NRZ - New Residential Investment And The Macro Credit Cycle

• With a 9.1% dividend yield, New Residential Investment Corp. appears attractive to many income-oriented investors, especially under a low-rate environment.
• However, you need to understand the macro credit cycles before investing in NRZ, or mREITs in general.
• NRZ makes money on the spread between the long-term and short-term rates and this spread is narrowing.
• With Fed’s hawkish tapering and anticipated interest rate raises, the narrowing is expected to exacerbate and further pressure NRZ’s profitability.
• Although it's a better positioned mREIT with its Caliber acquisition and lower-than-average leverage.

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