Real estate investment trusts have gained massive faith with in the investor’s portfolio in a short span of time. Not only does it promise a high cash flow, but also ongoing dividend yield along with many different benefits to offer. A company that has recently gained such trust is New Residential Investment Corp (NYSE:NRZ), which offers its clients investment opportunities as well as residential loans and securities along with other benefits. The company itself gains its earnings through earnings growth and as a result offers its clients 11.1% dividend yield.
REIT comes in different portfolios offering different returns. Some, for example invest in residential mortgage backed securities. These strategies even though promise double dividend yields, they are considered risky. So investors are extra careful when considering this option.
On the other hand there are REITs that have a more traditional approach, they invest in apartments, offices and shopping mall and are dependent on rental income for the investors. This is a less risky and more promising return strategy. The amount generated stay stable and are not subjected to growth for quite some time.
Thirdly, the REITs focuses on investing in mortgage servicing rights. They provide services like collecting payment, forwarding interest as well as principle cash flow to the lender. This produces an extraordinary opportunity for REIT’s to invest into. Banks have shown interest in outsourcing the administrative activities in connection to mortgage servicing. This approach gives a dividend yield of 15% to 20% from the investment.
Even though REITs are difficult to study due to complexity of the portfolios, New Residential (NYSE:NRZ) speculations are both positive and promising. From the third quarter in 2013 till 2014, the company managed to jump from $38 million to $63 million, a 65% gain with-in a year. These statistics come, regardless of the fact that it is a very young entity and still is in the learning phase. However, it has an impressive portfolio, displaying results from the last four quarters that show a wealthy record. Its $0.35 per share was topped with another $0.15 per share in January and July 2014, due to strong earnings and value growth.
All these figures point that New Residential (NYSE:NRZ) is off to a good start as an independent firm, with a potential to grow and produce yields to satisfy investor needs. Its main focus is on MSRs to deliver promising figures along the way. The company believes that $10 trillion mortgage servicing market can provide a large number of investing opportunities. Its gives a mortgage servicer the capacity to carry out mortgage services in exchange for a fee. At this stage, banks own 75% of MSRs but it won’t be long when due to pressure, these numbers will decline hence provide a ground for companies like New Residential (NYSE:NRZ) to take over and cater to the market. Solid book keeping and core earnings portray that New Residential (NYSE:NRZ) has a good understanding of its business and the 11.1% current yield gives it a competitive edge.