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MFA Mortgage (NYSE: MFA) had a good trading session yesterday. A cool thing, since it's well off its recent highs. The stock closed yesterday at $7.01, having risen over 11%. What was the catalyst? Well, some bullish commentary from an analyst certainly helped out, but, for my money, the bigger news was the increase in the dividend. MFA announced a Q1 payout of $0.18 per share, which is 24% higher than the previous quarter's dividend.
This is exactly what I want to see. I'm figuring that, over time, MFA will be able to make more increases to its dividend as it benefits from further rate cuts by the Fed. Granted, MFA did choose to reduce its leverage profile, as I mentioned in a recent post. Nevertheless, this dividend increase, in my opinion, shows that this particular mREIT is a cut above many and worth holding for now. It's going to be a volatile ride, and I expect some profit-taking based on yesterday's action, especially considering the fact that the volume of shares traded wasn't overly high.
Two of my other mREIT investments, Newcastle Investment (NYSE: NCT) and CapitalSource (NYSE: CSE), also fared well in yesterday's session. Another mortgage entity I'm keeping my eye on, Annaly Mortgage (NYSE: NLY), had a good day as well. Let's hope the financials are finally stabling -- granted, many financials, such as MFA, are way off their 52-week highs, but I have to say, I liked the way the second quarter started, and I certainly enjoyed MFA's dividend change.
Disclosure: I own shares of MFA, MFA preferred, CapitalSource, and Newcastle Investment; positions can change at any time.
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Reader Comments (Page 1 of 1)
4-02-2008 @ 11:43AM
Michael Schneider said...
Annally recently raised its dividend by a whopping 40%.
I hope things are stabilizing in the financial sector and if they do there will be a lot of money made in some of theses REITs as well as the banks etc. Annally is down this year after what happened to Thornburg-- another REIT thought to have good management. The payout from these REITs helps reduce the risks-- at least you get something back and if you combine the payout and the value of any tax loss if the worst happens the downside risk is really less than the upside potential-- the concern though is whether and when things will stabilize. Housing still seems very troubled to me although there have been a few glimmers of hope (Charles Biederman was on CNBC yesterday, helping the rally along by saying that there are buyers for foreclosures so the worst isn't happening).