Even before the pandemic, New Residential Investment's NII was headed in the wrong direction... Last year's NII was less than half of what it was in 2017. This year, NII is expected to rebound, but it is still more than 20% lower than 2018's total and 35% below 2017's total. SafetyNet Pro does not look kindly upon declining cash flow or NII. SafetyNet Pro is a groundbreaking tool that predicts dividend cuts with stunning accuracy. With it, you can determine the dividend safety rating of nearly 1,000 stocks. Access to SafetyNet Pro is reserved exclusively for subscribers of Marc's newsletter, The Oxford Income Letter. | |
That disastrous NII figure from last year means that New Residential Investment could not afford its dividend. It paid out $808 million in dividends while generating only $579 million in NII. So even if the pandemic hadn't occurred, New Residential might have been forced to cut the dividend anyway - especially because this year's NII, while forecast to be better than last year's, is still expected to be below $800 million and wouldn't cover the dividend if the total paid remained the same. Due to the drastic reduction of the dividend, New Residential is now projected to pay out just $204 million, giving the company plenty of room in case NII comes in below expectations. But with New Residential's declining NII and recent dividend cut, SafetyNet Pro says this is a dividend that can't be trusted. It will take a few years of increasing NII, low payout ratios and a stable dividend to restore confidence that the dividend, at whatever level, is safe. Dividend Safety Rating: F If you have a stock whose dividend safety you'd like me to analyze, leave the ticker symbol in the comments section. Good investing, Marc |
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