Agency mortgage REITs offer high yields with low credit risk, NLY raises dividends amid interest rate normalization.

Agency mortgage REITs (mREITs) that invest in agency mortgage-backed securities (MBS) guaranteed by Fannie Mae or Freddie Mac provide a unique investment opportunity with minimal credit risk. These mREITs, including NLY, benefit from changes in interest rates rather than credit risk exposure. As the interest rate curve normalizes, NLY has recently increased its dividend and currently yields over 13%, with expectations for further dividend hikes in the coming years. This makes agency mREITs attractive for investors seeking sustainable high income with relatively low credit risk exposure.