I read enough of their latest 10Q to see that they are not a fly by
night REIT. They are well capitalized. The thing is though, they are pretty heavily invested in CMOs and if rates move quickly in either direction, they could take a hit, prepayment or interest risk related, which would obviously take a toll on the dividend, since they are paying out all of their earnings. They can only grow by external financing. They really retain no earnings.
Now, if you are looking for exposure to this type of market/ mortgage backed securities, you should check out Federal National Mortgage Association FNM or Federal Home Loan FRE. You will notice that over the last 12, 36 and 60 month periods both of these stocks would have given you the same return as Capstead with a lot less risk. Plus, you wouldn't have to pay the taxes on Capstead's big dividend. FNM and FRE both have drips and were government spinoffs, so they are well connected to the right people in Washington. Also, both have excellent histories of raising dividends. As for Greentree, they are an excellent company, but I prefer the big companies, you get almost as much growth with less risk. Plus, Warren Buffett is a big buyer of FRE. Just my opinion. |
