I notice that the EPS is lower than the dividend that NYMT is offering. Is the company in trouble?
They also took out a loan I noticed.
Is this a common situation for the company or is this something that is only occuring now?
Dividends are based on Taxable income, EPS is based on accounting income. These are not the same. Asset sales, mark to market valuation and the like can cause a significant disconnect between the two. I prefer to look at cashflow and yield spread for an MREIT as a more predictable way to evaluate dividend sustainability.
"Mortgage REITs use both leverage and equity to augment earnings and to replenish and grow assets. The difference, or spread, between the interest an mREIT pays to borrow funds (usually as repurchase agreements or "repos") and the interest it earns on the mortgage-backed securities (MBS) it buys with those borrowed funds is around 2%. This in itself is not a big yield. So mREITs leverage, or borrow in multiples of stockholder equity, in order to multiply the spread by the leverage factor. Thus, if the leverage factor is 8 on a 2% net spread, then the effective spread is 16%. 90% of the resulting earnings (plus base asset yield less expenses like management fees and hedging costs) are distributed to shareholders."
Though I am in the minority on this one, I tend to look at net tangible assets as a metric for these finanacial firms. They have no factory equipment, no production floor; their product is money. Their net tangible assets seem to be rising each quarter, so they are making money. Another thing to watch for is net tangible assets per share. Here, NYMT is barely inching upward. This is my early warning "radar" that would tell me if profits are slipping.
Firms can play monkey tricks with earnings, but tangible assets represent the hard, brutal honest truth.
You need to educate more about MREITS. Also, ignor the person
with the silly comments . Ha , he's the guy that got on and criticized my
predicting skills on my " shorts running out of time" board . What a clown!!