Fed's Rates Reluctance Boosts Mortgage Real Estate Investment Trusts

Conventional wisdom dictates that higher interest rates diminish the chances that homeowners will refinance their mortgage rates. Additionally, many mortgage REITs did not anticipate the sharp spike in interest rates and the result was a rash of dividend cuts from REM and MORT holdings.

“With some pressure still expected on core earnings and thus dividends, we do not believe that valuations will markedly improve for the group as a whole. At the same time, share repurchases and potential M&A activity could provide a bit of price support, and we think that dividends continue to make these equities worth owning in a diversified, income-oriented portfolio,” adds Wunderlich in the note posted by Barron’s.


iShares Mortgage Real Estate Capped ETF