13% Dividend Yield And 39% Upside

Core Thesis - The investment thesis for Ready Capital Corporation (RC) suggests that the price-to-book ratio is expected to increase, with the potential for modest declines in book value per share while collecting dividends during the waiting period [8][9]. Company Overview - Ready Capital is identified as a mortgage REIT (mREIT), which typically has a more complex portfolio compared to agency mortgage REITs, leading to less investor attraction in the current market [4][19]. - The company has historically traded at a higher price-to-book ratio than many peers, making the current situation unique as it is experiencing a decline [4][19]. Financial Metrics - Key metrics for evaluating mortgage REITs include book value per share, trends in book value over time, price-to-book ratio, and asset types owned [4]. - The current dividend yield for Ready Capital is approximately 13.5%, based on a quarterly dividend of $0.30 per share at a share price of $8.90 [9]. Market Position - Ready Capital's book value has not seen significant declines, especially compared to agency mortgage REITs, which have experienced substantial decreases in book value over the past two years [7][19]. - The company is expected to recover its price-to-book ratio, similar to Rithm Capital Corp. (RITM), which recently saw its price-to-book ratio recover to around 90% [19]. Debt Structure - Ready Capital utilizes securitized debt obligations, which provide non-recourse financing and eliminate the need for future negotiations, thus offering a more stable financing structure compared to traditional bank financing [21][22]. - The use of securitized debt allows Ready Capital to lock in financing, matching assets and debt, which mitigates risks associated with fluctuating market values [22]. Recent Transactions - The company has seen recent buying activity, with shares being purchased at $8.83, indicating a belief in the stock's potential upside [10][12]. Comparative Analysis - A comparison of Ready Capital's financial metrics with those of Rithm Capital Corp. shows that while RC has a lower price-to-book ratio, it is still positioned favorably within the sector [14][19]. Conclusion - Overall, Ready Capital presents a compelling investment opportunity due to its attractive dividend yield, stable book value, and potential for price recovery, despite current market challenges [8][9][19].