2 Mortgage REITs to Add to Your Portfolio in the 2nd Quarter

New York Mortgage Trust, Starwood Property Trust have performed well and will continue to perform well despite changing interest rates

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Jacob Maslow
Apr 08, 2019
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Mortgage rates remained stable the first week of April, with demand rising to its highest level since 2016. Mortgage rates remained steady at 4.08% for a 30-year fixed rate mortgage as the market experienced a rise in refinancing activity.

As a result, real estate investment trusts remain an important part of a diversified portfolio, with two stocks in the mortgage sector standing out:

New York Mortgage Trust

New York Mortgage Trust Inc. (

NYMT, Financial) is up over 2% year to date, with the stock rising 3.9% between March 7 and April 5. The companys business plan provides strength when interest rates drop, offering a high dividend yield for investors.

The stock offers an 8%-plus dividend and is classified as a mortgage REIT, with 52% of investments in multifamily housing.

The REIT increased its investments in distressed residential mortgage loans from 201 to 3,352 between 2017 and 2018. Short-term borrowing is the companys primary protection against interest rate fluctuations, and 90% of debt matures within a 90-day period.

Distressed residential mortgage loans totaled $560.7 million in 2018, with other residential loans totaling $128 million. Multifamily commercial mortgage-backed securities totaled $249.4 million and non-agency, residential mortgage-backed securities totaled $196.2 million. Multifamily property loans totaled $113 million.

A diverse portfolio allowed New York Mortgage Trust to earn $78.7 million in net interest income in 2018.

Starwood Property Trust

Shares of Starwood Property Trust Inc. (

STWD, Financial) are up over 14% year to date, offering an 8.4% dividend. The company is one of the largest commercial REITs in the United States. It has investments in physical commercial real estate and maintains a large mortgage portfolio.

The company owns and originates floating-rate loans for commercial properties. Loan losses are rare for Starwood, and full-year 2018 earnings came in at $2.19 per share. Total investment capacity in February was $3.9 billion with an 8.7% annualized dividend yield.

The companys segment highlights for the most recent quarter show a diversified portfolio of products, allowing it to be more than just a mortgage broker. Commercial and residential lending resulted in originations and acquisitions of $1.6 billion. Non-agency residential loans worth $319 million were purchased. Infrastructure lending resulted in $229 million in loans and $160 million in repayments. Core earnings of $33 million in the property segment were noted, with $62 million in core revenue originating from investing and servicing units.

Disclosure: The author has no stakes in the listed equities.

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<p>Jacob Maslow is a writer who began his career as a payroll manager. The same affinity for numbers that originally led him to an early career in accounting now comes in handy when it comes to understanding and working with marketing analytics.</p> <p>A native of New York, Maslow is now based in the Middle East, where he lives with his wife and five children and provides high-quality services to clients in a variety of industries, including the legal, medical and financial sectors.</p> <p>In addition to his marketing and consulting work, Maslow has founded a variety of news websites, including Legal Scoops. He is a frequent contributor to a variety of publications.</p>