2024-04-09 02:49:48 ET
Summary
- Ready Capital's distributable EPS at $0.26 for its fiscal 2023 fourth quarter is only covering its dividend by 86.7%.
- The mREIT is trading at a material 40% discount to book value of $14.10 per share at the end of the fourth quarter.
- RC's preferred securities are trading at 25% discounts to their liquidation value and come with markedly higher yields than the bonds.
After two dividend cuts, it's easy to be skeptical about Ready Capital's (RC) dividend. The mortgage REIT last declared a quarterly cash dividend of $0.30 per share , left unchanged sequentially and $1.20 annualized, for a 13.6% dividend yield. Fiscal 2023 fourth quarter distributable EPS at $0.26 dipped by 4 cents sequentially and underperformed consensus estimates. Hence, RC can still not cover its dividend even after two dividend cuts. The mREIT's current insufficient dividend coverage at 86.7% could imply a near-term double-digit cut to bring coverage back in line with a prudent range. Critically, RC's inability so far to stabilize its earnings against the headwinds posed by record interest rates makes it hard to recommend the common shares as an investment....
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Ready Capital: Inability To Stabilize Earnings Against Headwinds Makes It A Hold