MORL's April Monthly Dividend Brings It's Annualized Rate To 27.4%

Mar. 28, 2016 2:54 PM ET

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Summary

My projection for the April 2016 monthly MORL dividend is $0.6918.

I remain bullish on MORL despite, and in some respects because, of the recent collapse in mREIT prices.

The new normal will be lower interest rates for much longer. Negative interest rates around the world support this.

The Federal Reserve is not keeping interest rates abnormally low, other factors are in play.

I remain bullish on the UBS ETRACS Monthly Pay 2X Leveraged Mortgage REIT ETN (NYSEARCA:MORL) despite, and in some respects because, of the recent collapse in mREIT prices. My view is based primarily on my outlook for interest rates and MORL's enormous yield. The mREITs that comprise MORL's portfolio have been under selling pressure since the 2013 "taper tantrum." The bearish argument against the mREITs was then and is now that higher interest rates are imminent. I disagree and think that interest rates will remain relatively low for longer than many market participants believe.

My projection for the April 2016 dividend for MORL and its' new, effectively identical, sister the UBS ETRACS Monthly Pay 2X Leveraged Mortgage REIT ETN Series B (NYSEARCA:MRRL) is $0.6918. Most of the MORL components pay dividends quarterly. Only two of the 25 MORL components: American Capital Agency Corp. (NASDAQ:AGNC) and ARMOUR Residential REIT Inc. (NYSE:ARR) pay dividends monthly. The January, April, October and July "big month" MORL dividends are much larger than the "small month" dividends paid in the other months since most of the portfolio components pay quarterly, typically with ex-dates in the last month of the quarter and payment dates in the first month of the next quarter.