18% Yield Now With A $200 Million Buyback

On January 19 New Residential Investment Corp (NYSE:NRZ) gave investors a rare thing to like so far this year. After months of a plunging stock price, management stepped in announcing a $200 million share buyback saying the "current stock price is at a significant discount to the value of our company". I view the buyback as a smart move as it takes advantage of an undervalued share price and boosts management's credibility.

The recently announced New Residential share buyback is highly positive in my opinion. While demonstrating management is willing to take action to boost the share price despite reducing assets under management, the company also takes advantage of a low share price valuation and significant dividend savings due to the high yield on the stock. Keeping in mind that buyback completions always remain optional, investors need to keep an eye out to make sure that management does go ahead and complete the buyback as announced.

Source: Seeking Alpha

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