Invesco Mortgage Capital: A 12% Yield Mortgage REIT With Rising Earnings, Despite QE3

Invesco Mortgage Capital (IVR) announced its third-quarter performance on Oct. 30, 2012. The impact of the third round of quantitative easing (QE3) conducted by the Fed was evident, as it was when most of Invesco's peers reported their performances for the third quarter of the current year.

The stock offers a dividend yield of 12.13%, which is backed well by a 16% operating cash flow yield. This reflects the fact that the company has enough financial muscle to continue dividend distribution in future.
In conclusion, Invesco remains one of the very few mortgage REITs that have been able to post a surge in their bottom lines at the end of the third quarter of the current year as compared to the linked quarter. Going forward, we believe the company's interest income will not take a hit as big as Annaly Capital (NLY) and other mortgage REITs that invest exclusively in agency fixed-rate securities. The reason for that is that Invesco has part of its portfolio invested in non-agency securities. We also believe that the company's ability to pay dividends will not be significantly affected by the third round of quantitative easing. Therefore, we recommend our income oriented investors to hold the stock. Read more