- We’re getting a dip in the mortgage REIT sector. We saw a quick one that was corrected recently, but this one moved quite a bit lower.
- The sector was expensive prior to the start of the dip, so some weakness isn’t surprising. This is an opportunity to start building positions again.
- We don’t advocate going all in. We’re still keeping a healthy chunk of cash on hand so we have flexibility to continue raising positions.
- Weakness is driven by a flattening of the curve, which hurts sentiment, and volatility (mainly down) in long-term rates, which hurts value.
- Not all declines in rates are challenging. The only challenge here is the rate of change.
For further details see:
New Residential: A Worthy 8.6% Dividend Yield