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Globe and Mail
03-07-2025
- Business
- Globe and Mail
Is Orchid Stock Worth Buying for Its Lucrative 20.3% Dividend Yield?
Orchid Island Capital, Inc. ORC has a record of paying out regular dividends, currently yielding a staggering 20.3% compared with the industry average of 12.4%. The company has increased its dividend three times over the past five years. This specialty finance mortgage real estate (mREIT) company, which invests in residential mortgage-backed securities (RMBS) on a leveraged basis, offers favorable long-term stockholder returns and a substantial dividend yield. Income-seeking investors have a large appetite for REIT stocks, as U.S. law requires REITs to distribute 90% of their annual taxable income in the form of dividends. ORC peers AGNC Investment AGNC and Arbor Realty Trust ABR also pay dividends regularly. AGNC Investment has a dividend yield of 15.8% and Arbor Realty Trust has a dividend yield of 15.5%. Coming back to Orchid, it has a strong liquidity position. As of March 31, 2025, the company had $446.5 million in cash and cash equivalents, and unpledged securities. It has no debt as of the same date. ORC also has a share repurchase plan in place. In 2022, the board of directors approved an increase in the authorization up to an additional 4.3 million shares, bringing the remaining authorization under the stock repurchase program to 6.2 million shares. As of April 25, 2025, the company had the authorization of 2.7 million shares available under the program. Given such a staggering dividend yield, it may entice many investors to buy the stock. Is now the right time to invest? To answer this, it is essential to delve into the details and evaluate various factors at play. ORC to Gain From Decline in Mortgage Rates Though the Federal Reserve has lowered the interest rates by 100 basis points in 2024, it has kept rates steady since then due to macroeconomic uncertainty. Despite this, mortgage rates have slightly declined. Per a Freddie Mac report, the average rate on a 30-year fixed-rate mortgage was 6.77% as of June 26, 2025, down from 6.81% in the previous week. Further, based on the incoming economic data, market participants are predicting at least two rate cuts by year-end. In its June Housing Forecast, Fannie Mae projected mortgage rates to reach 6.6% by the end of the third quarter of 2025 and 6.5% by the year's end. With rates trending lower and balanced supply/affordability playing out in the mortgage market, loan demand is expected to improve. With rising purchase originations and refinancing activities, Orchid will likely witness book value improvement in the coming period as spreads in the Agency market tighten, driving asset prices. This should also boost the company's net interest spread, improving the portfolio's overall yield. This is expected to support ORC's financials in the upcoming period. Orchid & Agency RMBS ORC has maintained its focus on agency RMBS, an investment strategy that has positioned it as one of the strong players in this specialized market segment. Orchid's investment strategy focuses on two categories of Agency RMBS, traditional pass-through Agency RMBS, such as mortgage pass-through certificates and collateralized mortgage obligations issued by Fannie Mae, Freddie Mac, or Ginnie Mae, and structured Agency RMBS. Interest rates were generally range-bound, and volatility was low for most of the first quarter, making it an ideal condition for a levered investment in Agency RMBS for ORC. Accordingly, the company generated attractive returns for the period. Given this, Orchid generated a positive total return of 2.6% in the first quarter of 2025, driven by the company's compelling monthly dividend. Agency RMBS will continue to offer a compelling return opportunity for ORC. Although the market is extremely competitive, the company's focus on agency RMBS puts it in a position to possibly profit from favorable trends. However, execution will be crucial to achieving these advantages. ORC Price Performance, Estimates & Valuation Analysis Orchid shares have gained 12.5% in the past three months compared with the industry's rally of 10%. Meanwhile, AGNC Investment and Arbor Realty have risen 9.2% and 1.5%, respectively, over the past three months. The Zacks Consensus Estimate for ORC's 2025 and 2026 earnings implies year-over-year jumps of 394.4% and 24.5%, respectively. The estimates for 2025 and 2026 have been unchanged over the past 30 days. Earnings Estimates Image Source: Zacks Investment Research From a valuation standpoint, Orchid appears expensive relative to the industry. The company is currently trading at a premium with a forward 12-month price-to-sales (P/S) TTM multiple of 2.47X, higher than the industry average of 2.35X. Its peer AGNC Investment and Arbor Realty Trust have forward 12-month P/S ratios of 2.75X and 1.70X, respectively. Price-to-Sales TTM How to Approach Orchid's Stock Now? ORC's attractive dividend yield, strong liquidity position and strategic focus on agency-backed RMBS make it well-positioned to capitalize on long-term growth, especially as mortgage rates gradually decline. These factors can drive book value growth, improved net interest spreads and solid earnings in the coming quarters. However, uncertainties around interest rate path and execution risks, along with premium valuation, suggest that it is prudent to remain cautious at the moment. Orchid currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. Today, See These 5 Potential Home Runs >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AGNC Investment Corp. (AGNC): Free Stock Analysis Report Arbor Realty Trust (ABR): Free Stock Analysis Report Orchid Island Capital, Inc. (ORC): Free Stock Analysis Report
Yahoo
20-06-2025
- Business
- Yahoo
How Much Would It Take To Earn $100 A Month From Arbor Realty Stock
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Arbor Realty Trust Inc. (NYSE:ABR) invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the U.S. The 52-week range of Arbor Realty stock price was $8.43 to $15.94. Arbor Realty's dividend yield is 11.60%. It paid $1.20 per share in dividends during the last 12 months. Don't Miss: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. You can On May 2, the company announced its Q1 2025 earnings, posting adjusted EPS of $0.31, beating the consensus estimate of $0.27, while revenues of $75.44 million came in below the consensus of $77.17 million, as reported by Benzinga. If you want to make $100 per month — $1,200 annually — from Arbor Realty dividends, your investment value needs to be approximately $10,345, which is around 999 shares at $10.36 each. Understanding the dividend yield calculations: When making an estimate, you need two key variables — the desired annual income ($1,200) and the dividend yield (11.60% in this case). So, $1,200 / 0.116 = $10,345 to generate an income of $100 per month. You can calculate the dividend yield by dividing the annual dividend payments by the current price of the stock. Trending: Invest Where It Hurts — And Help Millions Heal: The dividend yield can change over time. This is the outcome of fluctuating stock prices and dividend payments on a rolling basis. For instance, assume a stock that pays $2 as an annual dividend is priced at $50. Its dividend yield would be $2/$50 = 4%. If the stock price rises to $60, the dividend yield drops to 3.33% ($2/$60). A drop in stock price to $40 will have an inverse effect and increase the dividend yield to 5% ($2/$40). In summary, income-focused investors may find Arbor Realty stock an attractive option for making a steady income of $100 per month by owning 999 shares of stock. Check out this article by Benzinga for three stocks offering high dividend yields. Read Next: , which provides access to a pool of short-term loans backed by residential real estate with just a $100 minimum. Maximize saving for your retirement and cut down on taxes: . Image: Shutterstock This article How Much Would It Take To Earn $100 A Month From Arbor Realty Stock originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
Yahoo
19-06-2025
- Business
- Yahoo
Annaly Stock Gains 8% in 6 Months: Is It Worth Holding for Now?
Over the past six months, Annaly Capital Management NLY shares have gained 8% compared with the industry's rise of 1.7%. Price Performance Image Source: Zacks Investment Research NLY has also outperformed its peers AGNC Investment AGNC and Arbor Realty Trust ABR over the same time frame. AGNC Investment has grown 5.7%, while Arbor Realty has fallen 20.9%. Annaly is a mortgage real estate investment trust that primarily owns, manages and finances a portfolio of real estate-related investment securities. The company's diversified approach to capital allocation has been crucial in its ability to navigate market fluctuations and maintain a competitive edge. Let us delve deeper and analyze other factors to find out the NLY stock's investment worthiness. The Federal Reserve has lowered the interest rates by 100 basis points in 2024 and has kept rates steady since then. As such, mortgage rates are witnessing a slight decline. Per a Freddie Mac report, the average rate on a 30-year fixed-rate mortgage was 6.84% as of June 12, 2025, down from 6.95% in the same week a year ago. Housing affordability challenges are expected to decline with lower mortgage rates. With rates trending lower and balanced supply/affordability playing out in the mortgage market, loan demand is witnessing an increase. With improving purchase originations and refinancing activities, NLY will likely witness book value improvement in the coming period as spreads in the Agency market tighten, driving asset prices. This should also boost net interest spread, improving the portfolio's overall yield. This is expected to support Annaly's financials in the upcoming period. Annaly has a record of paying monthly dividends, currently yielding a staggering 14.7% compared with the industry's 11.7%. It currently sits at a payout ratio of 101%. The company recently hiked its dividend for the first time in the past five years. On March 13, 2025, Annaly announced a cash dividend of 70 cents per share for the first quarter of 2025, marking a 7.7% hike from the prior payout. This move reflects confidence in NLY's cash flow and growth prospects. Annaly peer AGNC Investment and Arbor Realty Trust also pay out quarterly dividends. AGNC Investment has a dividend yield of 15.6%, whereas Arbor Realty Trust has a dividend yield of 11.7%. Coming back to Annaly, it is focused on improving its liquidity and reducing leverage to support capital distribution activities. Till the end of the first quarter of 2025, the company had $7.5 billion of total assets available for financing, including cash and unencumbered Agency MBS of $4.7 billion, which can readily provide liquidity in times of adverse market conditions. This provides a substantial competitive edge in today's market. On Dec. 31, 2024, the company's board of directors authorized a common share repurchase program, which will expire on Dec. 31, 2029. Under the program, the company may repurchase up to $1.5 billion of its outstanding shares of common stock. Though the company has not repurchased shares under this plan since it was announced, its solid liquidity position will support its capital distribution in the future. One of Annaly's main advantages is its well-diversified capital allocation approach. The company's investment portfolio includes residential credit, mortgage servicing rights (MSR), and agency mortgage-backed securities (MBS). This comprehensive strategy aims to lower volatility and sensitivity to interest rate changes while simultaneously generating appealing risk-adjusted returns. As of March 31, 2025, its investment portfolio aggregated $84.9 billion. Annaly's diversified investment strategy will likely be a key contributor to long-term growth and stability. By diversifying its investments across the mortgage market, the company is better positioned to capitalize on opportunities as they occur in multiple areas while limiting the risks associated with overexposure to any particular location. In sync with this, in 2022, NLY sold its Middle Market Lending portfolio and exited its commercial real estate business. Through these, the company was able to enhance capabilities across its core housing finance strategy and allocate capital to residential credit businesses, the MSR platform and Agency MBS. Annaly is also focusing on improving its capabilities by acquiring newly originated MSRs from its partner network, which will continue to provide a strong advantage in expanding its MSR business. The inclusion of MSRs in the portfolio is also notable because these assets tend to increase in value as interest rates rise, offsetting reductions in the value of agency MBS. This hedging impact may produce more consistent returns over time and enable Annaly to perform well in a scenario of interest rate change. From a valuation standpoint, NLY appears expensive relative to the industry. The company is currently trading at a premium with a forward 12-month price-to-tangible book (P/TB) TTM multiple of 0.98X, higher than the industry average of 0.96X. Price-to-Tangible Book TTM Image Source: Zacks Investment Research Annaly peer AGNC Investment and Arbor Realty Trust forward 12-month price-to-tangible book of 0.88X and 1.08X, respectively. Though the macro environment remains uncertain with elevated volatility, which may impact NLY's performance adversely, its strong liquidity position allows the company to maintain its dividend policy and take advantage of market difficulties to acquire assets at attractive valuations. Also, Annaly's diversified investment strategy can be a key contributor to long-term growth and stability, supporting its financials. With analysts revising earnings estimates upward over the past 60 days, sentiment around the stock remains constructive. Estimates Revision Trend Image Source: Zacks Investment Research As such, existing shareholders may consider holding on to NLY for its income-generating potential and long-term stability. However, new investors may benefit from waiting for a more attractive entry point, given the stock's current premium valuation. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AGNC Investment Corp. (AGNC) : Free Stock Analysis Report Arbor Realty Trust (ABR) : Free Stock Analysis Report Annaly Capital Management Inc (NLY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
