Earlier this week, when looking at the rapidly fraying dynamics in the all-important Treasury repo market, we explained that as a result of the unprecedented, record shortage of underlying paper, the repo rate for the 10Y has plunged to the lowest on record (and even surpassing it on occasion), the -3.00% “fails” rate, an unstable, broken state characterized by a surge in failures to deliver and receive, when one party fails to deliver a U.S. Treasury to another party by the date previously agreed by the parties. Think of it as a margin call issued on a stock in which the responsible party refuses to comply, and is instead slapped with a token penalty, or “fails” fee.

This is precisely what has been going on with the Treasury market for over a week, ever since last Friday when we first pointed out the precarious collapse in the repo rate on the 10Y – traditionally the best indicator of stress in lending markets.

There was some expectation that after this week’s 10Y and 30Y auctions, that the shortage would moderate, however so far that has not happened, and now the last possible renormalization date is when these auctions settle early next week.

For now, however, things are going from bad to worse, and as Stone McCarthy shows in the following two charts, it is no longer just the 10Y which is in trouble: so is the 30Y, which as of this morning is trading near the fails range, or -2.40% in repo.

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The S&P 500 may yield just 2.2% today – but if you smartly invest in stocks that specialize in profitable niches, you can collect 6-11% yields right now. With double-digit price upside to boot!

Real Estate Investment Trusts (REITs) are some of my favorite vehicles for specialization and yield. REITs must have 75% of their assets in actual real estate and earn 75% of their income from those assets. These dividend machines are legally required to pass along at least 90% of their earnings to shareholders.

This is actually the best time to buy REITs this decade. The Vanguard REIT Index ETF (VNQ) pays 3.9% today – just about its highest since 2009. You’ll bank easy double-digit gains buying high quality REITs when their yields are high.

Of course, we must make sure the dividends are well funded, and preferably growing. Which is why I love REITs that specialize. The more unique the focus, the better. It means less competition, and higher rents.

Last week I shared my favorite office REITs – good plays on a quietly booming job market. Today I’ve got 4 unique niche REITs to share with you. They all have natural competitive moats and rising rents powering their big yields.

Four Specialized REITs With Yields Up To 11%

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