Random Thoughts, Especially on mREITSs

I think it is well worthwhile to set up a (free) account at seekingalpha.com. They have in-depth articles about sectors and securities that are deeper and more inclusive than most other sites. Within my favorite play, seeking dividends, there is a category I have discussed in previous posts, the mREITSs (Mortgage Real Estate Investment Trusts). While I also like some normal REITs, the mREITSs are a different animal, to put it mildly. With more risk and more reward, they are somewhat like regular REITs on steroids. As the "Investment Notes" primer I referred to previously mentions, I don't like anything that is a recent IPO. But mREITSs have so many additional risks already that having been a recent IPO is just one more thing and a negative I can overlook while carefully monitoring share price retention and enjoying the outsized dividend. In this vein, today I started reading a few positive briefs about EARN.

One I have watched and invested in much longer is WMC. Since I wanted the big special dividend they announced, I found it interesting that the announcements all said they would send a form to allow you to opt for your payment in cash or more shares. Having never received such a form, I was concerned, but these fears were alleviated when I read the comments section of a seekingalpha.com article found via a google search about it where some investors were saying, help, where is my letter, and the response by other users was that WMC will go with whatever you selected for your dividend reinvestment preference on your trading platform. This begged the (probably forever unanswered question) of why WMC bothered to say they would send a form for you to select how you wanted your dividend if they were just going to go by what you put down for your preferences in your regular trading platform.

The day after the "pay date" for the WMC special dividend, it came through to all three of my accounts where I had tried to get it; my Traditional IRA, Roth IRA, and standard Sharebuilder account. Having requested it to be paid in all cash but knowing that they had said in their announcements on the special dividend that they would pay all cash to those who requested this form up to the extent they could, and in the (very likely, in my estimation) event that more people wanted all cash than they could afford, then at least 34% would be cash and the rest paid in more shares. As it turns out, 41% was paid in cash and the rest was received in additional WMC shares.

Also I have seen numerous accounts now that when a security pays a dividend, the exchanges "reach in" and lower the share price by the amount of the dividend. This is very disconcerting, seems improper, and a violation of free market principles. Even more arbitrary, I've seen it written that in some cases they do not make this manipulation and instead just leave the dividend-paying stock alone. I certainly agree with David Van Knapp, who is apparently one of the more acclaimed and followed authors at seekingalpha.com, that this practice (artificial manipulation of share prices by the exchanges) is unnecessary, wrong, and should stop. But since it probably won't stop, we dividend seekers will just suffer through it.