Below, Investment U’s Income Expert, Marc Lichtenfeld, takes a look at New York Mortgage Trust’s dividend safety.
Though I haven’t lived in New York in more than 25 years, I still consider myself a New Yorker. It’s where I was born and raised.
I’m a lifelong Yankees fan, and I will argue to my dying breath about the superiority of New York bagels and pizza…
But one thing I don’t love is the dividend safety of New York Mortgage Trust (Nasdaq: NYMT).
The mortgage real estate investment trust (REIT), based on Park Avenue in Manhattan, pays a $0.05 per share quarterly dividend.
It makes money on the difference between how much it pays in interest on the money it borrows and how much it makes in interest on the money it lends or invests.
This profit is called net interest income (NII). New York Mortgage Trust’s NII is growing, which is a good thing.
In 2020, Wall Street expects the company to make $138 million in NII, up from $128 million last year and significantly up from the $79 million it earned in 2018.
But last year, the company paid out $188 million in dividends…
The $128 million it made in NII last year, while up sharply from the prior year, was not enough to cover the dividend.
New York Mortgage Trust Dividend Safety in 2020
This year, New York Mortgage Trust is expected to pay just $52 million in dividends.
This is because it eliminated payouts to shareholders in March and slashed the dividend by 75% in June from what it paid seven months prior.
In February 2019, the last time I covered New York Mortgage Trust, I said I expected a dividend cut because the company paid out more in dividends than it brought in and because it had a history of reducing its dividend.
This year, it should be able to cover its lower payout, but considering its dividend-cutting track record, it’s only a matter of time before it happens again.
New York Mortgage Trust has lowered its dividend payout five times in the past 10 years.
There’s an expression… “When someone shows you who they are, believe them.”
New York Mortgage Trust has shown it is a serial dividend cutter. It will disappoint shareholders again.
The company may raise the dividend if the economy rebounds and NII comes in where analysts expect…
But make no mistake about it. New York Mortgage Trust will cut its dividend when times get tough, just like it did in half of the years over the past decade.
Dividend Safety Rating: F
New York Mortgage Trust’s dividend safety is not high at all in 2020. In this case, the company’s past discretions are a good predictor for the future. During tough times, the dividend will likely be cut. For more information on the latest dividend ratings, sign up for the Wealthy Retirement e-letter below.
About Marc Lichtenfeld
Marc Lichtenfeld is the Chief Income Strategist of Investment U’s publisher, The Oxford Club. He has more than three decades of experience in the market and a dedicated following of more than 500,000 investors.
After getting his start on the trading desk at Carlin Equities, he moved over to Avalon Research Group as a senior analyst. Over the years, Marc’s commentary has appeared in The Wall Street Journal, Barron’s and U.S. News & World Report, among other outlets. Prior to joining The Oxford Club, he was a senior columnist at Jim Cramer’s TheStreet. Today, he is a sought-after media guest who has appeared on CNBC, Fox Business and Yahoo Finance.
Marc shares his financial advice via The Oxford Club’s free daily e-letter called Wealthy Retirement and a monthly, income-focused newsletter called The Oxford Income Letter. He also runs four subscription-based trading services: Technical Pattern Profits, Penny Options Trader, Oxford Bond Advantage and Predictive Profits.
His first book, Get Rich with Dividends: A Proven System for Earning Double-Digit Returns, achieved bestseller status shortly after its release in 2012, and the second edition was named the 2018 Book of the Year by the Institute for Financial Literacy. It has been published in four languages. In early 2018, Marc released his second book, You Don’t Have to Drive an Uber in Retirement: How to Maintain Your Lifestyle without Getting a Job or Cutting Corners, which hit No. 1 on Amazon’s bestseller list. It was named the 2019 Book of the Year by the Institute for Financial Literacy.
