Rithm Capital Corp. Declares First Quarter 2026 Common and Preferred Dividends Mar 24, 2026 4:30 PM Eastern Daylight Time Rithm Capital Corp. Declares First Quarter 2026 Common and Preferred Dividends Share NEW YORK--(BUSINESS WIRE)--Rithm Capital Corp. (NYSE:RITM, "Rithm Capital†or the "Company†) announced today that its Board of Directors (the "Board†) has declared its first quarter 2026 common and preferred stock dividends. "Today's announcement marks our 52nd consecutive quarterly dividend since our ...

Core Viewpoint - Rithm Capital (RITM) has reported strong financial results, including a significant increase in revenue and assets, yet its stock is trading near a 52-week low, raising questions about market perception and valuation [4][5][9]. Financial Performance - Rithm's Q4 2025 non-GAAP earnings available for distribution (EAD) were $0.74 per share, exceeding the consensus estimate by 29% [5]. - The company generated $1.29 billion in revenue for Q4, reflecting an 18.4% year-over-year increase [5]. - For the full year, EAD reached $2.35 per share, surpassing the estimate of $2.1745, with a 19% return on equity [5]. Asset Management Growth - Rithm's total investable assets have surpassed $100 billion, bolstered by acquisitions such as Crestline Management and Paramount Group's office portfolio [4][8]. - The asset management segment contributed $403.2 million in revenue during Q4 [8]. Market Valuation and Sentiment - Despite strong operating results, the market remains skeptical, primarily due to volatility in mortgage servicing rights (MSR), which negatively impacted GAAP net income [2][7]. - The stock trades at 0.74 times book value, with a current price of approximately $9.11 against a book value of $12.66 per share [9]. - Analyst consensus price target stands at $14.50, with 10 buy or strong-buy ratings and no sell ratings [9]. Strategic Direction - CEO Michael Nierenberg has indicated a desire to transition Rithm into a C-Corp to align with asset management multiples rather than REIT multiples, referencing Blackstone as a benchmark [8][12]. - The company aims to demonstrate that asset management fees can offset MSR volatility, which is crucial for revaluation [12].

Group 1 - KBRA assigns preliminary ratings to 10 classes of mortgage-backed notes from New Residential Mortgage Loan Trust 2026-NQM4, a $496.3 million non-prime RMBS transaction sponsored by Rithm Capital Corp [1] - The underlying mortgages in the pool were primarily originated by NewRez LLC, accounting for 66.5% of the total [1] - The transaction is collateralized by a pool of 916 residential mortgages, which are seasoned approximately two months [1] Group 2 - Borrowers in NRMLT 2026-NQM4 have a weighted average original credit score of 757, with a weighted average original loan-to-value (LTV) of 71.4% and a weighted average combined LTV (CLTV) of 71.4% [1] - KBRA's rating approach included loan-level analysis through its Residential Asset Loss Model (REALM) and an examination of third-party loan file due diligence [1] - The analysis also involved cash flow modeling of the transaction's payment structure and reviews of key transaction parties [1]

Core Insights - The article discusses Rithm Capital (NYSE: RITM) and its stock performance, highlighting a previous analysis that rated RITM as a buy based on the normalization of the yield curve [1] Group 1: Company Overview - Rithm Capital is involved in the mortgage market, commercial market, and banking industry, with a focus on asset allocation and ETFs related to these sectors [1] Group 2: Analyst Background - The analysis is conducted by Sensor Unlimited, an economist with a PhD in financial economics, who has a decade of experience covering the mortgage and banking sectors [1] Group 3: Investment Strategies - The investing group Envision Early Retirement, led by Sensor Unlimited, offers two model portfolios aimed at short-term survival and aggressive long-term growth, along with direct access for discussions and monthly updates [1]

Core Insights - Newrez has been recognized as a 2025 Fannie Mae Servicer Total Achievement and Rewards (STAR) Performer for the fourth consecutive year, achieving honors in General Servicing, Solution Delivery, and Timeline Management [1] - The STAR Program acknowledges high-performing mortgage servicers for their operational excellence and contributions to sustainable homeownership [1] - Newrez's commitment to operational excellence includes strategic investments in AI technologies, such as ReziChat, aimed at enhancing customer experiences [1] Company Performance - Newrez is ranked among the top five mortgage lenders and servicers in the United States, as per Inside Mortgage Finance [1] - The company emphasizes a customer-first approach throughout the homeownership journey, offering a wide array of products and services [1] - Newrez's mission is to facilitate homeownership by providing industry-leading servicing capabilities and a robust origination model [1] Strategic Initiatives - Newrez is committed to improving outcomes for homeowners and supporting long-term homeownership solutions in partnership with Fannie Mae and the broader mortgage industry [1] - The company has made significant investments in technology, including an AI-powered mortgage underwriting solution in collaboration with HomeVision [1] - Newrez has also become the first major mortgage provider to recognize crypto assets for mortgage qualification, allowing consumers to use digital assets for asset verification without liquidating their holdings [1]

Core Viewpoint - Rithm (RITM) is experiencing a decline in stock price and is under scrutiny as it approaches its earnings report, with expectations for stable earnings per share and significant revenue growth compared to the previous year [1][2]. Group 1: Stock Performance - Rithm's stock closed at $9.95, reflecting a decrease of 1.39% from the previous trading session, which is worse than the S&P 500's loss of 0.94% [1]. - Over the past month, Rithm's stock has dropped by 6.57%, underperforming the Finance sector's loss of 2.41% and the S&P 500's loss of 1.3% [1]. Group 2: Earnings Expectations - The upcoming earnings report is anticipated to show earnings per share (EPS) of $0.52, unchanged from the same quarter last year [2]. - Revenue is expected to reach $1.26 billion, indicating a substantial increase of 64.51% compared to the same quarter of the previous year [2]. Group 3: Fiscal Year Projections - For the entire fiscal year, earnings are projected at $2.3 per share, reflecting a decrease of 2.13% from the previous year, while revenue is expected to be $5.32 billion, showing an increase of 21.38% [3]. - Recent analyst estimate revisions suggest a positive outlook for Rithm's business operations and profitability [3]. Group 4: Valuation Metrics - Rithm's current Forward P/E ratio stands at 4.38, which is significantly lower than the industry average Forward P/E of 10.94 [6]. - The Financial - Miscellaneous Services industry, to which Rithm belongs, ranks in the bottom 44% of all industries, according to the Zacks Industry Rank [6].

Core Thesis - Rithm Capital Corp. (RITM) is viewed positively due to its diversified asset management model, combining mortgage servicing with alternative asset management, which has led to a high-yield, cash-generative business [2][5] Financial Performance - As of February 25th, RITM's share price was $10.22, with trailing and forward P/E ratios of 8.59 and 5.08 respectively [1] - The company has maintained a steady quarterly dividend of $0.25 per share for four years, supported by rising non-GAAP EPS/distributable income per share, which increased from $0.34 to $0.54 as of Q3 2025 [2] - RITM's annual earnings exceed $2 per share, covering the current $1 annual dividend [3] Growth Strategy - Rithm's growth has been primarily driven by acquisitions, including Crestline Management LP, a $17 billion private credit and alternative asset manager, and Paramount Group Inc., which owns $1.6 billion in premium office properties [3][4] - These acquisitions have expanded Rithm's footprint in alternative credit and high-quality real estate, enhancing revenue diversification [4] Valuation and Market Potential - As of Q3 2025, RITM's book value was $12.38 per share, while the stock traded at $11.20, indicating a 0.90x book multiple [4] - Comparable asset managers trade at 1.5–2.0x book, suggesting a potential upside exceeding 50% as the market recognizes Rithm's underlying value [5]

Core Insights - The article discusses the investment positions held by the analyst in RITHM, NLY, and AGNC, indicating a beneficial long position in these stocks [1] Group 1 - The analyst has a beneficial long position in RITHM, NLY, and AGNC through stock ownership, options, or other derivatives [1] - The article expresses the analyst's personal opinions and does not involve compensation from any company mentioned [1] - There is no business relationship between the analyst and the companies whose stocks are discussed [1]

Market Position and Performance - As of December 31, 2025, Newrez ranks among the top five lenders and servicers in the U.S., based on total funded volume of originations and total unpaid principal balance serviced, respectively[35]. - The estimated total U.S. mortgage origination volume for 2025 was $2.0 trillion, an increase from $1.7 trillion in 2024, with a forecast of $2.2 trillion for 2026[40]. - The conforming loan limit for 2026 is set at $832,750, up from $806,500 in 2025, reflecting adjustments for high-priced real estate markets[38]. - Mortgage rates ranged between approximately 6% and 7% throughout 2025, contributing to affordability pressures in the housing market[40]. - The company employs approximately 7,240 employees as of December 31, 2025, with 5,630 in Origination and Servicing[161]. - The company ranks among the top five lenders and servicers in the U.S. based on total funded volume of originations and total UPB serviced as of December 31, 2025[64]. Revenue Generation and Financial Strategies - The company generates revenue through servicing and sales of residential mortgage loans, with profit margins per loan varying by channel; Direct to Consumer typically has the highest margins[67]. - Servicers derive income from contractual servicing fees and ancillary revenue, which are influenced by the size of the servicing portfolio and delinquency rates[42]. - The company earns tiered subservicing fees based on delinquency status and performance requirements, which contributes to ancillary income on each loan serviced[69]. - The company finances investments in MSRs and MSR financing receivables with short- and medium-term bank and capital markets notes, which may bear fixed or variable interest rates[70]. - The company utilizes warehouse financing to fund loans at origination through the sale date, indicating a reliance on short-term financing[67]. - The company charges interest rates on loans ranging from approximately 4% to 17%, with terms typically between 6 to 120 months[82]. - The company earns revenues from management fees and incentive income based on AUM or invested capital[90]. Asset Management and Investment Strategies - The Asset Management segment managed approximately $63 billion in AUM as of December 31, 2025[87]. - The asset management industry is highly competitive, affecting the ability to raise and retain assets under management (AUM) and deploy capital on attractive terms[46]. - Investment performance, investor capital inflows, and market conditions significantly affect asset management results, with poor performance potentially reducing AUM and profitability[49]. - The company’s strategy emphasizes disciplined capital allocation and diversification of earnings across fee-based and balance sheet-oriented activities[61]. - The Asset Management segment offers investment management and advisory services across various alternative investment strategies[88]. - The company invests in government-backed securities to hedge its MSR portfolio and meet REIT requirements[74]. - The company finances construction, renovation, and bridge loans using a warehouse credit facility and revolving securitization structures[78]. Regulatory Compliance and Risk Management - Regulatory compliance is extensive, with the company subject to numerous federal, state, and local laws governing its mortgage lending and servicing activities[121]. - The company is subject to extensive regulatory requirements under the Securities Exchange Act of 1934 and is regulated by the SEC, with certain subsidiaries registered as investment advisers[125]. - The company must comply with risk retention and related regulatory requirements applicable to securitizations, which may require retaining a portion of securities issued in certain transactions[126]. - The company is governed by various data privacy laws, including the CCPA and GDPR, which impose obligations on the collection and security of personal data[127]. - Risk-based capital laws assess the minimum capital needed to support the company's operations, with increasing regulatory intervention as the capital ratio decreases[142]. - The company intends to qualify as a REIT, which requires distributing at least 90% of taxable income to avoid federal income tax[144]. - The company monitors its asset composition to ensure compliance with the 40% test under the Investment Company Act of 1940, avoiding registration as an investment company[146]. Competitive Landscape - The residential transitional lending industry is competitive, influenced by housing fundamentals, financing costs, and borrower execution capabilities[45]. - Competition in the residential mortgage market includes banks, REITs, private equity firms, and technology-enabled platforms, with many competitors having greater access to capital[156]. - The asset management industry is highly competitive, affecting the ability to raise and retain assets under management (AUM) and deploy capital on attractive terms[159]. Strategic Initiatives - The company may pursue acquisitions or other strategic initiatives in response to market conditions and regulatory developments[62]. - The company treats interests in certain subsidiaries as non-investment securities to maintain its exclusion from registration under the 1940 Act[150]. - Adoor LLC focuses on acquiring and managing SFR properties, involving purchasing, renovating, and leasing high-quality residential properties[98]. - The company pursues opportunistic investments in the commercial real estate sector, typically structured through joint ventures[108].

Group 1 - The article promotes an actively managed portfolio focused on undervalued preferred stocks and baby bonds, highlighting the potential for high returns [1] - It emphasizes the annualized yield achieved on closed trades, suggesting a strong performance track record [1] - The company invites investors to join its Conservative Income Portfolio, indicating a strategy aimed at generating consistent income [1] Group 2 - The methodology for achieving high returns is mentioned, suggesting a structured approach to investment [2]