Surging bond yields, stubborn inflation pressures and a cooler housing market are putting mortgage related stocks under the spotlight right now. For investors, that mix can create sharp winners and quiet laggards as funding costs, asset values and dividends are all tested at once. This article walks through three stocks exposed to these cross currents, explaining how each is positioned so you can decide where they may fit, or may not fit, in your portfolio.

The three stocks below are a sample from a wider set of listed mortgage REITs and mortgage backed securities investors, with the full screen surfacing 24 more companies that also clear the same basic financial health, market cap and dividend or risk filters. To see that full universe and quickly identify which ideas fit your risk and income goals, head straight into the Listed Mortgage REITs and Mortgage-Backed Securities (MBS) Investors screener.

Cherry Hill Mortgage Investment (CHMI)

Cherry Hill Mortgage Investment is a US residential real estate finance REIT that acquires, invests in and manages residential mortgage assets, including mortgage backed securities and servicing related assets. As a REIT, it aims to distribute at least 90% of its taxable income to shareholders instead of paying federal corporate income tax. The stock is relatively small in this sector, with a market cap of about $108 million.

Investors watching mortgage REITs in a higher rate environment may find Cherry Hill Mortgage Investment difficult to ignore. The company sits directly in the flow of mortgage and MBS spread moves, has recently returned to profitability with earnings of $3.74 million in Q2 2026 and offers a double digit dividend yield, while its P/E remains below the broader US market. However, revenue is expected to decline sharply and the dividend is not well covered by earnings, with the structure funded by higher risk external borrowing. With a pending all stock and cash merger with TPG Mortgage Investment Trust that still requires multiple approvals, there is more to assess here than the headline yield and small market cap suggest.

Cherry Hill Mortgage Investment sits at the crossroads of double digit yield, a smaller market cap, and a complex merger story, which can make surface level impressions misleading. Get the full picture in the 3 key rewards and 2 important warning signs (1 is major!)

Build your own high-yield mortgage REIT shortlist

Cherry Hill Mortgage Investment and the other two stocks in this list all came out of a single Simply Wall St screen, but your best ideas will often come from filters tailored to you. Use our flexible Screener to combine yield, valuation, risk and balance sheet metrics, or start with any of our curated Investing Ideas.

Dynex Capital (DX)

Dynex Capital is a mortgage REIT that invests in residential and commercial mortgage backed securities in the US, mainly in agency MBS backed by government related entities such as Fannie Mae and Freddie Mac, alongside some non agency MBS. The company generates all of its roughly $502 million of revenue from its mortgage REIT activities and is entirely focused on the US market. Dynex Capital currently has a market cap of about $3.2b.

Dynex Capital is closely tied to the current move higher in bond yields and mortgage rates, with its portfolio of agency MBS designed to benefit when spreads widen and volatility creates mispricing. Recent results included very high profit margins and a double digit earnings growth outlook, alongside a double digit dividend yield that reflects both income appeal and concern about how well that payout is backed by cash flow. Funding rests fully on external borrowing and recent shareholder dilution shows the cost of growing the balance sheet quickly. For investors willing to accept that funding and dividend risk, there is more to consider in how Dynex Capital is positioned if mortgage spreads stay wide and policy support for housing credit remains in focus.

Dynex Capital’s mix of wide mortgage spreads, high margins and a double digit yield could be masking what really matters for future income. See how the funding and payout story lines up in the 4 key rewards and 3 important warning signs (2 are major!)

Orchid Island Capital (ORC)

Orchid Island Capital is a US mortgage REIT that focuses solely on residential mortgage backed securities, mainly Agency RMBS backed by single family home loans. It earns all of its roughly $270 million of revenue from mortgage REIT activity in the United States and currently has a market cap of about $1.3b.

Orchid Island Capital sits at the intersection of rising mortgage rates, sticky inflation and wider mortgage spreads, which is exactly what many RMBS focused investors are looking at today. The stock combines a very low P/E, very high recent earnings growth and an 18.1% yield with heavy use of external funding, weak cash flow coverage and ongoing share dilution. Recent updates on its higher coupon RMBS focus, tight net interest spreads and increased hedge coverage show an active response to the latest Fed and bond market moves. For investors who want direct exposure to how mortgage spreads and inflation play out, the central question is whether that rich yield and strong recent profitability adequately compensate for the funding and dilution risks now in view.

Orchid Island Capital’s rich 18.1% yield and low P/E might be masking what really drives future payouts. See how the funding, hedging and dilution story fits together in the analysis report for Orchid Island Capital

Seeking Fresh Alternatives Before Others Do

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.