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The mortgage REIT sector has seen quite a bit of volatility lately, but Ready Capital () remains one of the biggest bargains among the common shares.Shares of RC trade at a huge discount to book value. Using our recent estimates, book value for RC should be about $14.30 per share as of early November. At $9.67, that results in a .68 price-to-book ratio. Rallying to trade at book value would be about a 47% increase in the share price. Not bad for a share with a dividend yield of nearly 15%. The sector plunged in late October, before putting together a huge rally. That was related to swings in book value. I put together a guide on from October 27th to November 3rd.That surge in book value was reversing a huge plunge from the prior weeks.We cover the swings in share prices, book value, and targets within our .The highest dividend yield here is ARMOUR Residential REIT () at nearly 29%. That’s already been declared through the end of the year, but don’t expect it to last much longer. ARR can’t really generate that kind of recurring cash flow without paying out the principal for dividends. Of course, you should be pretty suspicious when you see such a big yield anyway.We’ve been evaluating each REIT and BDC as they report earnings. For instance, we had a for Blackstone Mortgage Trust (), Annaly Capital Management (), Rithm Capital (), and ARR.I can also say AGNC Investment Corp. () carries the highest price-to-book ratio in the sector. Peers like Dynex Capital () are materially more attractive because of a much lower ratio. While I don’t like AGNC’s common shares, I find AGNCP () more attractive.Looking over to BDCs, there is also a reasonable discount to book value on SLR Investment Corp. (). I think that’s a respectable bargain, so we have a position in SLRC.Looking at the preferred shares, I see a great deal of opportunity. We’re particularly interested in preferred shares that should begin floating within the next 18 months. If they float sooner, that’s even better. The preferred shares have been a great tool for us to:
Investors who are looking for fixed income would want to look at the fixed-rate shares. However, the fixed-to-floating shares can be a good choice for most income investors. In particular, any investors looking to hold shares for a while as part of a retirement income strategy would be much better off examining the mortgage REIT preferred shares over the mortgage REIT common shares.
Strategy
Investments in common shares should be treated as positions for trading. This isn’t a buy-and-hold sector, contrary to what many yield-chasers would claim.If you’re looking for long-term dividend growers, you would look for companies like Realty Income (). We determined (). However, the selloff that ensued created a much better bargain than if Realty Income had negotiated a much better price. I also prepared .My tables for comparison have regularly been very popular with readers, so I’m going to include them below.These tables are a very important part of the article because they enable investors to quickly visualize information across the sector.
Stock Table
We will close out the rest of the article with the tables and charts we provide for readers to help them track the sector for both common shares and preferred shares.We’re including a quick table for the common shares that will be shown in our tables:
Type of REIT or BDC
Residential Agency
Residential Hybrid
Residential Originator and Servicer
Commercial
BDC
AGNC
RC
PMT
BXMT
MAIN
NLY
EFC
RITM
GPMT
CSWC
DX
AAIC
ACRE
ARCC
TWO
CIM
TSLX
ORC
NYMT
TPVG
ARR
MFA
OCSL
CHMI
MITT
GAIN
IVR
GBDC
EARN
SLRC
OBDC
TCPC
PFLT
FSK
MFIC
PSEC
If you’re looking for a stock that I haven’t mentioned yet, you’ll still find it in the charts below. The charts contain comparisons based on price-to-book value, dividend yields, and earnings yield. You won’t find these tables anywhere else.For mortgage REITs, please look at the charts for AGNC, NLY, DX, ORC, ARR, CHMI, TWO, IVR, EARN, CIM, EFC, NYMT, MFA, MITT, AAIC, PMT, RITM, BXMT, GPMT, WMC, and RC.For BDCs, please look at the charts for MAIN, CSWC, ARCC, TSLX, TPVG, OCSL, GAIN, GBDC, SLRC, OBDC, PFLT, TCPC, FSK, PSEC, and MFIC. This series is the easiest place to find charts providing up-to-date comparisons across the sector.
Warning
Book values changed dramatically during Q3 2023. Relying on mortgage REIT trailing book value would be very unwise, especially for agency mortgage REITs. The values for BDCs didn’t change much.No seriously, book value went up in flames. 
Residential Mortgage REIT Charts
Note: The chart for our public articles uses the book value per share from the quarter indicated in the chart. We use the current estimated (proprietary estimates) book value per share to determine our targets and trading decisions. It is available in our service, but those estimates are not included in the charts below. PMT and NYMT are not showing an earnings yield metric as neither REIT provides a quarterly “Core EPS” metric. Presently, a few other REITs also have no consensus estimate. Second Note: Due to the way historical amortized cost and hedging is factored into the earnings metrics, it is possible for two mortgage REITs with similar portfolios to post materially different metrics for earnings. I would be very cautious about putting much emphasis on the consensus analyst estimate (which is used to determine the earnings yield). In particular, throughout late 2022 the earnings metric became less comparable for many REITs.(Click on image to enlarge)
Commercial Mortgage REIT Charts
BDC Charts
Preferred Share and Baby Bond Charts
I changed the coloring a bit. We needed to adjust to include that the first fixed-to-floating shares have transitioned over to floating rates. When a share is already floating, the stripped yield may be different from the “Floating Yield on Price” due to changes in interest rates. For instance, NLY-F already has a floating rate. However, the rate is only reset once per 3 months. The stripped yield is calculated using the upcoming projected dividend payment and the “Floating Yield on Price” is based on where the dividend would be if the rate reset today. In my opinion, for these shares the “Floating Yield on Price” is clearly the more important metric.
Note: Shares that are classified as “Other” are not necessarily the same. Within The REIT Forum, we provide further distinction. For the purpose of these charts, I lumped all of them together as “Other”. Now there are only two left, PMT-A and PMT-B. Those both have the same issue. Management claims the shares will be fixed-rate, even though the prospectus says they should be fixed-to-floating. I as soon as it was announced. . If PMT reverses its decision (or has the decision reversed for them), the shares will switch to fixed-to-floating. Until then, I have them listed as “other”.More By This Author:
