If You Like Passive Income REITs, You'll Love This One Paying A Dividend Over 14%

Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.

If you ask investors about dividends, many would say, "the more, the merrier." Monthly dividends from REITs are popular because they allow shareholders to earn money effortlessly through direct deposits. Keep reading to find out how you can earn a dividend approaching 15% with this REIT.

Trending: Mark Cuban believes “the next wave of revenue generation is around real estate and entertainment” — this new real estate fund allows you to get started with just $100.

ARMOUR Residential REIT Inc. (NYSE: ARR) currently offers an estimated dividend of 14.06%. It primarily invests in residential mortgage-backed securities (RMBS), including securities guaranteed or issued by organizations affiliated with the U.S. government such as Fannie Mae, Freddie Mac, and Ginnie Mae.

ARR investors also benefit from knowing that each loan in its portfolio is secured by tangible assets (real estate). Despite the disruption caused by the 2008 financial crisis, residential mortgage lending has a proven track record of delivering reliable and solid performance for its investors. There are many data points that illustrate the reliability of mortgage lending.

According to data firm CoreLogic, America's total mortgage delinquency rate has been below 3% since February 2023. The national foreclosure rate since March 2022 is a near-all-time low of 0.3%. Considering that ARR has long-term, fixed-rate RMBS as the bulk of its portfolio, there is every reason to believe these assets will continue to perform. Adjustable rate and multifamily mortgage-backed securities are also mixed into ARR's portfolio to diversify and boost returns

Private credit offers up to 20% APY. Potential accredited investors are looking to capitalize on this growing asset class.

In the unlikely event of widespread borrower defaults, the loans in ARR's portfolio are backed by real estate assets that historically appreciate and can be liquidated to recover investor capital. This setup provides ARR and its investors with a secure position unlikely to falter overnight, ensuring solid dividends into the future.

ARR has a current market cap of $1.08 billion and a share price of $20.25. The recent announcement that they are paying a share dividend of $0.24 per month, which is $2.88 per share annually, makes it an investor-friendly investment. That translates to a dividend above 14%.

Based on the current 14.06% estimate, a $10,000 investment in ARR would pay an annual dividend of $1,406 (if current performance trends continue). A $100,000 investment would yield $14,060 in passive income. Remembering that past performance does not guarantee future results is always important. Still, ARR's portfolio of RMBS and the historical strength of America's mortgage market make it a potentially lucrative addition to any investor portfolio.



Check Out One Of Benzinga's Top Picks for Private Market Opportunities Available Now:

Integris Secured Credit Fund IV

The fund provides a fixed annual return of 12%, payable quarterly, over a 2-year period starting April 2024 and ending April 2026. The note is secured by collateral with an estimated value of $71M, with an anticipated loan-to-value ratio of 14%.

Minimum investment: $100,000 Available to: Accredited investors View fund information

View more private market offerings on Benzinga's Alternative Investment screener.

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

This article If You Like Passive Income REITs, You'll Love This One Paying A Dividend Over 14% originally appeared on Benzinga.com