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Low Rates = High Yields

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July 05, 2011 – Comments (1) | RELATED TICKERS: NLY , HTS , CIM

The Fed's 'extended period' of low short-term rates will help at least one class of investments keep  churning out double digit yields.

As long as borrowing costs stay low, it's cheap for mortgage REITs to leverage up and take advantage of the spread between short-term borrowing costs and the yields available on mortgage backed securities.

There are interest rate risks and, in some cases, default risk, so these aren't 'set it and forget it' investments, but those yields are very tempting.

Fool on!

Russ

Disclosure:  Long HTS and planning to add after the no-trade window around the article opens up.

1 Comments – Post Your Own

#1) On July 06, 2011 at 12:14 AM, Valyooo (99.63) wrote:

AGNC is my favorite.  Highest yield, has been growing a lot faster than NLY and CIM, handled 2008 better than them too.

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