A Crazy High Dividend Yield, 16%. NRZ

The S&P is down a little over 1% today. While randomly reading about stocks, New Residential Investment (NRZ) came up on my list again. While the market is down, New Residential Investment (NRZ) was up today and they just put in a fresh 52-week low on 1/19/16. We have a lot of dividend growth and best of breed stocks. We though we take a pick at a super high yielder. New Residential Investment (NRZ) has a crazy high dividend yield over 16%. That is high enough that the stock market says there is a good chance for a cut. And it definitely could happen.

NRZ - 2016-02 - Falling Knife
NRZ – 2016-02 – Falling Knife

So, New Residential Investment (NRZ) is getting our best of breed stock pick for excessively high dividend. Good thing I get make my own list for best of breed stocks and I get to pick what categories are in it.

Falling Knife

From the chart above, we can see we are trying to catch a falling knife.  The grey lines show a channel that is still heading straight down.  On top of that, the stock broke through the floor, which is the red line.  Catching a falling knife is hard to do.  However, they just authorized a $200 million buyback. That is about 9% of the company’s current market cap. That is a large percentage to help put a floor under the stock. Having a base of support with the company buying backs its own stock will hopefully stop the knife from falling more. And the more it falls, the more shares they can buy.  If the company was in financial trouble, a buyback is the last place for money to go. If they were, they should pay down debt or save the cash.

Crazy High Dividend Yield

Currently, they are making money, and because they are a mREIT, they have to pay 90% of their profits as a dividend.  I do not believe that people are going to quit paying their mortgages any time soon, that was so 7 years ago.  While the stock could still drop or have the dividend cut, I am willing to take the risk reward in my portfolio.  Hopefully, I am not too early.


Crazy Purchase

We bought 25 shares for $281.25 including the commission we got charged. With the large yield, we will get $48 a year. Even if that gets cut in half, we will still get $24 a year, which is still a very nice payment.

Do you have a Crazy High Dividend Yield? Please share in the comment section below.

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Disclosure: STAG – We own shares.

 

 

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