The Best Place For Earning 12% Dividends Now
This might seem surprising, but I am suspicious of high dividend yields…
Being a expert dividend stock analyst, I regularly examine the stock market for high-yield dividend stocks. My searches generally bring hundreds of results. At this time, for example, 95 stocks are yielding more than 10%.
These dividend yields look remarkable until I take a look at the firms behind them. But they are mostly rubbish. The high yield means the stock value has in recent times dropped or the dividend payment is about to drop… or both.
In other words, I in general consider high dividend yields the same manner I would treat a colorful snake: I steer clear.
That said, there are always exceptions to this rule. Throughout the years, I have been capable of find pockets of rock-solid high-yield stocks dumped in the trash. In recent times, I discovered one of these “pockets” in the mortgage industry…
One can find two different sorts of mortgages. 1. Agency Mortgages: The mortgages insured from the government. 2. Nonagency Mortgages: These mortgages don’t have government back up and they are issued by private lenders like banks or mortgage companies.
In past 3 years, investors who invested their money in nonagency mortgages have lost trillions of dollars. The recession has made it much difficult for the property owners to make their monthly mortgage payments. Non-Payment, delinquencies plus foreclosures have increased like anything. The investors who invested their money in these mortgages have lost their fortunes since there is no security from a government guarantee.
Mortgages have created huge losses for the investors who touched them in the last 10 years. They are the very last investment choice that you’d think buying if you’re planning for investment. I’ll agree with you, also leave them with the rest of the junk my screens turn up.
In general, I’d agree with you. However take a look at this for a while.
TransUnion is the third largest consumer credit reporting agency in United States, that provides credit-related information to potential creditors. Every month, TransUnion measures how many mortgages that have gone 60 days or more without the borrower making a payment.
In accordance to the most recent research report from TransUnion, the 60-day failure rate for the entire mortgages dropped this month for the 1st time in last 3 years, from 6.89% to 6.77%.
One of the fundamentals of being profitable in the stock market is to buy when things go from bad to less bad. And that is what happening in the mortgage market right now. A smaller number of individuals are defaulting on their loans for the 1st time.
The market is turning around. It’s a excellent opportunity to buy nonagency mortgages, even if they stink.
Mortgage Real Estate Investment Trusts (REIT) are stock market instruments that focus in investing in mortgages. Nonagency mortgages are still transacting, on average, approximately 70 cents on the dollar. The few mortgage REITs that invest in nonagency mortgages are trading like junk bonds as well as paying out 12%-18% dividends.
As smaller quantity homeowners failure to pay on their mortgages, mortgage REITs should be capable to make more income and pay bigger dividends. As other investors realize mortgage REIT dividends are sustainable, they’re going to push up the stock prices, providing you with capital gains, too.
Briefly, the mortgage market is moving from “bad” to “less bad” and it’s giving us a rare opportunity to receive a secure, high profits stream from the mortgage REIT industry.
Top Income Stocks specializes in finding the highest yielding, safe dividend paying stocks in world today. Every month you’ll receive our TOP 10 picks showing you the best dividend-paying income stocks. Click here to signup today and can get Top Incomes Stocks 30-day trial membership for just $4.97.
Related posts: