Want to Make 14% on Your Money?

The headline of today's daily 'What We're Hearing' blast sounds like junk mail that you might see in your email inbox. But rest assured, certain mortgage REITs are paying hefty dividends these days. At the top of the list is Annaly Capital Management, which has a 13.5% dividend/yield rate. Annaly's bread and butter consists of investing in agency MBS. PennyMac, a REIT that buys nonperforming loans but also engages in correspondent lending and servicing, is yielding 11.8%. (Black Rock must be loving it.) Redwood Trust, the only firm in the world to issue jumbo MBS the past two years, yields almost 9% and trades a lot closer to its 52-week low than its high. What does this tell us about the mortgage market? Hard to say, but I will offer this: despite a recent uptick in the 10-year Treasury, mortgage rates aren't going to go much higher – as long as the Federal Reserve has its way.