgage Trust has a 52-week range of $11.66 to $21.09 and pays a $1.48 annual dividend, which yields 12.3%.

JP Morgan analyst Shane recently downgraded Claros Mortgage Trust to Underweight and lowered his price target from $19 to $17. That’s still a 41% upside potential from its recent price of $12.00. Claros Mortgage Trust is another mREIT that has only recently initiated a dividend, so assessing the safety and stability of its dividend is too difficult at this point.

Apollo Commercial Real Est. Finance Inc. ARI is another mREIT that acquires and manages commercial loans and other types of debt.

JP Morgan analyst Shane also downgraded Apollo Commercial Real Estate Finance while lowering its target price from $12.50 to $11.00. From its recent price of $8.45, that represents a 30% increase.

Apollo Commercial Real Estate Finance has a 52-week range of $8.20 to $15.98 and pays a $1.40 annual dividend, which yields 16.4%. On a positive note, the company has paid a dividend every quarter since 2010, with only a $0.05 cut made in early 2020. That would seem to suggest that the dividend is fairly stable going forward.

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