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Rithm Capital (RITM) Announces Q4 Dividends, Share Buybacks
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Rithm Capital Corp. (RITM - Free Report) announced that its board authorized fourth-quarter 2022 common and preferred stock dividends. The company also renewed its stock buyback program in a shareholders’ value-boosting move.
The fourth-quarter dividend of 25 cents has been unchanged sequentially. The amount will be paid out on Jan 27, 2023, to stockholders of record as of Dec 30, 2022. Based on the closing price of $8.62 per share on Dec 19, 2022, the stock has a dividend yield of 11.6%, much higher than the industry average of 2.6%.
With such a high dividend yield, the question arises if that is sustainable.
Companies in the mortgage market were affected this year due to increasing interest rates and the underperformance of mortgage-backed securities. However, Rithm Capital draws support from its diversified business model, which provides it with some relief from the volatility witnessed in the mortgage business.
RITM’s mortgage servicing business is expected to benefit from rising interests. As growing interest rates affect refinancing activities, companies like Rithm Capital are expected to receive servicing fees for a longer period. This will likely provide the company with steady cash flows, supporting its high dividend yields.
While this year witnessed aggressive rate hikes, the intensity is expected to slow down. With lower interest rate volatility, RITM’s mortgage origination business is expected to benefit. Thanks to the improving business scenario, the company’s shareholder value-boosting efforts are expected to remain strong.
Rithm Capital announced a share buyback program of up to $200 million of common shares, along with up to $100 million of preferred shares program. The repurchase programs are expected to run through Dec 31, 2023. The new programs are expected to replace the previous similar ones, which were scheduled to expire on Dec 31, 2022.
For the fourth quarter, RITM’s board also declared Series A, Series B, Series C and Series D dividends per share of around 47 cents, 45 cents, 40 cents and 44 cents, respectively. The dividends will be paid out on Feb 15, 2023, to preferred stockholders of record as of Jan 13, 2023.
Milwaukee, WI-based MGIC Investment is a private mortgage insurance and other products provider. The Zacks Consensus Estimate for MTG’s current-year bottom line is pegged at $2.86 per share, indicating 49.7% year-over-year growth.
Headquartered in Toronto, CI Financial is a leading asset management holding firm. The Zacks Consensus Estimate for CIXX’s current-year bottom line is pegged at $2.33 per share, which has improved 3.1% in the past 60 days.
Based in San Francisco, NerdWallet is a digital platform operator connecting individuals and businesses with financial products suppliers. The Zacks Consensus Estimate for NRDS’ 2022 earnings indicates a 74.4% improvement from that reported a year ago.
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Rithm Capital (RITM) Announces Q4 Dividends, Share Buybacks
Rithm Capital Corp. (RITM - Free Report) announced that its board authorized fourth-quarter 2022 common and preferred stock dividends. The company also renewed its stock buyback program in a shareholders’ value-boosting move.
The fourth-quarter dividend of 25 cents has been unchanged sequentially. The amount will be paid out on Jan 27, 2023, to stockholders of record as of Dec 30, 2022. Based on the closing price of $8.62 per share on Dec 19, 2022, the stock has a dividend yield of 11.6%, much higher than the industry average of 2.6%.
Rithm Capital Corp. Dividend Yield (TTM)
Rithm Capital Corp. dividend-yield-ttm | Rithm Capital Corp. Quote
With such a high dividend yield, the question arises if that is sustainable.
Companies in the mortgage market were affected this year due to increasing interest rates and the underperformance of mortgage-backed securities. However, Rithm Capital draws support from its diversified business model, which provides it with some relief from the volatility witnessed in the mortgage business.
RITM’s mortgage servicing business is expected to benefit from rising interests. As growing interest rates affect refinancing activities, companies like Rithm Capital are expected to receive servicing fees for a longer period. This will likely provide the company with steady cash flows, supporting its high dividend yields.
While this year witnessed aggressive rate hikes, the intensity is expected to slow down. With lower interest rate volatility, RITM’s mortgage origination business is expected to benefit. Thanks to the improving business scenario, the company’s shareholder value-boosting efforts are expected to remain strong.
Rithm Capital announced a share buyback program of up to $200 million of common shares, along with up to $100 million of preferred shares program. The repurchase programs are expected to run through Dec 31, 2023. The new programs are expected to replace the previous similar ones, which were scheduled to expire on Dec 31, 2022.
For the fourth quarter, RITM’s board also declared Series A, Series B, Series C and Series D dividends per share of around 47 cents, 45 cents, 40 cents and 44 cents, respectively. The dividends will be paid out on Feb 15, 2023, to preferred stockholders of record as of Jan 13, 2023.
Zacks Rank & Key Picks
Rithm Capital currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader finance space are MGIC Investment Corporation (MTG - Free Report) , CI Financial Corp. and NerdWallet, Inc. (NRDS - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Milwaukee, WI-based MGIC Investment is a private mortgage insurance and other products provider. The Zacks Consensus Estimate for MTG’s current-year bottom line is pegged at $2.86 per share, indicating 49.7% year-over-year growth.
Headquartered in Toronto, CI Financial is a leading asset management holding firm. The Zacks Consensus Estimate for CIXX’s current-year bottom line is pegged at $2.33 per share, which has improved 3.1% in the past 60 days.
Based in San Francisco, NerdWallet is a digital platform operator connecting individuals and businesses with financial products suppliers. The Zacks Consensus Estimate for NRDS’ 2022 earnings indicates a 74.4% improvement from that reported a year ago.