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Newcastle Investment Corp. Message Board

  • secondstagelensman secondstagelensman Jan 29, 2013 11:59 AM Flag

    What yield percent will investors be satisifed with?

    In the past, NCT's yield has hovered around 10%.
    But if investors are generally convinced that the dividend is reasonably safe, the yield would likely decline, sending the stock's price higher.
    So on a $1.04 scheduled total payout, the price would rise further, probably into the low teens.
    As a result, if I'm right, there is still solid capital-gain potential remaining in this investment, in addition to a damn good yield.

    Sentiment: Buy

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    • As for trying to estimate the expected yield, I would look at HLSS which IMO has the closest model to NRZ. Currently, HLSS is at 6 1/2 % yield. But a CC is scheduled in about a week for HLSS and since they just digested a big secondary, we will find out if the yield changes from the current $1.44. If so, it will be interesting to see how the stock price adjusts.

      • 1 Reply to jerseyvinny3
      • Thanks for the input. I am going to keep it at 5% each for NCT, RSO and NRF. I really like these 3 stocks but no need to take toooooo much risk. The hard part is I was lucky enough to trust my gut earlier in life and was correct allowing for a very early retirement. Don't need to score again but it is so much fun when it works out. But, 5% is it. Nothing else is more than 2% and 72% is in 14 equity option income funds so as long as there is a market I should have a portfolio. GLTA!

    • I too agree that a lower yield higher price is going to occur. In addition, I believe dividend increases will continue. Confidence should increase the multiple so while lower yield and multiple expansion are similiar they are not exactly the same psychology. Nct has room to move up in the short term above 12 (by year end). Over the next 5 years 20.00 is not out of line. They have no trouble raising equity capital and seem to know how to put it to work to make money. Insiders seem to like the stock. I keep buing more but am reluctant to go above 5% of portfolio which is hard to do in light of the reasons given above.GLTA!

    • I guess similar REITs provide returns between 6-9% Not sure what the mean or median would be, but 8% seams generous. That would price it at $13 per share. However, the forward PE is about 7 or half of what it should be, that would price it around $20 per share. Of course all of this changes when they spinoff MRZ.

      Sentiment: Strong Buy

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