Dividend Stock #3: MFA Financial (MFA)

Posted Mar 14th 2010 11:00AM by Jeff Reeves
Filed under: Housing

Dividend Yield: 14.8%
Market Cap: $2.0 billion

MFA Financial (MFA) is a real estate investment trust (REIT) that primarily invests in mortgage-backed securities. According to Wall Street rules, a REIT is a corporation that invests in real estate in some form and gets a special tax designation as a "trust" that reduces or altogether eliminates income taxes. In return, Real Estate Investment Trusts must return 90% of their income to investors. This provides for some great dividends for income-oriented investors -- such as the nearly 15% yield that MFA offers.

Though mortgage-backed securities are not exactly the most stable business to be in, the company shows strong earnings and trades at a reasonable P/E of about 7, so there is reason to expect things to stay stable or even improve at MFA across the coming months.

At the time of this writing, the author did not own shares of MFA.

Next: Dividend Stock #2: Och-Ziff Capital Management (OZM)

Tags: dividend stocks, MFA, MFA Financial