by Travis Johnson, Stock Gumshoe | July 8, 2008 11:40 am
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If you want to bottom fish in that area why not NLY? They got thrown out with the subprime bath water. They invest mainly in gov’t backed mortgages and pay a handsome dividend.
NLY is certainly beloved by many — and it is safer than some, since as far as I can tel they’re really only taking interest rate risk, though with circumstances as they are it’s always possible that the risk is signficantly greater than conventional wisdom believes (thus the high yield).
I owned the shares a few years ago, but haven’t looked at them in detail for quite some time. I think the risk is lower for NLY than for CSE, but I also think the potential reward is significantly lower, and I like that CSE invests in mortgages to maintain REIT status, but is not really focused on the residential mortgage market. I wouldn’t tell anyone to avoid NLY, just haven’t been interested myself recently — probably because I owned NLY in the high teens three or four years ago when it was a conservative, decent yield investment with a yield around 7-8%, if I remember correctly. The yield is inarguably nicer now, at about 15%.