Daily Dividend: Almost a 20% Yield (CYS)

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Cypress Sharpridge Investments, Inc. (NYSE: CYS) is one REIT that many investors are not aware of.  With the dividend yield that it is sporting and which it has reconfirmed today, that may be something that income investors need to review.  Here is why: at the current price and the current dividend it sports a whopping 19% yield.  We recently covered some of the other mortgage-REITS with 10% yields and higher, but this one was off the list because of its size (~$750 million market cap).

Today came word that Cypress Sharpridge declared a quarterly dividend of $0.60 per share of common stock for the first quarter of 2011, payable on April 20, 2011 to stockholders of record on April 6, 2011.

The company’s website notes that it is a specialty finance company that was created with the objective of achieving consistent risk-adjusted investment income from residential Agency mortgage backed securities.  It invests using leverage and invests in residential mortgage pass-through securities which are backed by Fannie Mae, Freddie Mac, and Ginnie Mae which are also collateralized by single-family residential mortgage loans.  The firm’s dividend history is as follows:

  • Dec 09, 2010: $0.60 Dividend
  • Sep 16, 2010: $0.60 Dividend
  • Jun 24, 2010: $0.60 Dividend
  • Apr 12, 2010: $0.55 Dividend
  • Dec 29, 2009: $0.55 Dividend
  • Oct 01, 2009: $0.35 Dividend

Shares are trading up 0.3% at $12.53 and the 52-week trading range is $10.40 to $14.57.  Be advised that a 19% yield is no assurance that things will remain that way.  Currently these mortgage REITs are able to have such high payouts because the cost of borrowing and cost of carrying is so much lower than the yields offered up.  The current QE2 and extremely low rate environment is aiding these returns.  As we like to feature the risks with the rewards, there is no assurance that those yields will be there in the future.

As always, know what you invest in.  Tune in daily at 11:00 AM EST for The Daily Dividend from 24/7 Wall St. by bookmarking the site or by selecting our “Dividends Tab” in your browsers.

JON C. OGG

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