For investors suffering from a lack of profitability, real estate investment fund (REIT) ETFs have historically been an attractive option for generating regular portfolio income. But one often overlooked type REIT offers a particularly attractive yield: mortgage REIT (mREIT).
Two of the five most profitable REIT ETFs are Mortgage REITs. IN Mortgage loan VanEck Vectors REIT Income ETF (DEATH ) and iShares Mortgage Real Estate ETF (REM ) increase the annual dividend yield at the level of 6.98% and 6.62%, respectively.
REITs are designed to give away the majority (90%) of their earnings as dividends, making them ideal for investors looking for a stable source of cash.
While traditional REITs own real estate and earn their dividends by renting their property, mortgage REITs act more like banks in the way they generate profits. They own mortgages and mortgage-backed securities, generating income through loans and lending.
This particular model may have a greater interest rate risk than a conventional stock. REITbut they also outperformed REIT stock returns.
DEATH not just a highly profitable fund: ETF grew by 71.62% over last year, making it the most efficient REIT ETF over the past twelve months.
Its main holding is Annaly Capital, which accounts for 12.79% of the portfolio’s assets. Annaly is gaining momentum recently and currently has a dividend yield of over 10%. The company’s quarterly earnings will be released later this month.
With 24 names, DEATH has a somewhat concentrated portfolio, which means it may not seem as diverse as it is. However, since it owns a REIT, each of these 24 companies actually has access to hundreds or even thousands of individual mortgages and securities.
Meanwhile, REM increased by 71.09% compared to last year, second only to DEATH…
The two ETFs have many holdings in common, including Annaly Capital, but REM has slightly more stakes in its portfolio (currently 35 to 25 MORT), distributing its positions among small, medium and large cap companies.
For more news, information and strategy, visit Dividend Channel…