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Newcastle Investment Corp. Message Board

  • aghfella aghfella Jun 4, 2013 12:18 PM Flag

    Reits

    I know we are all happy this morning, but I have a nagging thought that just will not go away. Within the next 12-18 months NCT will be a Sr. citizens company, right now NRZ is in reality a finance company. Both are reits and this is good because of the 90% dividends rule. But as everyone can see from last week the whole reit market took a big hit ( mostly computer trading, but still a big hit). Everyone here is familiar with "baskets", so, at least in the near future we are still in those baskets and our stock price is going to reflect this every time something negative comes out of the Feds about tapering QE 2-3, plus the shorts are going to keep hammering negative articles about the reits. Hopefully FIG will have the PR dept come out with some PR's stressing what these two companies really do, I know this sounds like having our cake and eating it also, but it is what it is. Anyone have any thoughts?

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    • aghfella, I share your concern, QE tapering may hurt share prices. But I like the business models for NRZ and NCT and plan to buy on the dips and continue collecting shares. I only have a small position in both (1,300 shares) but am reinvesting my dividends and selling covered calls and then using the proceeds to buy more shares. With an 8-9% dividend, I believe I can build this into something substantial over the long term.

      Sentiment: Buy

    • REITs will have downward pressure as rates rise, but REITs that can grow without too much dilution will do okay. Maybe treading water, but the dividends make it pay to sit there. I have been in REITs for the last 12 years and it has paid off. The past may not predict the future, but maybe.

      Anyway, contrary to what is being bantered about, I do think we will be fine and stocks in general will also be fine. Its not only homeowners upside down who benefited from the QE's (and I am not so sure it's gonna be tapered back as soon as everyone thinks). Just about all corporations with any kind of pulse, I would imagine, has reengineered their balance sheet by now to have taken advantage of all this cheap money. This means that even with low demand they can stay healthy and ready to explode when demand comes back.

 
NCT
4.68-0.020(-0.43%)Dec 24 2:48 PMEST

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