NRZ - 3 Things Robinhood Traders Should Consider Before Investing in Mortgage REITS
Online broker Robinhood is changing the way people invest, in both good and worrisome ways. Some troubling signs show up in the company's list of the 100 most popular stocks, which changes regularly and recently included mortgage real estate investment trusts (mREITs) like MFA Financial (NYSE: MFA), New Residential Investment (NYSE: NRZ), and New York Mortgage Trust (NASDAQ: NYMT).
These are not your typical real estate companies, and they need to be treated with caution. Here are three things Robinhood traders should consider before stepping into this niche area of the REIT sector.
Real estate investment trusts are specially designed corporate entities meant to pass income on to their shareholders. They pay out 90% of their taxable income, and in exchange, they avoid corporate-level taxation. Shareholders treat the dividends as regular income.