"REM owns shares in mortgage real estate investment trusts, which borrow at short-term rates and invest in mortgage-backed securities or loans. The income REM distributes comes from dividends paid by those mREITs, which derive from the net interest spread those companies earn on their portfolios."
"Annaly Capital Management is REM's largest position at 22% of the fund. Annaly paid a $0.70 quarterly dividend throughout 2025 and covered it with full-year earnings available for distribution of $2.92 per share against an annual dividend of $2.80 per share."
"The portfolio splits into two camps. Agency mREITs like Annaly and AGNC invest in securities backed by Fannie Mae, Freddie Mac, or Ginnie Mae, carrying no credit risk but significant interest rate risk."
iShares Mortgage Real Estate ETF (REM) has a 9.22% dividend yield and $545 million in net assets. It invests in mortgage real estate investment trusts (mREITs) that earn income from the spread between mortgage asset earnings and borrowing costs. The fund holds 35 positions, primarily in financials, with Annaly Capital Management and AGNC Investment making up 36% of the portfolio. REM includes both agency and non-agency mREITs, providing diversification. Annaly, the largest holding, has a thin coverage ratio but has shown growth in net interest spread and capital raised.
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