Even in light of the down real estate market, income investors who are seeking high dividend yields could find a strong pick in Armour Residential REIT (ARR). Currently, REITs are very attractive – especially relative to the fixed income market overall.
According to Five Star Equities, one of the biggest reasons for this is that the sector as a whole has an above average dividend growth outlook. This is primarily due to the the ability of REITs to manage risks and produce higher returns by capitalizing on increased leverage, compared to other industries such as healthcare and technology. Given this, plus the 10% annual dividend growth expectation in this particular industry sector, investors could have a real winner by going with Armour for both the long- and the short-term.
In this article, I discuss why Armour Residential REIT is one of my all time favorites, along with why I think – based on its dividend yield and its future growth prospects – that it may very well be the next home run for investors who seek both growth and income.
REITs as An Industry Sector
So far this year, mortgage REITs (real estate investment trusts) have outperformed the market as investors continue flocking to the large dividends that these shares tend to produce. According to one analyst, the effective prepayment risk management that is practiced by REITs tends to generate higher returns due to these entities being able to run at a higher amount of leverage without the need to compromise their equity cushion. To continue reading, click here.