EPS Miss by This 15% Yielding mREIT: New York Mortgage Trust, Inc. (NYMT), Newcastle Investment Corp. (NCT), PennyMac Mortgage Investment Trust (PMT)

Investment Portfolio

The graph above gives a clear picture of the company’s holdings at the end of the fourth quarter. Agency residential mortgage backed securities, which are 61% of the entire holdings, are the largest type of asset NYMT holds. Commercial mortgage backed securities are 13% of the company’s portfolio. They yielded 11.94% during the quarter, which qualify them as the highest yielding assets. Agency Interest Only securities yielded 10.83% during the quarter but experienced the highest prepayments of 21.8%.

Dividends

New York Mortgage is currently yielding 15% based on its quarterly dividend distribution of $0.27 per common share. The company increased its dividend 8% at the beginning of the prior year. This is despite the challenging macroeconomic environment, where most of the pure play REITs were forced to cut their shareholder distributions. PennyMac Mortgage Investment Trust (NYSE:PMT) and Newcastle Investment Corp. (NYSE:NCT) also increased their dividends during the prior year by 3.6% and 10%, respectively.

Valuations

The stock is currently trading at a 10% premium to its book value, according to Reuters. Compared to this, PennyMac Mortgage Investment Trust (NYSE:PMT) and Newcastle Investment Corp. (NYSE:NCT) are trading at 25% and 92% premiums to their respective book values. Therefore, among the mortgage REITs that also invest in distressed securities, New York Mortgage Trust is trading at cheap multiples.

Conclusion

Despite an earnings miss, I am bullish on the stock and recommend investors buy NYMT to benefit from its elevated dividend yield and attractive relative valuations.

The article EPS Miss by This 15% Yielding mREIT originally appeared on Fool.com and is written by Adnan Khan.

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