Thu Sep 19 08:51:00 UTC 2024: ## Wall Street’s Most-Hated Industry May Be About to Shine: Two Mortgage REITs Offer 12%+ Yields

**NEW YORK** – Despite the recent downturn, the mortgage REIT industry, often considered Wall Street’s least favorite, may be poised for a comeback. With the Federal Reserve expected to begin a rate-easing cycle, two mortgage REIT giants, Annaly Capital Management (NLY) and AGNC Investment (AGNC), are attracting attention thanks to their ultra-high yields of 12.5% and 13.9%, respectively.

Mortgage REITs, which borrow money at lower short-term rates to invest in higher-yielding long-term assets like mortgage-backed securities (MBSs), have faced challenges in recent years due to rising interest rates. However, with inflation cooling and the Fed shifting towards a more dovish stance, the industry is poised for a rebound.

As interest rates fall, the net interest margin of Annaly and AGNC is expected to expand, further boosted by their acquisition of high-yield MBSs over the past two years. Additionally, the Fed’s cautious approach to monetary policy will provide a stable environment for these companies to manage their portfolios effectively.

Analysts believe that the normalization of the yield curve, where longer-term bonds offer higher yields than short-term bonds, will also be a significant driver of growth for mortgage REITs.

Annaly and AGNC further distinguish themselves by focusing heavily on agency securities, which are backed by the federal government, offering additional protection against defaults.

Despite their recent underperformance, Annaly and AGNC are primed for a strong turnaround. However, investors should conduct thorough research before investing in these high-yield stocks, as they come with inherent risks.

Read More