Cheap Stocks to Buy Now – CYS Investments (CYS)
Price as of 8/14/14: $9.24
I just named CYS Investments (CYS) as one of my favorite high-dividend REITs to buy now. CYS is a real estate investment trust that doesn’t actually own any physical real estate. Instead, CYS trades in mortgage-backed securities.
A low-interest-rate environment has allowed so-called mREITs like CYS to make a lot of money trading mortgage paper as the housing market has recovered. Of course, the big issue is that CYS is sensitive to interest-rate risk should rates rise and eat into the spreads of its loan portfolio.
We saw that in 2013, as CYS stock fell about 22% on the year.
However, the stock was so oversold it briefly traded below its net asset value. And since then, investors in REITs like CYS have realized the selloff was a bit overdone. Shares are up 25% year-to-date, and the company has returned to profitability this year, looking to easily cover the 32 cents per share in quarterly dividends it is paying.
And that dividend adds up to an amazing 14% yield at current pricing.
CYS could have another strong year or two, with modestly low rates providing a tailwind, and with a juicy yield and momentum behind shares, it’s hard to pooh-pooh this stock as a fad.