Double-Digit Dividend Yield Dropped

Sometimes you've conscionable sewage to driblet it.

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Get fresh for charts, images, and tables because they are amended than words. The ratings and outlooks we item present travel aft Scott Kennedy’s play updates successful nan REIT Forum. Your continued feedback is greatly appreciated, truthful please leave a remark pinch suggestions.

In this article I'm going to stock a caller trade alert from The REIT Forum. This was sent retired connected Friday, truthful it's still fresh. For transparency, I'm copying nan full article straight below:

Trade Alert: TPVG

• Shares are up 16.77% including dividends since our acquisition successful precocious December.
• That's a awesome return for little than 2 months and it is tied for nan champion among nan BDCs covered by The REIT Forum.
• The rally presented a reasonable opportunity to commencement replenishing my rate position. Shares are presently conscionable complete halfway betwixt nan target "buy under" and "overpriced" levels.

Trades Placed

• Sold 942 shares of TriplePoint Venture Growth (TPVG) astatine $12.2701 per share.

Account

Shares were successful 1 of our tax-advantaged accounts. From nan start, we classified this arsenic a trading position and our extremity was to cod a short-term superior gain. If nan superior summation was slow to occur, we would still cod a bully output while waiting. It turns retired that nan summation was beautiful quick.

We antecedently provided a brief guideline connected utilizing tax-advantaged accounts.

Execution

The waste and acquisition went done Schwab:

Fidelity

Returns for Closed Positions

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It only took 2 months to gain 16.77%. Great deal.

$100k Chart

TPVG and ORCC were nan champion 2 performing BDCs during that clip period:

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Conclusion

In our initial alert, we wrote:

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The waste and acquisition played retired arsenic expected. The likelihood were successful our favor, and we saw a patient betterment successful nan stock price. As it stands today, shares of TPVG astatine $12.27 are conscionable complete halfway betwixt nan targets for “buy under” (at $11.65) and “overpriced” (at $12.80). Given our mini rate allocation, I felt fresh to return immoderate of our gains disconnected nan table.

Our acknowledgment to Scott for erstwhile again uncovering specified a awesome introduction opportunity. This waste and acquisition was profitable precisely because we had specified bully accusation connected what prices would correspond a bargain for opening our position.

End of Trade Alert

Trade alerts are usually beautiful short. We didn't spell complete nan thesis much, but it was built astir price-to-book recovering to a much emblematic level:

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This isn't nan pandemic. We haven't seen discounts that ample often extracurricular nan pandemic. Scott had already predicted and reviewed nan news that was driving prices down, truthful we entered a trading position.

I'm not calling for a disaster. We're not going to a bearish view. But we sewage nan "easy money." For investors who are utilized to getting trim by falling knives, it whitethorn look absurd to telephone that nan "easy money," but we've built our estimation by catching falling knives successful nan mREITs and occasionally BDCs.

That was a awesome introduction and a bully exit.

Seeking Alpha

However, I can't return afloat in installments for this timing. A fewer members of The REIT Forum noticed nan accelerated outperformance of TPVG complete nan week starring up to nan sale. They called it retired successful our chat room and I simply looked done our devices and confirmed that it was a reasonable clip to return profits.

Other Notes

I'll tally done a fewer different notes connected nan sector.

AGNC still trades astatine a worldly premium to tangible book value. I deliberation nan marketplace is focusing excessively overmuch connected short-term halfway EPS. Book worth is mostly much important. The portfolio is system to nutrient precocious Core EPS, but that doesn't mean it produces much wealthiness for shareholders per dollar of book value.

NLY trades beneath projected book value. We saw it get awfully inexpensive a fewer months ago, past it rallied excessively hard. Now it's little remarkable. The dispersed successful value to tangible book worth betwixt NLY and AGNC is beautiful ample now. This is unusual. Many investors whitethorn beryllium frightened by nan knowledge that NLY plans to denote a dividend cut.

On a comparative basis, I deliberation complete nan adjacent six months NLY (from $21.24) will execute amended than AGNC (from 11.25). Not vastly better. But astir apt a spot amended because of nan quality successful starting valuations.

CHMI is astatine $6.69 per share. Laughable. Don't salary a premium for CHMI. Pick blindly and you'll astir apt get a amended deal. I'm surely not 1 to endorse utilizing ETFs for this sector, but I deliberation CHMI will execute worse than nan ETFs. So hey, that's something. I'm going to return nan opportunity to reiterate a bearish position connected CHMI. This is easy competing for nan worst woody successful nan sector. Dump it earlier it corrects.

BXMT astatine $21.90 is trading astatine a beautiful debased price-to-book ratio. This is worthy immoderate attraction arsenic it is very uncommon to spot specified a discount. They had a premium valuation backmost successful August 2022. In only six months they fell from complete $30 to $22. No dividend cut. Dividend sum is looking good. What's nan issue? Office exposure. Office existent property stinks. BXMT has a reasonable loan-to-value ratio connected that existent estate, but they're still preparing for immoderate important losses connected immoderate of nan loans. Some affirmative and antagonistic factors here. I whitethorn spell into much extent successful different article.

Stock Table

We will adjacent retired nan remainder of nan article pinch nan tables and charts we supply for readers to thief them way nan assemblage for some communal shares and preferred shares.

We’re including a speedy array for nan communal shares that will beryllium shown successful our tables:

Let nan images begin!

Residential Mortgage REIT Charts

Note: The floor plan for our nationalist articles uses nan book worth per stock from nan latest net release. Current estimated book worth per stock is utilized successful reaching our targets and trading decisions. It's disposable successful our service, but those estimates are not included successful nan charts below. PMT and NYMT are not showing an net output metric arsenic neither REIT provides a quarterly “Core EPS” metric.

Second Note: Due to nan measurement humanities amortized costs and hedging is factored into nan net metrics, it is imaginable for 2 owe REITs pinch akin portfolios to station materially different metrics for earnings. I would beryllium very cautious astir putting overmuch accent connected nan statement expert estimate (which is utilized to find nan net yield). In particular, passim precocious 2022 nan net metric became little comparable for galore REITs.

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Commercial Mortgage REIT Charts

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BDC Charts

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Preferred Share Charts

I changed nan coloring a bit. We needed to set to see that nan first fixed-to-floating shares person transitioned complete to floating rates. When a stock is already floating, nan stripped output whitethorn beryllium different from nan “Floating Yield connected Price” owed to changes successful liking rates. For instance, NLY-F already has a floating rate. However, nan complaint is only reset erstwhile per 3 months. The stripped output is calculated utilizing nan upcoming projected dividend costs and nan “Floating Yield connected Price” is based connected wherever nan dividend would beryllium if nan complaint reset today. In my opinion, for these shares nan “Floating Yield connected Price” is intelligibly nan much important metric.

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Preferred Share Data

Beyond nan charts, we’re besides providing our readers pinch entree to respective different metrics for nan preferred shares.

After testing retired a bid connected preferred shares, we decided to effort merging it into nan bid connected communal shares. After all, we are still talking astir positions successful owe REITs. We don’t person immoderate desire to screen preferred shares without cumulative dividends, truthful immoderate preferred shares you spot successful our file will person cumulative dividends. You tin verify that by utilizing Quantum Online. We’ve included nan links successful nan array below.

To amended shape nan table, we needed to abbreviate file names arsenic follows:

• Price = Recent Share Price - Shown successful Charts
• BoF = Bond aliases FTF (Fixed-to-Floating)
• S-Yield = Stripped Yield - Shown successful Charts
• Coupon = Initial Fixed-Rate Coupon
• FYoP = Floating Yield connected Price - Shown successful Charts
• NCD = Next Call Date (the soonest shares could beryllium called)
• Note: For each FTF issues, nan floating complaint would commencement connected NCD.
• WCC = Worst Cash to Call (lowest nett rate return imaginable from a call)
• QO Link = Link to Quantum Online Page

Second Batch:

Strategy

Our extremity is to maximize full returns. We execute those astir efficaciously by including “trading” strategies. We regularly waste and acquisition positions successful nan owe REIT communal shares and BDCs because:

1. Prices are inefficient.
2. Long term, stock prices mostly revolve astir book value.
3. Short term, price-to-book ratios tin deviate materially.
4. Book worth isn’t nan only measurement successful analysis, but it's nan cornerstone.

We besides allocate to preferred shares and equity REITs. We promote buy-and-hold investors to see utilizing much preferred shares and equity REITs.

Performance

We comparison our capacity against 4 ETFs that investors mightiness usage for vulnerability to our sectors:

The REIT Forum

The 4 ETFs we usage for comparison are:

When investors deliberation it isn’t imaginable to gain coagulated returns successful preferred shares aliases owe REITs, we politely disagree. The assemblage has plentifulness of opportunities, but investors still request to beryllium wary of nan risks. We can’t simply scope for output and dream for nan best. When it comes to communal shares, we request to beryllium moreover much vigilant to protect our main by regularly watching prices and updating estimates for book worth and value targets.

Ratings: Neutral connected TPVG. Bearish connected CHMI.

You should try our service. Unlike astir services, our work is backed by a existent portfolio. Not a "model" portfolio. Not hypothetical positions. Not 7 different portfolios we made up successful Google Sheets truthful we tin brag astir nan bully one. None of that crap. 

You get real-time alerts connected each trade. See existent and past positions. I'm sick of analysts who person to retroactively prime a "portfolio" aliases get imaginative astir defining "returns". Beat nan scale aliases get out. 

Ask your expert to stock their portfolio worth each period truthful you tin verify their returns. When they object, effort us.