They can be confusing. I tend to understand how they work,but only when I'm actually reading about them. But I couldn't explain it now. but as someone else stated, even the experts have a hard time explaining it. I don't have a lot invested in them. I don't care about price appreciation if they keep paying the dividend.
Yes, for some they can be pretty confusing.... I kinda understand them as I was a trustee for ABS securities for a few years... I actually had to review paper that they were trying to put into the trust and make sure that it met the rules stated in the trust...
A REIT is similar enough to an ABS... so the big question is their underwriting criteria... and do they follow it or not... just like any lending, being fast and loose with credit can get you in trouble...
As Mulligan said, it might be better to invest in the preferred shares... sure, less yield, but you are higher up in the food chain.... and as long as they make a profit they would probably pay the divis....
Now, if the whole pool went to pot, then nothing is safe...
Well, there is always StonMor if you need a graveyard to whistle in: STON
Chasing yield! Bad move. AND you're paying higher taxes! :faceplant:I own several mReits and wonder if any of you also invested in them. I own ARI, NYMT, NRZ, ORC and CYS off the top of my head. Dv yield on these rge from 10% -18%.
Chasing yield! Bad move. AND you're paying higher taxes! :faceplant:
I plead guilty to chasing yield. They're in IRA's ,so no higher taxes. I only have 5% of my portfolio in them, about 1% per the 5 stocks. They currently average about 15% . Even if they cut dividends down the road I'll be OK, just so they don't go bankrupt. I don't DRIP the divi's from these, I use the money to buy more conventional dividend names like P&G, JNJ, T, etc.
So I am curious Mreits are mortgage reits and invest in mortgages correct? So if I'm not mistaken mortgages are under 5% so exactly where does the difference come from? further how do you know the dividend is nothing but a return of your capital?
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There are a lot of moving parts to these including leverage and God knows what else.
These basic rules have served me well...Would you agree
Rule #1
Never invest in anything where you don't understand where the money comes from. Bernie Madoff investors learned the reality of this basic premise..
Rule #2
Avoid long term relationships with high maintenance women
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I have invested in MReits in the past. I've discovered you can make a small fortune in them; provided you start with a large fortune.
I got burned by investing in a BDC.... yes, it had great dividends... but then the price started to go down... I did not know why, so hung on... and it kept going down... I am sure there are some bad loans that will eventually come out, but I sold it a year ago... I guess I will check some time, but I do think I lost overall...
I just took a quick look at your first... ARI...
Earnings per share.. $1.54, dividends... $1.84... I would be there is some non cash items that make up the difference, but that just means it is liquidating over time... so unless they keep issuing shares I do not see how they get money to invest....
I do see they have a preff.... and that divi probably has to be paid before common... wonder what the yield is on that...
OK, looked it up... 8.68 yield but not rated... but seems safe as they cover the common pretty well... and it is cumulative, so there is that...
Ticker ARI.PA....