Stimulus Measures From the Federal Reserve Pressuring Bond Yields Lower -- REITs Begin to Falter

NEW YORK, NY--(Marketwire - Oct 24, 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 Annaly Capital Management, Inc. (NYSE: NLY) and Two Harbors Investment Corp. (NYSE: TWO).

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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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Annaly Capital offers a quarterly dividend of $0.50 per share for an annualized dived yield of 12.55 percent. The company's Board of Directors has recently authorized a share repurchase program of $1.5 billion. Annaly is scheduled to release their third quarter 2012 earnings on October 29, 2012.

Two Harbors Investment Corp. is a Maryland corporation focused on investing, financing and managing residential mortgage-backed securities (RMBS) and related investments. The company offers investors an annual dividend of $1.44 per share for a yield of around 12 percent. Two Harbors is also scheduled to release their third quarter 2012 earnings on October 29, 2012.

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