High-Dividend Stocks Without the Stock Market: Mortgage REITs for Long-Term Investments
6 minute read
December 4, 2023


The economic landscape of the 2020s has been peppered with a kind of volatility beyond anyone’s predictions. As a result, those elusive ‘unicorns,’ (i.e., higher-dividend stocks that offer stability to nervous investors) never seem to materialize. 

Is it any wonder then, that those who are looking to diversify their portfolio are seeking alternative long-term investments to the stock market?

Seeking stability outside the stock market

Mortgage real estate investment trusts (mREITs) are an enticing option, offering the possibility of high dividends coupled with long-term growth potential. 

They represent a departure from the frenetic pace of stock exchanges while providing a more predictable and often more substantial income stream.

The enduring appeal of mREITs for long-term growth

Mortgage REITs have long been valued by those seeking to balance their portfolio for two key reasons: 

  1. These investments have a reputation for weathering economic fluctuations while still providing attractive returns
  2. Their ability to distribute most of their taxable income as dividends makes them a perennial favorite for investors focused on long-term wealth accumulation

Let’s Start Investing

The basics of mortgage REITs

The idea of finding a stable, high-dividend stock still captures the imagination of investors everywhere. 

Yes, stocks offering high dividends are out there. However, investors must proceed with caution because these stocks are all subject to the whims of the market and company performance.

The volatility of your typical high-dividend stock

For example, a company’s high-dividend yield could be the result of a substantial decline in its stock price. This might hint at potential financial distress that may jeopardize future dividend disbursements. 

Moreover, these stocks are sensitive to interest rate hikes, which can diminish their allure as rates climb. 

It’s also possible for companies to decrease or eliminate their dividends. This scenario played out in 2020 when dozens of the S&P 500’s dividend distributors either cut back or halted their dividends. 

Mortgage REITs, on the other hand, offer returns based on interest from mortgage-backed securities. 

This distinct approach reduces the reliance on the successes and failures of individual corporations, mitigating many of the inherent risks of stock market investments.

The role of mortgage REITs in generating high-yield returns

Mortgage REITs generate income by investing in property mortgages and mortgage-backed securities. They take advantage of the interest payments on these debt instruments, which often result in higher yields for investors. 

This structure is designed to deliver robust dividends, making them a compelling choice for those in pursuit of high-yield investments.

Understanding the long-term benefits of mortgage REIT investments

Mortgage REITs are particularly well-suited for the long-term investor. 

They provide a steady income through dividends, which are typically higher than average stock dividends. 

This regular income stream is often seen as a reliable component of a diversified investment portfolio designed to build wealth over time.

How mortgage REITs serve as a hedge against market volatility

Mortgage REITs’ focus on real estate debt rather than market speculation allows them to maintain a degree of insulation against stock market turbulence. 

Their performance is more closely tied to the real estate market’s fundamentals and interest rates rather than to corporate profits, offering a safeguard during periods of high market volatility.

Yield analysis: Mortgage REITs vs. stock dividends

When it comes to dividend yields, mortgage REITs often outperform traditional high-dividend stocks. 

While company earnings and payout ratios influence stock dividends, mortgage REITs are structured to return most of their earnings to shareholders, often resulting in higher yield percentages.

The impact of economic cycles on Mortgage REIT dividends

At the close of 2022, mortgage REITs (mREITs) boasted a significantly high dividend yield of 13.43%, outpacing the yield of other options (for example, equity REITs, which stood at 3.97%).

By the third quarter of 2022, mREITs had distributed dividends totaling $1.9 billion—no wonder they are a common feature in portfolios designed for income generation. 

However, mREITs did feel the sting of the 2022 market slump, recording an end-of-year return of -26.6% amidst pressures from unrealized investment losses and derivatives valued at market rates. 

Nevertheless, with the stabilization of interest rates approaching the year’s end, mREITs saw an uptick in earnings.

Mortgage REITs and retirement portfolios

For retirees and those nearing retirement, stability and consistent income are key. Mortgage REITs, with their higher-than-average dividend yields, can provide a stream of income that can be used for living expenses or reinvested. 

Including mREITs in a retirement portfolio can offer regular income and potential growth from the underlying real estate investments.

The compounding advantage of reinvesting mortgage REIT dividends

Reinvesting dividends from mortgage REITs can exponentially increase the value of an investment over time, harnessing the power of compounding. 

This strategy can be particularly effective within retirement accounts, where the tax-deferred status allows dividends to grow and compound without immediate tax implications.

Marquee Funding Group’s approach to mortgage REITs

Marquee Funding Group’s private mortgage REITs are designed to cater to investors seeking alternatives to public market volatility. 

Marquee’s offerings focus on high-quality real estate debt, providing a stable investment that targets consistent returns and capital preservation tailored to support long-term investment goals.

Tailored investment solutions for high-yield, long-term growth

Marquee’s approach is to create investment solutions that align with investor objectives, offering a level of personalization not typically found in public REITs

With an emphasis on high-yield, long-term growth, Marquee’s private mortgage REITs are structured to deliver competitive returns tailored to the needs of each investor.

Final thoughts: Are mortgage REITs the right long-term high-dividend investment for you?

Mortgage REITs stand out as a compelling choice for investors seeking high dividend payouts without the stock market’s volatility. 

They offer an avenue for long-term investment that combines growth potential with income generation, suitable for investors with various profiles, including those planning for retirement.

How to get involved with Marquee Funding Group’s Private mREITs

If the prospect of stable, high-yield dividends appeals to your investment sensibility, Marquee Funding Group invites you to consider our Mortgage REIT options. 

Discover how our tailored private mortgage REIT solutions can enhance your portfolio’s performance and support your long-term financial aspirations. 

Start investing with Marquee Funding Group today to learn more and take the next step toward high-yield returns.

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