Take Advantage of These Five Dividend-Paying Investments to Start the New Year on a Positive Note
By: Ned Piplovic,
Regardless of how your investment portfolio performed in 2016, you may want to check out five funds that pay dividends in January and have dividend yields of more than 11%.
If you are bullish on real estate and mortgage markets, you might want to take a close look at these opportunities that invest in real-estate financing, mortgages and various mortgage-backed securities (MBSs). The ex-dividend date for all five of these investments is December 28, 2016, and one of the funds plans to boost its dividend.
Arlington Asset Investment Corp. (NYSE: AI)
Arlington Asset Investment Corp.’s focus is the acquisition of mortgage-related assets. The company leverages residential mortgage-backed
securities (MBS). While Arlington Asset Investment Corp., invests in some MBSs issued by private organizations, most of the securities are issued or guaranteed by U.S. government agencies or U.S. government-sponsored entities.
The $0.625 quarterly dividend is the same as last period’s dividend. Its quarterly dividend translates to an annual dividend of $2.50 and a 16.4% dividend yield. Its current dividend yield is equal to the trailing 12-month average and is only slightly less than its 16.8% average over the past five years.
The stock price pulled back 11% from the 52-week on December 9, 2016. However, since the 52-week low in late January, the stock price has increased 62%.
AGNC Investment Corp. (NASDAQ: AGNC)
This company was American Capital Agency Corp. until September 2016 when it took its current name. AGNC Investment Corp. operates as a real estate investment trust (REIT) and invests in residential mortgage pass-through securities and collateralized mortgage obligations through short-term borrowings structured as repurchase agreements. The company chooses investments where government-sponsored enterprises or the U.S. government agency guarantees principal and interest.
Its current dividend yields 11.8% on a monthly dividend payout of $0.18 — a $2.16 annual payout. That dividend yield is consistent with the 12-month average, but 26% lower than its five-year average of 16.1%.
While the other four suggestions in this group will pay the dividend at the end of January, AGNC Investment Corp.’s dividend pay date is January 9, 2016. The time between the ex-dividend and pay date is less than two weeks. This short time makes this dividend is a great opportunity for investors who wish to take advantage of the quick cash dividend payout.
The stock price is 10.7% lower than the $20.43 high on Oct. 26. AGNC reached a 52-week low during trading on December 15, 2016, but it rebounded and increased 16.1% to $18.25 over the two trading days ending with December 19, 2016.
Annaly Capital Management Inc. (NYSE: NLY)
In addition to investing in various types of residential mortgage-backed securities like the first two companies listed above, Annaly Capital Management, Inc. also invests in commercial mortgage-backed securities, as well as commercial loans and other commercial real estate debt.
This is the only company in the group that is paying an increased dividend. Its current quarterly dividend of $0.30 is 13.6% higher than the dividend payout last quarter. The annualized $1.20 dividend yields 11.8% as it did over the last three years. However, the five-year dividend payout is slightly higher at 13.5%.
NLY’s share price increased 37% between the 52-week low in mid-January and the 52-week high of $11.29 on August 10, 2016. Since then, the stock price declined 7.9% and closed at $10.40 on December 19, 2016.
New Residential Investment Corp. (NYSE: NRZ)
New Residential Investment Corp. invests in excess mortgage servicing rights (MSRs) on residential mortgage loans, servicer advances and credit-sensitive real estate securities.
The annual dividend in 2014 was $0.38 and $1.75 in 2015. Its current quarterly dividend of $0.46 will lift the 2016 total annual dividend payment to its highest level in three years at $1.84. Going back to September 2013, the quarterly dividend payout declined only in the third quarter of 2014 when the split-adjusted dividend was $0.01 lower than the dividend paid out in the second quarter of 2013.
Its stock price is currently 78.3% higher than its 52-week low on January 14, 2016. The 52-high occurred on December 8, 2016. Its most recent price has declined only 0.7% from that high to close at $16.17 on December 19, 2016.
Anworth Mortgage Asset Corp. (NYSE: ANH)
Anworth Mortgage Asset Corporation is a REIT that invests in residential MBSs guaranteed by Ginnie Mae or other government and government-sponsored entities like Fannie Mae and Freddie Mac. The company also invests in mortgage investments that are guaranteed by a private institution, such as commercial banks.
The company will pay the same $0.15 dividend as it did in the previous quarter — $0.60 annual dividend. Since 1997, the dividend fluctuated considerably. It went as high as $2.00 in 2002 and as low as $0.08 in 2006. The dividend has been a little more stable over the last four years. The annual dividend was $0.50 in 2013, $0.56 in 2014 and $0.60 in 2015. The dividend will be $0.60 again in 2016.
Stock price increased 46% from the 52-week low on January 20, 2016. The price closed at $5.34 on December 19, 2016, only two cents below the 52-week high, which happened on December 9, 2016.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.