- 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.
For further details see:
New Residential Investment And The Macro Credit Cycle