FBRT - Fat Yields For Freedom

2024-06-27 18:35:50 ET

Summary

• Investors seeking financial freedom are hunting for bigger dividend yields.
• Are you hunting in the right place? Some yields are much more reliable than others.
• Looking back several years, we can see that many investors were regularly taking on more risk and lower returns because they wanted higher dividends.
• This piece includes all the normal sector charts. Or our amazing charts. That sounds better, right?

Time to compare common equity with preferred equity for mortgage REITs.

If you’re familiar with my work, you’ll know a few things:

1. The preferred shares make better long-term investments. Sometimes they provide trading opportunities as well.
2. Common equity can be great for trading. It isn’t great for long-term buy-and-hold investors.
3. I get snarky.

We’re going to take a look at a handful of investments.

I included one of the least volatile investments possible. The iShares Short Treasury Bond ETF (SHV) is one of several substitutes for cash. It just rolls short-term Treasuries. I own some shares of SHV. I’ll try to remember it in the disclosures.

The laziest investor ever might park their money in SHV and then forget to do anything else for years. So this is our baseline for the returns an investor gets without taking on any equity risk....

For further details see: