Rithm Capital (RITM) Reveals Q2 Dividends: What We Think
Rithm Capital Corp. RITM announced that its board has authorized second-quarter 2023 common as well as preferred stock dividends. The second-quarter dividend of 25 cents remained unchanged sequentially. In the first quarter, it paid $120.8 million in common dividends. The second quarter dividend will be paid on Jul 28, 2023, to stockholders of record as of Jul 3, 2023.
For the second quarter, RITM’s Board also declared Series A, Series B, Series C and Series D dividends per share of 46.9 cents, 44.5 cents, 39.8 cents and 43.8 cents, respectively. The dividends will be paid on Jul 17, 2023, to preferred stockholders.
The company continues to maintain a higher-than-industry dividend yield. Based on the closing price of $9.10 per share on Jun 23, the stock has a dividend yield of 11%, which is higher than the industry average of 2.4%.
Rithm Capital Corp. Dividend Yield (TTM)
Rithm Capital Corp. dividend-yield-ttm | Rithm Capital Corp. Quote
Now the question arises if that dividend yield is sustainable and what to expect in the future.
Rithm Capital recently celebrated reaching the milestone of ten years as a publicly traded firm. During this time, its total assets jumped to around $32 billion from almost $3 billion. The company’s total equity also rose to around $7 billion from $1 billion. Starting from 2013, RITM paid dividends of $4.6 billion.
The mortgage market is significantly impacted by the high interest rate environment. Companies in this space are prone to getting affected by the underperformance of mortgage-backed securities. However, Rithm Capital’s diversified business model provides it with relief from the volatility witnessed in the mortgage business.
Also, the high interest rate environment is expected to benefit its mortgage servicing business. With high interest rates affecting refinancing activities, companies like RITM are likely to collect servicing fees for a longer period. This is likely to provide the company with steady cash flows, supporting its dividend payouts.
While the past year witnessed aggressive rate hikes, the intensity has slowed down and there’s a somewhat clear picture of where the Fed will go from here. The lower interest rate volatility will likely benefit Rithm Capital’s mortgage origination business. Also, it expects that the stress in the banking system will drive more assets to the marketplace, creating tremendous opportunities for companies like RITM to boost their portfolio. Thanks to these opportunities, its shareholder value-boosting efforts are expected to remain strong.
Zacks Rank & Key Picks
Rithm Capital currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader finance space are Axos Financial, Inc. AX, Vinci Partners Investments Ltd. VINP and Forge Global Holdings, Inc. FRGE. While Axos Financial sports a Zacks Rank #1 (Strong Buy), Vinci Partners and Forge Global carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Based in Las Vegas, Axos Financial is a consumer and business banking products provider. The Zacks Consensus Estimate for AX’s current year earnings indicates a 16.1% year-over-year increase.
Rio de Janeiro-based Vinci Partners is an asset management platform operator in Brazil. The Zacks Consensus Estimate for VINP’s current year earnings indicates a 12.3% year-over-year increase.
Headquartered in San Francisco, Forge Global offers marketplace infrastructure, data services, as well as technology solutions for participants in the private market. The Zacks Consensus Estimate for FRGE’s 2023 earnings indicates a 27.9% year-over-year improvement.
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