iShares Mortgage Real Estate Capped (REM)
Most investors are familiar with equity real estate investment trusts (REITs). These are the stocks that own actual shopping malls, office buildings and other property. However, there is another kind of REIT — mortgage REITs (MREITs).
MREITs don’t actually own physical buildings, but invest in mortgage-backed securities or issue financing for others. They often borrow money themselves and use that leverage to invest in other mortgages.
They’re a complex bailiwick for most investors to understand, but they do kick off some amazingly high dividends. Which is why the iShares Mortgage Real Estate Capped ETF (REM) could be the best way to seek out high dividend yield.
REM tracks 37 different MREITs across the agency and non-agency subsectors. That dual focus allows the dividend ETF to throw off a huge 15.6% dividend yield.
While the Fed’s tapering has resulted in some recent capital losses for MREITs, many analysts now predict that the bulk of the sector has deleveraged and moved most of their own lending into floating rate loans. That should provide a floor for the REM’s share price and its huge dividend yield.
Expenses run 0.48%.