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News From the Real Estate Sector

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In 2001, I identified precious metals as starting what I think will be a huge bull market. Today, in 2007, I think we have many more years for it to run.
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News From the Real Estate Sector

Thursday, 28 May 2009

Surprise -- Home Sales are Increasing! Now's the time to get ready for the rebound with this REIT yielding 18.5% The real estate sector is starting to show early signs of life. The National Association of Realtors just announced that home sales increased 2.9% from March to April -- an increase that was bigger than expected.
The rebound may not be in full swing just yet -- but that makes now the perfect time to position yourself for the upswing. Once the real estate resurgence is clearly under way, it will be too late -- most of the profit opportunities will have passed you by.

     Fortunately, there is one way that you can make money now -- and make sure you're ready for the rebound. We've found one stable, diversified REIT that is already handing investors nice profits -- and it's poised to climb even higher as real estate recovers.

     This security has gained +30.0% since Editor Carla Pasternak first recommended it to readers of High-Yield Investing back in February. And that doesn't even count dividends! (The yield on this gem is nothing to sneeze at, as I'll explain in just a second.)

     How has this REIT managed to do so well while the real estate market continued its slump? It's simple -- this company is in the right place at exactly the right time.

Key Statistics
Security Type: REIT
Dividend (since inception): $3.36
Yield: 18.5%
Payment Frequency: Quarterly
Gains (2/20/09-5/26/09): +30.0%

     This REIT borrows money to invest in mortgage-backed securities. Not just any mortgage securities, mind you, but only those whose principal and interest are guaranteed by U.S. government-backed agencies.

     Talk about being in the right place at the right time ... bank borrowing rates are at the lowest they've been in over 50 years. And even though mortgage rates are lower than they were a few months ago, the bank borrowing rate is still much lower -- the perfect scenario for a company like this one that profits from the difference between the two.

     To give you an example of exactly how this plays out, this REIT's investment portfolio yields 5.04% against the incredibly low borrowing costs of just 2.63%. That gives them an unusually profitable spread of 2.41%. (To put that in context, a successful mortgage REIT, like Annaly, last year saw an average yield on assets of 5.03% but paid borrowing costs of 4.08% for a spread of just 0.95%.)

     After successfully navigating through the most tumultuous mortgage market in history, this company is on track to continue its impressive earnings streak and fat payouts. The six analysts who follow it are projecting earnings to rise +50% in the months ahead.

     Like any REIT, this beauty distributes almost all of its available cash and capital gains to shareholders every year. And right now, the company is giving its holders an abnormally high yearly cash payment averaging 18.5% on every dollar they put into it.

     There's no guarantee, of course, but invest $50,000 now and you're looking at a nice little stipend of $9,500 a year. And that's just in the first year. As long as the dividend payout remains steady, your income will roll in year after year -- and increase as it compounds its assets.

     But don't wait. Opportunities like this will disappear very quickly once the rebound is in full swing. This REIT has gained +30.0% in just the last three months, but it will likely jump even higher once the market thinks real estate is recovering. Don't miss this opportunity to position yourself now.

     There is a full write-up of this high-yielding cash cow in the report just released by my editors, Paul Tracy and Carla Pasternak. Go here to read the full report on it now.

Sincerely,

Lou Betancourt
StreetAuthority, Publisher

P.S. It's important to be in the market before a rebound occurs. If you wait until it's in full swing... then you just might miss out on some of the biggest gains, which sometimes come in one day. That's why it's doubly important to position yourself now for the eventual resurgence in real estate. Go here to learn more about this timely recommendation.