This year will long be remembered as one of the worst for real estate investment trust (REIT) stocks, and mortgage REITs (mREITS) declined more than most. Over the past 52 weeks, many of the mREITs were down 30% to 60%.
While that scares many investors, others seek to take advantage of the huge sell-off and lock in stocks that could offer large appreciation gains with high dividend yields over the next few years.
Take a look at three mREITs with the best performance over the past four weeks and see how likely they are to continue performing well:
AG Mortgage Investment Trust Inc. MITT is a New York-based mREIT that invests in residential properties with nonqualifying mortgages, nonowner-occupied loans, land financing, agency residential mortgage-backed securities and commercial investments.
While AG Mortgage Investment Trust is down 41.85% over the past 52 weeks, in the last four weeks it’s been the king of mREITS, rising 20.55%. Its $0.88 quarterly dividend now yields 14.7% annually.
Third-quarter operating results were mixed. Earnings per share (EPS) of -$0.03 missed estimates by $0.22. Book value per share declined from $11.48 in June to $11.02. But total interest income of $15.49 million was up 24.6% year-over-year and was $0.56 million above analysts’ expectations.
AG Mortgage Investment Trust continues to buy back its shares, as it has throughout 2022. The most recent repurchase was 400,000 shares at an average cost of $6.08 per share. The stock was as low as $3.52 in October.
With management’s faith in the company, and its recent outperformance versus all other mREITs, AG Mortgage Investment Trust should continue to perform well.
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 has a 52-week range of $7.30 to $16.03. The dividend was cut twice between 2017 and 2020, but the resulting monthly dividend of $0.12 has been paid consistently ever since. The $1.44 annual dividend yields 14.3% on its most recent closing price of $10.01.
Over the past four weeks, AGNC Investment is up 19.88%, making it the second-best mREIT performer. Third-quarter EPS of $0.84 per share beat Wall Street’s expectations by $0.15. Forward EPS of $3.03 easily covers the dividend.
AGNC Investment cut its dividend twice between 2017 and 2020, but the $0.12 dividend has been paid consistently every month since. Although investors should not assume AGNC Investment will rise another 19% per month anytime soon, it could continue to outperform most other mREITS in the near future.
Annaly Capital Management Inc. NLY is one of the most well-known and popular mREITs. Annaly Capital Management invests in mortgage-backed securities in order to loan money on residential properties backed by Fannie Mae, Freddie Mac or Ginnie Mae.
Annaly Capital Management has always paid a large dividend that compensated for its volatility. But the dividend has also been cut twice within the past five years. The current quarterly dividend of $0.88 yields a lofty 16.1%.
Third-quarter operating results were poor, with revenue and earnings per share (EPS) both declining sharply from the third quarter of 2021 and missing analyst expectations.
In addition, investors didn’t appreciate Annaly Capital Management’s reverse 1-4 split in September, and the shares declined another 25% into October.
But over the past four weeks, Annaly Capital Management has risen by 19.59%, with investors bargain hunting given the Federal Reserve’s possible tapering of future interest rates. While there have been no insider transactions since July, hedge fund Renaissance Technologies bought 2.3 million shares recently, sensing the selling may be overdone.
But with an 82% payout ratio, declining revenue and EPS, as well as the current inflationary environment, it seems less likely that Annaly Capital Management will repeat its four-week performance, so caution is urged.
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