When most investors look towards real estate for their portfolios, they do so from the point of view of owning physical properties. But much higher yields can be had by focusing on mortgages and loans made to property developers. The key to making those high double-digit yields work is by reducing risks – and that’s just what our latest pick in our High-Yield Model Portfolio has done.
Since its founding during the Great Recession, our pick has focused on some of the safest areas of mortgage-backed securities, meaning those that are backed by Federal agencies. At the same time, its recent forays into the mortgage servicing rights (MSRs) market have continued to provide a safe clash flow volume to its underlying portfolio. Book value has remained stable as well.
And since its structure as a real estate investment trust (REIT), those cash flows head right back into investors pockets with a hefty 11%+ yield. With housing demand rising and net interest rates strong, our pick is poised to win in the current environment.
Because of our current pick’s, strong success and portfolio strength, we’re removing a competing specialty finance REIT from the model.
You can check out the Best High Dividend Stocks Model Portfolio to explore all the stocks.
