With the growing news of mortagage refinancing, I closed out my leveraged position in VMBS.
I like that NLY is selling some of its portfolio and buying its own shares. Less income spread over fewer shares is the same income per share. But I would expect a pullback.
Then it seems to me that the business development companies will have the same interest rate spread problem as mREIT's. They just don't have to worry about mortgage refinancing.
Then there is BKLN. These are junk loans that reset when interest rates go up. So pick an interest rate bottom and leverage this at 2 to 1 for 10% interest.
Another idea is Master Limited partnerships. Two exampes are ETP and OAK. A MLP focused on energy is only concerned with commodity volume and not on commodity price. The other types of MLP are rare but possibly have their own advantageous correlations or non-correlations. Dividend could be 8%. The catch ? The energy MLP's seem to have a lot of debt. The dividend of an MLP is really a distribution of return-of-capital but that's a tax advantage that they might not deserve. Then lower the stock basis by the amount of distribution and pay the taxes on the distributions when the stock is sold. Also, the stockholder of an MLP must file state taxes in every state that the MLP operates.
Finally, there's a new mREIT ETF that is leveraged at 2 to 1 and that's MORL. Wow, leverage companies at 2 to 1 that are already leveraged at 6 to 1 ?