Western Asset Management Capital Corp. (NYSE: WMC) is another hybrid mortgage REIT. Beside, investing in residential agency and non-agency MBS, the company also is invested in commercial mortgage-backed securities and other asset-backed securities. This wide variety of assets provides the company with enough diversification to survive the volatility in interest rates. Deutsche Bank has a $21.50 target, and the consensus is right at line at $21.50. Investors receive a gigantic 20.61% dividend.
The main reason for the bear raid on the mortgage REIT stocks was the fear of rising interest rates. While the bond market is an anticipatory device, the fact remains that the Fed has not even begun the tapering of the QE purchasing, let alone raise interest rates. Investors with capital dedicated to aggressive growth and income may be well served to nibble on these beaten down stocks. If they start to gain any traction, the short sellers will run for the hills.