Looking at The Dividend Channel this morning, cherry picking stocks with noted insider buying activity is one way investors can boost dividend yields. We took a look at the most active and profitable of real estate (REIT) stocks to preview some investment potential deserving of note. A big question for many trusts will be whether or not each can stay competitive with the FED at buying up mortgage instruments.
Annaly Capital is of particular interest not simply for the high yield, or for their president's purchase of $1.39 million at the end of 2012, but for the positive news about the REIT. What makes this group a solid one "to watch" is the Q 4 2012 net income of $700.5 million. Wellington J. Denahan, CEO of Annaly, expressed the mood for this stock via their last reporting:
“In our market, indeed every market, decisions made by policymakers continue to have exceptional influence on pricing and behavior. Nevertheless, as our results demonstrate, we continue to navigate through these uncertain waters to identify attractive relative value opportunities on both sides of our balance sheet. These market conditions are likely to persist, however, as structural imbalances here and abroad continue to affect economic activity. In this environment, we believe that remaining conservative in our management approach is in the best long-term interests of shareholders.”
Keys: Essential to this REITs value is their ability to continue outmaneuvering not only competitors, but the FED at buying the mortgage backed securities.
ARMOUR is another high yield REIT focused on mortgage backed securities. If insider buys have anything to do with a stock's value, then the several hundred million key ARMOUR execs have purchased recently give clues to another group to watch. Why is this stock interesting? Beyond the high yield, ARMOUR Residential just announced last week their offering of Series B preferred. Looking at yesterday's close, the movement seems to trend upward 7.11 +0.06 (0.85%)
Keys: Not unlike Annaly, movements by the FED impact ARMOUR heavily. Despite the fact the stock is undervalued, a lot depends on competition for the dwindling pool of securities they thrive on.
Two Harbors, harbors all the potential return the other two REITs do, but with a much bigger bang. 18% is a whopping yield, but the aforementioned Oasis of securities drying up has to shake confidence in these securities backed funds. Here, insider investing is a lot less confident too, the key people at Two Harbors only having only invested several hundred thousand compared with the tens of millions competing groups have in their own wares.
Keys: Can the robust stock break out with a better return on equity? Will the conversion of Silver Bay Realty Trust Corp. (SBY) shares next month render the expected value? Everyone says "buy" this one.
America Capital is another real estate investment trust which focuses on mortgage instruments of several types. Just yesterday the group announced their IPO of some 20,000,000 shares, just after having announced Q4 2012 earnings per share of $1.40 per. On the face of this stock, everything suggests "buy", but a few too many press releases focused on their movement puzzles this writer.
Keys: Confidence by the investment reporting community. Somehow so few seem willing to rate this trust either way? The stock closed yesterday at 25.70 -0.87 (-3.27%)
Ditto for AG. Again, mortgage backed securities will spell win or lose for this trust. Insider investment here has not been robust compared with the others mentioned. What makes this stock a real horse to watch is the strong dividend history exhibited. Forbes points to this in an evaluation here, but given the yield and the relatively fantastic price to book ratio, it's no wonder lots of eyes are on this investment.
Keys: Figuring out whether or not MITT can maintain this same strong dividend legacy. WATCH THIS ONE
AMTG sits in the top spot in the Dividend Channel's list, in part because of the clear upward trending of the fund. What's interesting for us about Apollo is that the fund has so little news related to the movement of their shares. Other than the announcement for their Q4, the fund seems to chug along unassumingly. However, yesterday's close trended more toward the stock tanking than triumphing. However, the dividend trail tells of a stock rock steady throughout the last 12 months.
Keys: Maintaining this dividend yield strength, something that is to a degree dependent on the funds competitiveness at buying. So far the trend shows they are top notch shape shifters where reacting is concerned.