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MILL VALLEY, Calif. - Redwood Trust, Inc. (NYSE: NYSE:RWT), a specialty finance company with a focus on housing credit, has declared dividends for its common and preferred stock for the third quarter of 2024. The announcement comes as the company expresses confidence in its financial stability and future prospects in light of a changing interest rate environment.
The company's Board of Directors has authorized a regular common stock dividend of $0.17 per share, which is a 6.25% increase from the second quarter of 2024. This dividend, which is the company's 101st consecutive quarterly payout, is scheduled to be paid on September 30, 2024, to shareholders of record as of September 23, 2024.
Christopher Abate, Chief Executive Officer of Redwood, commented on the dividend increase, stating, "We are pleased to announce an increase in our common dividend, reflecting our continued confidence in the strength of our balance sheet and our outlook heading into a more accommodative interest rate environment." Abate also highlighted the company's progress toward achieving the goals set during their March 2024 Investor Day and reiterated the commitment to generating long-term value for shareholders.
In addition to the common stock dividend, Redwood's Board has also declared a dividend for its 10.00% Series A Fixed-Rate Reset Cumulative Redeemable Preferred Stock. The preferred stock dividend is set at $0.625 per share and will be payable on October 15, 2024, to stockholders of record on October 1, 2024.
The press release includes forward-looking statements, which are based on current expectations and projections about future events. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Redwood cautions readers not to place undue reliance on these forward-looking statements, which speak only as of the date made.
Redwood Trust operates in several segments of the U.S. housing market outside the scope of government programs, providing liquidity through securitization platforms, whole-loan distribution, and its publicly traded shares. The company is internally managed and structured as a real estate investment trust (REIT) for tax purposes.
This dividend announcement is based on a press release statement from Redwood Trust, Inc.
In other recent news, Redwood Trust has demonstrated significant growth in its Q2 2024 earnings and loan volumes. The company's earnings available for distribution rose by 70% to $0.13 per share, while it reported GAAP earnings of $14 million, translating to $0.10 per share. Despite a decrease in GAAP earnings from the first quarter, recent developments suggest a positive outlook for Redwood Trust, with stable credit performance and diversified investment strategies.
Piper Sandler recently adjusted its price target for Redwood Trust shares, raising it to $7.50 from the previous $6.50, while maintaining a Neutral rating. This change was in response to the company's recent earnings report, which showed a decline in GAAP earnings per share (EPS) to $0.10 from $0.21 in the previous quarter. Operating EPS was estimated at $0.11, falling short of both Piper Sandler's expectations and the consensus among other analysts.
Despite these shortfalls, Piper Sandler anticipates that Redwood Trust will cover its quarterly dividend by the year's end. The company management expressed confidence in maintaining the current dividend level, citing potential benefits from reduced funding costs due to rate cuts. Partnerships with CPP Investments and Oaktree are supporting the company's strategy to expand its loan volumes. These are among the recent developments that investors might find relevant.
InvestingPro Insights
As Redwood Trust (NYSE: RWT) announces its 101st consecutive quarterly dividend, a key indicator of its confidence and commitment to shareholder returns, the company's financial metrics and analyst insights provide a more detailed picture of its current status. According to InvestingPro data, Redwood Trust has a market capitalization of approximately $978.4 million, suggesting a substantial presence in the specialty finance sector. The company's price-to-earnings (P/E) ratio stands at 36.63, which, when adjusted for the last twelve months as of Q2 2024, shows a slight decrease to 36.2, indicating a stable earnings valuation over the period.
InvestingPro Tips highlight that Redwood Trust is expected to see net income growth this year, which may be a contributing factor to the company's decision to increase its dividend payout. Moreover, the company has been successful in maintaining dividend payments for an impressive 30 consecutive years, showcasing its reliability in returning value to shareholders. However, it's worth noting that while analysts are predicting the company to be profitable this year, there have been downward revisions in earnings expectations for the upcoming period by three analysts, which investors may want to consider.
Another aspect to consider is the company's dividend yield, which as of the last recorded date, stands at a significant 8.58%. This is particularly appealing to income-focused investors and complements the company's history of consistent dividend payments. Additionally, Redwood Trust's stock price has experienced a large uptick over the last six months, with a 27.29% total return, reflecting a strong performance that investors may find encouraging.
For those seeking more comprehensive analysis, InvestingPro offers additional tips that delve deeper into Redwood Trust's performance and future outlook. Interested readers can find a wealth of further insights by visiting the dedicated InvestingPro page for Redwood Trust at https://www.investing.com/pro/RWT.
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