Thank you for your input! It's not often these message boards provide a really intelligent post. I feel better about holding my position.
from REM. I can't believe it . On top of everything else, they can't figure the tax characteristics of their distributions in a timely manner.
Yes take the dividend of approx. $1.48 per year out of the NAVr since 2011 and REM would be in a nose dive around a NAV of around $ 5-7 ETF....
That is what reaching for yield will do for your investments..
Sentiment: Strong Sell
On Yahoo, go to Historical Prices, then hit Dividends Only, then hit Get Prices. You will get list of dividends by date and amount.
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Frank: Thanks, wasn't aware it was today.........now I have to run upstairs and check if I stopped the roof leak (seriously).
The iShares Mortgage Real Estate Capped ETF (NYSEARCA:REM) will soon declare its quarterly dividend, which will be paid at the end of June 2015. The table below shows each of the 37 mREITs in the REM portfolio, the weight, number of shares, price, ex-dividend date, dividend amount and the dividend frequency from each component using data of June 18, 2015.
Multiplying the shares of each component by the dividend gives a dollar amount for each component. Some mREITs pay monthly. To calculate the amount that a monthly-paying component pays during a quarter the dividend is multiplied by three. The quarterly figure for an issue where the monthly dividend was changed during the quarter, such as AMERICAN CAPITAL AGENCY REIT CORP (NASDAQ:AGNC) is the sum of the three monthly dividends. One component, iStar Financial Inc. (NYSE:STAR), with a weight of 2.265%, does not currently pay dividends. Adding up the dollar amounts of the dividends for all 36 of the components that pay dividends results in $31,278,681. I have assumed that any earnings that REM received on the holdings of $5,853,189 in cash and treasury money market funds were negligible and have not included them in my calculations. Dividing the $31,278,68 figure by the 105,150,000 shares outstanding gives a gross dividend of $0.2975. Using a 0.48% net expense ratio reduces the quarterly dividend by $0.0137. This would imply a quarterly dividend, which will be paid at the end of June 2015 of $0.2838. On a trailing 12-month basis the annual dividend for REM would be $1.488. This would be a current yield of 13.0% for REM at a price of $11.43....."
Keep in mind that you may need to have strong conviction and hold through an initial knee-jerk price decline as traders react when the Fed raises short term interest rates. I believe the 13% dividend yield will bring investors back within a couple months when they see that REIT income is not badly hurt as they feared. Also keep in mind that I could be mistaken. :-)
Amiculus: Thank you for the wealth of information. You touched on the important question i.e., is it a good bet going forward. That's what I was interested in hearing. I am not as sophisticated as some in these matters and hearing an opinion such as yours was definitely valuable. You have convinced me to buy REM next week. I will take an initial position, something I should have done about a year ago.
Many of your questions require a crystal ball which no one has. I have a couple of educated opinions, though. On the question of loss for someone who bought at the IPO in 2007 at $50 per share and held to the presentprice of $11.65 -- their loss of $38.35 would be only partially compensated by the total of $15.57 in dividends that REM has paid since inception. They would still have a horrendous net loss of $22.78 per share, or -45%. Clearly they bought at the height of the real estate bubble and paid the price if they were foolish enough to hold for the last 8 years. Also, the current annual dividend of about $1.50 represents only a 3% yield on their $50 investment -- not attractive.
However, the real question is whether REM looks like a good investment going forward. The current share price and dividend mean an attractive yield of close to 13% -- very attractive. The 2 largest components the underlying index, NLY and AGNC, currently trade at about 20% discount to book value, and the index as a whole trades at a 7 to 10% discount to book value. So there is a lot of margin for safety when interest rates start to rise. Keep in mind that rising interest rates have a positive impact on REITs as well as a negative impact. The positive impact is that it MAY result in a larger spread between short-term and long-term rates, and allow REITs to increase their dividends. The negative impact is that the value of the debt instruments currently held declines and so reduces their book value. Well-managed REITs can hedge much of the impact of rising interest rates on their book value, especially if the rise is gradual.
Overall, I think REM is a good investment risk at this time and I have put a significant amount of money to work in it. I believe that interest rates will rise at some point in the next few years, not necessarily soon, but doubt that REM will be decimated by that as it will be gradual and limited.