Two Harbors Investment Corp (TWO), American Capital Agency Corp. (AGNC), Annaly Capital Management, Inc. (NLY): What Is An mREIT?

Largest Mortgage REIT

Annaly Capital Management, Inc. (NYSE:NLY) was founded in 1997 and is the largest mortgage REIT, with a market cap of over $11 billion and income of $3.37 billion. Over the years, Annaly Capital has generated compelling returns to investors, distributing over $9 billion in dividends to shareholders.

Previously, Annaly Capital Management, Inc. (NYSE:NLY) invested in only fixed rate agency mortgages but has recently diversified its portfolio by purchasing CreXus, which is a commercial MBS company. Another plus is insider buying, as evidenced by one of the directors, John Schaefer, recently buying 25,000 shares.

Annaly Capital Management, Inc. (NYSE:NLY) is not quite as cheap as some of the other selections, but it has an excellent long-term track record. It still sells at a 15% discount to book value. The dividend is an impressive $1.68 per share, which is a yield of 13.6%. Now could be the time to buy Annaly Capital Management, Inc. (NYSE:NLY) while it is still a bargain compared to historical valuations.

Foolish bottom line

Mortgage REITs are a volatile but potentially lucrative sector. Despite taking a dip recently, over the past five years, mREITs have been great income providers. The current downturn may provide an excellent buying opportunity. If you can tolerate the ups and downs, these companies will almost surely reward the patient investor.

The article 3 Bargain mREITs for High Income originally appeared on Fool.com and is written by John Dowdee.

John Dowdee has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

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