New Residential Investment: This Outperforming Mortgage REIT Has A Covered 11.2% Yield And 12% Upside

This REIT’s huge MSR portfolio and prospects for dividend growth are the two single biggest reasons to buy into the mortgage REIT today. It will most likely announce a dividend hike over the short haul - thanks to significant excess dividend coverage. Though shares have surged lately, the mortgage REIT is far from being expensive. I have a 12-month price target of $20, implying ~12 percent upside. An investment in the stock yields 11.2 percent.

New Residential Investment, Inc. (NRZ) not only offers income investors a covered 11.2 percent dividend yield, but an investment in the mortgage REIT also comes with capital upside as I see its shares as undervalued. New Residential Investment has one of the best dividend coverage stats in the sector that strongly tilt the odds in favor of a dividend raise over the short haul, or maybe even a special dividend. I think investors could capture total returns of ~25 percent over the next twelve months.

Source: Seeking Alpha

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