You read that correctly, Newcastle Investment Corp (NYSE: NCT) a REIT, is currently paying around $2.88 per share dividend, that equates to a yield of 21.9% based on yesterday's closing price of $13.15 according to AOL Money & Finance data. We all know the "truism" that if something sounds to good to be true... it usually is. So why am I crazy enough to even consider such a thing? Believe me, I have been asking myself that question over the last five months or so that I have been watching this stock.

Newcastle first came to my attention through a Smart Money story written by James B. Stewart many months ago. He was discussing three stocks that he thought were worth the risk and had bought into all three. One of them was the now bankrupt American Home Mortgage (AHM) -- need I say more? The second was NCT and the third escapes my memory. Bankruptcy tends to put a damper on my investment psyche, so I left this idea alone until last month when NCT popped up on my radar screen again.

I do not remember what I was reading at the time but I started to take a closer look and found that NCT was very well diversified into all classes of real estate, with only 10% of the portfolio being in residential properties. Looking at some of the traditional metrics: the P/E is around 10, the P/S 1.3, the P/B 0.74 and the PEG ratio is listed at 0.15. All these numbers are SCREAMING VALUE very loudly. So what's the problem?