NEW YORK, NY--(Marketwire - Oct 23, 2012) - Shares of high yielding REITs have experienced a little pull back this month. During the five days through October 15 mortgage real-estate investment trusts have fallen 5.9 percent, which was the largest decline since October of last year. The Paragon Report examines investing opportunities in diversified REITs and provides equity research on ARMOUR Residential REIT, Inc. (
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Mortgage REITs have been successful in the past as the cost to borrow money to buy bonds and securities have been far less than the yields they receive. But there have been some concerns regarding the current spread REITs earn on their purchases. As the Federal Reserve has pledged to keep interest rates near-zero till at least mid-2015, yields of bonds and mortgage backed securities have been pressured lower. The yield on the Barclays U.S. MBS Conventional 30 Year Index has fallen from 2.9 percent, in January, to 2.4 percent. "The spread between yields and funding is abnormally low," says Sean Kelleher, president of Shay Asset Management.
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ARMOUR is a Maryland corporation that invests primarily in hybrid adjustable rate, adjustable rate and fixed rate residential mortgage-backed securities issued or guaranteed by U.S. Government-chartered entities. The company offers investors an annual dividend of $1.08 per share for a yield of around 15.3 percent. ARMOUR is scheduled to release their third quarter 2012 financial results on November 2, 2012.
Hatteras Financial is a real estate investment trust formed in 2007 to invest in single-family residential mortgage pass-through securities guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae. The company offers investors an annual dividend of $3.20 per share for a yield of roughly 12 percent. Shares of Hatteras have fallen over 10 percent in the last month.
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