Technical Review - REITs Continue Their High Yielding Ways

          Technical Review - REITs Continue Their High Yielding Ways

  PR Newswire

  LONDON, January 16, 2013

LONDON, January 16, 2013 /PRNewswire/ --

The company in the REITs industry mentioned in this release is currently on
StockCall list of companies to follow for 2013. At the market close yesterday,
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Diversified real estate investment trusts have been some of the most stable
and high dividend yielding stocks available. In fact, the number of companies
that raised dividends in 2012 was the highest in over a decade. Housing market
optimism could lift mortgage focused trust dividends even higher while
improving capital spending could help spark broader commercial real estate

One such company is MFA Financial Inc. ^(1) (NYSE:MFA) which has a dividend
yield of 9.04%. It has a cash dividend coverage ratio of 10.4%, indicating
that the company generates enough cash from operations to be able to sustain
its dividend payment to shareholders. However, the king of dividend in the
diversified REITs industry is Annaly Capital Management Inc. ^(2) (NYSE: NLY)
with its dividend yield of 12.27%. Annaly is the first publicly traded
Mortgage REIT.

Those impressive yields have come under fire in recent weeks though. A
regulatory proposal that would affect the rate at which dividends are taxed
could have the biggest impact on trusts and investors. Prior to 2013, most
investors could pay a maximum of 15% on dividend income. A fiscal cliff
compromise lifted that maximum to 20% for earners above $450,000. The proposed
law before the compromise would remove preferential treatment for dividends
and send rates soaring to the standard income tax rates of around 43%. The
proposal was shelved when the fiscal cliff crisis was temporarily delayed but
lawmakers on both sides have resumed their discussions and many tax related
questions remain unanswered.

Presumably, trusts would be more likely to return cash to investors in the
form of share buybacks over dividends in the event of a substantial tax hike,
though it remains to be seen how this will play out.

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1.MFA Financial Inc. Technical Analysis [ ] 
2.Annaly Capital Management Inc. Technical Analysis [ ]

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