Over the Easter holiday, I had a discussion with Don’s 92-year-old dad about the pitiful rates he’s earning on his certificates of deposit at the banks. For $25,000, he’s getting about 1% per year. That’s certainly not making him any money!

We talked him into his first stock market investments a while back, and he’s game for more, so I did a little research to see what I could find that might give him a much better return.

Now, as you might imagine, he has most of his money in really safe, conservative investments. But at this juncture in his life, he’s feeling a little more speculative and wants to have some fun with his money.

And if you have a little bit set aside — funds that you don’t need right away — and want to take a bit of a risk for a whopping large return, take a look at these two real estate investment trusts, both of which are paying very generous dividends right now:

American Capital Agency Corp.

American Capital Agency Corp. (NASDAQ:AGNC) is an REIT that invests in residential mortgage pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by government-sponsored entities or by the U.S. government agency.

Price: $30.11
Market cap: $6.75 billion
Target: $31
Why I Like It: Fabulous dividend (16.6%), great potential to also grow capital appreciation in the near term

Invesco Mortgage Capital

Invesco Mortgage Capital (NYSE:IVR) is an REIT that invests in both residential and government-backed mortgages.

Price: $17.26
Market cap: $1.97 billion
Target: $19
Why I Like It: Fabulous dividend (17.9%), recent uptick in institutional buying of its shares

Both of these stocks are very high-yielding REITs, and when interest rates begin to creep up, you will want to vacate your shares. But in the interim, their dividend yields certainly can supplement your income needs, at a very healthy level.

But please be conservative and invest only a small portion of your portfolio in these shares, as they are considered fairly speculative, in terms of repayment risk.

Note: I intend to establish a portfolio of similar picks, some 25 to 30 stocks that I’ll update on a regular basis. I will discuss them from time to time in my blog and on this website, but a full analysis of each stock — as well as detailed updates — will be available only via subscription. If you’d like more information, just contact me directly, at nzambell@frontiernet.net.