Mortgage REITs Outperform in First Seven Months of 2017

The FTSE NAREIT All REITs Index, the broadest index of the U.S. REIT market containing both Equity and Mortgage REITS, gained 6.69 percent on a total return basis in the first seven months of 2017. Mortgage REITs continued to outperform Equity REITs and the broader equity market in the first seven months. The total return of the FTSE NAREIT Mortgage REITs Index was 16.48 percent for the year through July 31, while the FTSE NAREIT All Equity REITs Index was up 6.21 percent and the S&P 500 gained 11.59 percent.

Home Financing Mortgage REITs drove the performance of the Mortgage REIT market, delivering a total return of 19.72 percent in the first seven months of 2017, compared to Commercial Financing REITs’ 6.50 percent gain.

In addition to delivering strong total returns, Mortgage REITs rewarded investors with outsized dividend yields. The dividend yield of the FTSE NAREIT Mortgage REITs Index on July 31 was 9.74 percent, with Home Financing Mortgage REITs yielding 10.27 percent and Commercial Financing Mortgage REITs yielding 7.99 percent.  In comparison, the dividend yield of the FTSE NAREIT All REITs Index on July 31 was 4.12 percent, the yield of the FTSE NAREIT All Equity REITs Index was 3.81 percent and the yield of the S&P 500 was 1.99 percent.

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