Market Vectors Mortgage REIT ETF (MORT)
There’s more than one way to skin a cat, and that holds true in the real estate sector as well. While most everyone is familiar with the owners of physical property, there is another type of REIT — mortgage owners. These companies will loan money to owners of real estate or purchase existing mortgages and mortgage-backed securities (MBS).
Many of these companies have been able to borrow at near-zero interest rates and use that leverage to purchase more mortgage-backed securities. These securities can be insured by federal agencies — like Ginnie Mae — or those without agency insurance (non-agency).
The result is dividend yields well north of 9%.
Offering a 10.95% yield is the Market Vectors Mortgage REIT ETF (MORT). The ETF bets on a basket of 26 of these different mREITS and has been severely punished since the Fed began its taper talk. MORT isn’t without risk, but it the Fed continues to hold back its taper, the ETF should continue to churn out heavy distributions to shareholders.
Expenses for MORT run 0.58%.
As of this writing, Aaron Levitt was long VNQ.