As the company’s name implies, New Residential Investment (NYSE:NRZ) is a real estate investment trust (REIT) that invests in residential mortgage-related assets. The company’s a solid performer in the U.S. residential real estate niche, and NRZ stock holders undoubtedly appreciate New Residential Investment as a generous dividend payer.
While New Residential Investment is structured as a REIT, it’s surprisingly diversified for a company in this category.
Through strategic investments, this company continues to capitalize on significant opportunities in the American residential housing market.
As an investor in NRZ stock, you can sit back and let New Residential Investment do the legwork, even if you’re not super-familiar with the ins and outs of residential real estate. Plus, you’ll get to collect those juicy dividend distributions along the way.
This sounds like a pretty good deal already, so let’s dive into the technical aspects of NRZ stock.
A Closer Look at NRZ Stock
The collapse in NRZ stock after the onset of the novel coronavirus was truly extraordinary. This quantify this, consider that NRZ’s 52-week high is $17.66 and its 52-week low is $2.91.
You won’t be able to get NRZ stock at $3 now because the share price has retraced back to the $8 level. Still, the stock continues to trade at less than half of it’s pre-pandemic price.
NRZ stock seemed perfectly comfortable at the $17 level for several years prior to the coronavirus crisis. This tends to suggest that the stock might get back to that level at some point in the future.
However, this is a waiting game for investors. Patience will be the key to success here as the residential housing market isn’t the same as it was in 2019. But then, you’ll be able to collect dividend distributions on your NRZ stock shares while you wait. So, let’s talk about that now.
Big Payout Hike
REIT stocks are often known for doling out sizable dividend distributions. However, it’s not every day that you hear about a company in this category hiking its yield by a whopping 50%
That’s precisely what New Residential Investment did recently. For the third quarter of this year, the company’s board declared a quarterly dividend of 15 cents per share for its common stock. That’s 50% higher than the dividend offered during the second quarter.
If you want to take advantage of this generous payout, you’ll need to be on record as an NRZ shareholder on Oct. 5. The dividend will be payable on Oct. 30.
New Residential Investment Chairman and CEO Michael Nierenberg certainly earned some bragging rights with this eye-popping yield raise. “We believe the 50% increase this quarter to our common stock dividend reflects our confidence in the potential earnings power of our Company and our commitment to driving shareholder value,” commented Nierenberg.
Strategic Moves
Don’t get the wrong idea here. I wouldn’t want you to buy a stock only for the dividends. Big-time yield is a nice bonus, but owning a stake in a solid company is more important.
So, let’s take a look at some quick facts about New Residential Investment. The company has roughly 4 million customers and an $18.5 billion portfolio. With all of that, I’d say we’re off to a good start.
What put this company ahead of its competition in recent years was several savvy strategic investments. One of them was the acquisition of Shellpoint Partners LLC. This gave New Residential Investment access to Shellpoint’s origination and servicing platform.
Thus, New Residential Investment could take advantage of Shellpoint’s ancillary businesses. These include “title insurance, appraisal management, real estate brokerage, property insurance, property management and other real estate services.”
In addition, New Residential made an investment in Covius Holdings Inc., which provides technology-enabled services to the financial services industry, as well as Guardian Asset Management, a specialist in field services and property management.
The Bottom Line
If you want to own NRZ stock for the generous dividend payments, that’s understandable. Just know that New Residential Investment also provides excellent REIT portfolio diversification through a number of value-added investments.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.