New Residential shares are surging over 7% in Thursday’s pre-market trading, after the company’s board announced a 50% hike in its quarterly dividend to $0.15 per share. This marks the company’s second consecutive dividend increase this year. The new dividend will be payable on Oct. 30 to shareholders of record on Oct. 5.
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In June, New Residential Investment (NRZ), which provides capital and services to the mortgage and financial services industry, raised its quarterly dividend by 100% to $0.10 per share. The back-to-back dividend increase came after the company had to slash its dividend by 90% in late March from $0.50 per share down to $0.05.
On Sept. 15, the company said “it has priced its previously announced [on Sept. 10] offering of $550 million aggregate principal amount of 6.250% senior unsecured notes due 2025.” On Sept. 11, B. Riley FBR analyst Timothy P. Hayes also expected “the coupon to be significantly lower than the cost of the facility (11%).” He maintained a Buy rating and a price target of $9.50 (27.4% upside potential), saying that the company’s “liquidity remains strong as NRZ has ample cash and continues to term out debt via securitizations.”
The company has plans to use the offering proceeds to repay its $600 million senior term loan facility and reduce the cost of funds. (See NRZ stock analysis on TipRanks).
Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 6 Buys. The average price target of $10.25 implies upside potential of 37.4% to current levels. Shares have declined by 53.7% year-to-date.
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