After getting pummeled last year, mortgage real estate investment trust exchange traded funds have recouped some of their lost ground and remain attractively priced.

The Market Vectors Mortgage REIT Income ETF (NYSEArca: MORT) and iShares Mortgage Real Estate Capped ETF (NYSEArca: REM) have both returned over 15% year-to-date.

Sterne Agee analysts Jason Weaver, Henry Coffey Jr., and Calvin Hotrum argue that mortgage REITs still offer attractive valuations, reports Michael Ide for ValueWalk.

“Price/Book ratios remain well south of their historical medians even in comparable periods of heightened interest rate volatility, and dividend yields now appear far more sustainable and attractive versus comparable asset classes,” the analysts said in a research note.

Specifically, the analysts point to enticing mortgage-related REITs like Two Harbors Investment Corp (NYSE: TWO) and MFA Financial (NYSE: MFA). REM includes a 4.7% position in TWO and 4.5% in MFA. MORT has a 5.8% allocation toward TWO and 4.2% toward MFA.

Looking at valuation metrics, the REM has a price-to-earnings ratio of 11.7 and a price-to-book of 1.0 while MORT has a P/E reading of 11.9 and a P/B of 1.0. In contrast, the S&P 500 index shows a P/E of 17.4 and a P/B of 2.4.

Mortgage REITs also offer attractive yields. REM has a 13.4% trailing 12-month yield while MORT has a 12.7% 12-month yield.

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