From their 8K, 2/11/2013
For the fourth quarter of 2012, Newcastle expects core earnings to be in the range of $0.18 – $0.20 per diluted share, cash available for distribution (“CAD”) to be approximately $34 – $36 million and net income under U.S. generally accepted accounting principles (“GAAP”) to be $0.31 – $0.33 per diluted share.
The decrease in core earnings and CAD relative to the third quarter of 2012 is principally attributable to (1) Newcastle’s average uninvested cash balance during the fourth quarter, which was largely a result of its decision to preserve cash for a potential co-investment in excess mortgage servicing rights (“Excess MSRs”) from Residential Capital, LLC (“ResCap”), and (2) higher general and administrative expenses associated with certain transactions, such as ResCap and the planned spin-off of New Residential Investment Corp. Although not reflected in the calculation of core earnings, the impact of uninvested cash during the fourth quarter was partially offset by Newcastle’s receipt of a breakup fee related to the termination of the ResCap agreements.
It is clear that you are underestimating the dividend. If you read the presentation Edens presented to financial analysts (on the website) where he states that he expects the spin off will create two companies, one of which will have a 50 cent dividend, while the other pays 56 cents. Since present owners of the stock will receive one share of the new company for each share they own, the total dividend as of the spinnoff date (March 13) would be 1.06.
I think he obviously thinks they are willing to raise the dividend 28 cents a year. The next dividend will be 27 cents a share.
The presentation stated their earnings would put the divvy at between .18-.20. Noted on the board that they would use the ResCap breakup fee to augment the divvy. My guess is no change from previous (.22). No divvy increases until they put the huge pile of cash to work., hopefully already in the pipeline.