- Mortgage REITs - which endured punishing declines of 50-70% during the peak of the pandemic - have rallied back from the brink since mid-2020 to within shouting distance of record highs.
- The pandemic-driven wave of dividend cuts has given way to a frenzy of dividend hikes this year with 25 mREITs increasing their payouts, pushing the average yield to nearly 8%.
- After a sharp recovery, mREIT Book Values trended sideways in early 2021 amid declining rates and yield curve tightening, but third quarter results should be helped by favorable yield-curve movements.
- Mortgage REITs don't deserve their "ugly duckling" status within the REIT sector. Adding mREITs to a balanced equity REIT portfolio is a prudent strategy to hedge interest rate risk while adding immediate income.
- Mortgage REIT earnings season kicks off this week. The three trends we're watching: 1) Dividend Sustainability, 2) Updated Book Values, 3) Commentary on the effects of expired pandemic relief measures.
For further details see:
Mortgage REITs: High Yield Is Back