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Ellington (EFC) Declares 40% Dividend Hike: Worth a Look?
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Ellington Financial’s (EFC - Free Report) board of directors approved a 40% hike in the company’s monthly common stock dividend. The revised monthly dividend now totals 14 cents per share compared with the previous figure of 10 cents. The amount will be paid out on May 25 to shareholders of record as of Apr 30, 2021.
Considering the last day’s closing price of $17.07 per share, the dividend yield is currently valued at 9.8%. This yield is not only attractive to income investors but also represents a steady income stream.
Though the dividend is slightly below the pre-pandemic level, Ellington raised the dividend twice in 2020. This reflects the bank’s commitment to return value to shareholders with its robust cash-generation competencies.
"I am pleased that the Board increased our monthly dividend to $0.14, as we continue to see strong growth in our business, driven by a larger flow of high-yielding loans from our origination programs," said Laurence Penn, chief executive officer and president.
We believe that despite intense competition, the company has a long-term upside potential based on its robust loan-acquisition pipeline and strategic equity investments in loan origination companies.
Earnings: Ellington witnessed earnings growth of 9.2% in the last three to five years. This earnings momentum is likely to continue in the near term as indicated by the company’s projected EPS growth rate (F1/F0) of 3.1% and 6.6% for 2021 and 2022, respectively.
Revenues: The company’s organic growth seems impressive. Ellington’s revenues witnessed a CAGR of 21.4% over the last five years (2016-2020). Driven by efforts to grow business, the company’s top line is expected to be up 3.7% for 2021 and 10.4% for 2022.
Leverage: Ellington currently has a debt/equity ratio of 2.95, higher than the industry average of 0.96. This shows that the company has a higher debt burden when compared with peers and, hence, may not be financially stable in adverse economic conditions.
Return on Equity (ROE): The company’s ROE of 9.91% compares unfavorably with the industry’s 10.72%, reflecting that it does not reinvest its cash more efficiently than peers.
Price Performance: Shares of Ellington have gained 35.5% over the past six months against a 14.3% decline of the industry it belongs to.
Thus, based on the above-mentioned fundamentals, the stock seems worth holding on to. Though low rates continue to support mortgage companies, mounting expenses might hurt bottom-line growth to some extent.
Other Finance Stocks Taking Similar Actions
Over the past few months, several finance companies have announced hikes in their quarterly dividends. Some of these are Eagle Bancorp (EGBN - Free Report) , Bank OZK (OZK - Free Report) and Preferred Bank (PFBC - Free Report) .
Eagle Bancorp raised its quarterly dividend by 13.6%, while Bank OZK increased it by 0.9%. Furthermore, Preferred Bank has announced a 26.7% hike in its dividend.
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In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Ellington (EFC) Declares 40% Dividend Hike: Worth a Look?
Ellington Financial’s (EFC - Free Report) board of directors approved a 40% hike in the company’s monthly common stock dividend. The revised monthly dividend now totals 14 cents per share compared with the previous figure of 10 cents. The amount will be paid out on May 25 to shareholders of record as of Apr 30, 2021.
Considering the last day’s closing price of $17.07 per share, the dividend yield is currently valued at 9.8%. This yield is not only attractive to income investors but also represents a steady income stream.
Though the dividend is slightly below the pre-pandemic level, Ellington raised the dividend twice in 2020. This reflects the bank’s commitment to return value to shareholders with its robust cash-generation competencies.
"I am pleased that the Board increased our monthly dividend to $0.14, as we continue to see strong growth in our business, driven by a larger flow of high-yielding loans from our origination programs," said Laurence Penn, chief executive officer and president.
We believe that despite intense competition, the company has a long-term upside potential based on its robust loan-acquisition pipeline and strategic equity investments in loan origination companies.
Investors interested in this Zacks Rank #3 (Hold) stock can have a look at the company’s fundamentals and growth opportunities. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings: Ellington witnessed earnings growth of 9.2% in the last three to five years. This earnings momentum is likely to continue in the near term as indicated by the company’s projected EPS growth rate (F1/F0) of 3.1% and 6.6% for 2021 and 2022, respectively.
Revenues: The company’s organic growth seems impressive. Ellington’s revenues witnessed a CAGR of 21.4% over the last five years (2016-2020). Driven by efforts to grow business, the company’s top line is expected to be up 3.7% for 2021 and 10.4% for 2022.
Leverage: Ellington currently has a debt/equity ratio of 2.95, higher than the industry average of 0.96. This shows that the company has a higher debt burden when compared with peers and, hence, may not be financially stable in adverse economic conditions.
Return on Equity (ROE): The company’s ROE of 9.91% compares unfavorably with the industry’s 10.72%, reflecting that it does not reinvest its cash more efficiently than peers.
Price Performance: Shares of Ellington have gained 35.5% over the past six months against a 14.3% decline of the industry it belongs to.
Thus, based on the above-mentioned fundamentals, the stock seems worth holding on to. Though low rates continue to support mortgage companies, mounting expenses might hurt bottom-line growth to some extent.
Other Finance Stocks Taking Similar Actions
Over the past few months, several finance companies have announced hikes in their quarterly dividends. Some of these are Eagle Bancorp (EGBN - Free Report) , Bank OZK (OZK - Free Report) and Preferred Bank (PFBC - Free Report) .
Eagle Bancorp raised its quarterly dividend by 13.6%, while Bank OZK increased it by 0.9%. Furthermore, Preferred Bank has announced a 26.7% hike in its dividend.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
AccessZacks Top 10 Stocks for 2021 today >>