Core Insights - The article provides a detailed analysis comparing Rithm Capital Corp. (RITM) to 17 other mortgage real estate investment trusts (mREITs) [1][2] - The analysis focuses on RITM's recent results, dividend rates, yield percentages, and sustainability metrics [3][4] Summary of RITM's Performance - RITM's book value as of June 30, 2025, is compared to its peers, aiding in understanding its financial standing [2] - RITM declared a dividend of $0.25 per common share for Q2 2025, unchanged from the previous quarter, resulting in a trailing twelve-month (TTM) dividend yield of 8.92% [16][28] - The annual forward yield based on RITM's stock price as of June 20, 2025, is also 8.92%, while the yield based on its book value is 7.87% [16] Dividend Sustainability Analysis - RITM's dividend sustainability is assessed through its core earnings, with a current payout ratio of 46% for Q2 2025, indicating a strong ability to maintain dividends [23][24] - The article projects a very high probability (90%) of maintaining a dividend between $0.25 and $0.30 per share for Q4 2025 and Q1 2026 [30] - RITM's core earnings available for distribution (EAD) for Q1 and Q2 2025 are reported at $275.3 million and $291.1 million, respectively, with earnings per share of $0.52 and $0.54 [23] Comparative Metrics - RITM's TTM dividend yield and annual forward yield are noted to be below average compared to its peers, indicating potential for future adjustments [28] - The analysis includes a comparison of RITM's leverage ratio, which is lower than that of its peer PMT, suggesting a conservative approach to risk management [17] Future Outlook - The article anticipates a gradual increase in net interest spreads starting in late 2025, which could positively impact RITM's earnings and dividend sustainability [25] - RITM's stock price as of September 19, 2025, was $12.11, with projections indicating a price target of approximately $14.35 per share, suggesting potential for appreciation [34][37]

Core Insights - Orchid Island Capital (ORC) and AGNC Investment Corp. (AGNC) are prominent players in the mortgage real estate investment trusts (mREITs) sector, both providing attractive long-term returns and substantial dividend yields. The analysis aims to determine which company presents a better investment opportunity at this time [1]. AGNC Investment Corp. - AGNC employs an active portfolio-management strategy, regularly adjusting its holdings and implementing hedges to adapt to market changes, which positions it defensively against volatility [2]. - As of June 30, 2025, AGNC has hedged 89% of its outstanding balance in Investment Securities Repo, TBA position, and other debt, which may enhance cash flow stability and support long-term growth [3]. - The company holds $73.3 billion in Agency mortgage-backed securities (MBS), benefiting from GSE guarantees, which makes these investments relatively safer despite market volatility [4]. - AGNC's liquidity, including unencumbered cash and Agency MBS, stood at $6.4 billion as of June 30, 2025, with a modest increase in leverage to 7.6 times [5]. - The current dividend yield for AGNC is 14.4%, although it has not increased its dividend in the past five years [6]. Orchid Island Capital - ORC focuses exclusively on Agency residential MBS, which limits credit risks but increases sensitivity to interest rate changes and prepayments [7]. - The recent decline in mortgage rates is expected to improve ORC's book value as spreads in the Agency market tighten, enhancing net interest spread and overall portfolio yield [8]. - ORC currently boasts a dividend yield of 20.6% and has increased its dividend three times in the past five years, supported by a strong liquidity position of $492.5 million [10]. - Earnings for ORC are projected to surge by 450% in 2025 and 40% in 2026, significantly outpacing AGNC's expected declines [9][24]. Performance and Valuation - Over the past year, AGNC shares rose by 8.1%, while ORC shares increased by 4.3%, compared to the industry's growth of 5.2% [11]. - ORC is trading at a 12-month forward price-to-tangible book (P/TB) ratio of 0.88X, which is a discount compared to the industry average of 1.07X, while AGNC trades at a premium with a P/TB of 1.24X [13][16]. - The Zacks Consensus Estimate indicates AGNC's earnings will decline by 15.4% in 2025 and 0.9% in 2026, while ORC's earnings are expected to rise by 450% and 39.7% in the same years [19][20][21]. Conclusion - While AGNC remains a reliable mREIT with a disciplined strategy and steady dividends, ORC presents a more compelling opportunity for income-seeking investors due to its higher dividend yield, strong liquidity, and significant earnings growth potential [22][24].

Core Insights - The article discusses the investment analysis of Annaly Capital Management, Inc. (NYSE: NLY) and compares it with Rithm Capital, suggesting that investors interested in mortgage real estate investment trusts (mREITs) should consider holding Rithm instead of NLY [1]. Group 1: Company Analysis - Annaly Capital Management, Inc. is analyzed in the context of its performance against Rithm Capital, indicating a preference for Rithm for mREIT investments [1]. - The analysis highlights the importance of dynamic asset allocation in generating high income and growth while managing isolated risks [1]. Group 2: Analyst Background - The analyst, Sensor Unlimited, has a PhD in financial economics and has spent a decade covering the mortgage market, commercial market, and banking industry [2]. - The focus of the analyst's work includes asset allocation and ETFs related to the overall market, bonds, banking, financial sectors, and housing markets [2].

Core Insights - The article focuses on analyzing Rithm Capital Corp.'s (RITM) recent performance compared to 17 mortgage real estate investment trust (mREIT) peers, highlighting key metrics such as investment composition, leverage, hedging coverage ratio, and economic returns [1][2][3]. Investment Composition and Performance - As of June 30, 2025, RITM's investment portfolio consisted of 20% fixed-rate agency MBS, 0% variable-rate agency MBS, 36% mortgage servicing rights (MSR), and 44% non-agency MBS and other mortgage-related investments [17][19]. - RITM's total MSR sub-portfolio had an unpaid principal balance (UPB) of $865 billion, reflecting a significant increase from $648 billion a year prior, largely due to acquisitions [37][38]. Leverage and Hedging - RITM's on-balance sheet leverage ratio was 2.5x, with an at-risk leverage ratio of 0.9x as of June 30, 2025, indicating a slight decrease in leverage compared to the previous quarter [19][20]. - The hedging coverage ratio for RITM was 44% as of June 30, 2025, which is geared towards lower mortgage interest rates, allowing the company to maintain stability in its book value (BV) during fluctuating interest rate environments [46][53]. Economic Returns - RITM achieved a trailing 24-month economic return of 20.97%, outperforming all covered mREIT peers, with the average returns for various classifications being significantly lower [51]. - The company's BV increased by 2.58% from Q1 to Q2 2025, driven by a minor increase in mortgage interest rates and a quarterly dividend of $0.25 per share, resulting in an economic return of 4.60% for Q2 2025 [20][21]. Valuation and Market Position - As of September 5, 2025, RITM's stock price was $12.62, trading at a 2.55% discount to the estimated current BV of $12.95, suggesting a slightly undervalued position compared to peers [48][49]. - RITM's diversified investment strategy, including MSR and other mortgage-related assets, positions it favorably to deliver attractive risk-adjusted returns across various interest rate scenarios [56].

Core Insights - The article focuses on analyzing Rithm Capital Corp.'s (RITM) recent performance compared to 17 mortgage real estate investment trust (mREIT) peers, highlighting key metrics such as investment composition, leverage, hedging coverage ratio, and economic returns [1][2][3]. Investment Composition and Performance - As of June 30, 2025, RITM's investment portfolio consisted of 20% fixed-rate agency MBS, 0% variable-rate agency MBS, 36% mortgage servicing rights (MSR), and 44% non-agency MBS and other mortgage-related investments [17][19]. - RITM's total MSR sub-portfolio had an unpaid principal balance of $865 billion, reflecting a significant increase from $648 billion a year prior, largely due to acquisitions [37][38]. Leverage and Hedging - RITM's on-balance sheet leverage ratio was 2.5x, with an at-risk leverage ratio of 0.9x as of June 30, 2025, indicating a slight decrease in leverage compared to the previous quarter [19][20]. - The hedging coverage ratio for RITM was 44% as of June 30, 2025, which is geared towards lower mortgage interest rates, allowing the company to maintain stability in its book value (BV) during fluctuating interest rate environments [46][53]. Economic Returns - RITM achieved a trailing 24-month economic return of 20.97%, outperforming its mREIT peers, which averaged negative returns across various classifications [51][52]. - The company's BV increased by 2.58% from Q1 to Q2 2025, supported by a quarterly dividend of $0.25 per share, resulting in an economic return of 4.60% for the quarter [20][21]. Valuation and Market Position - As of September 5, 2025, RITM's stock price was $12.62, trading at a 2.55% discount to the estimated current BV of $12.95, suggesting a slightly undervalued position compared to peers [48][49]. - RITM's diversified investment strategy, including MSR and various mortgage-related assets, positions it favorably for risk-adjusted returns across different interest rate scenarios [56][57].

Core Viewpoint - AGNC Investment Corp. and Starwood Property Trust, Inc. are two prominent players in the mortgage real estate investment trusts (mREITs) sector, both providing attractive long-term returns and substantial dividend yields. The analysis aims to compare their strengths, risks, and growth potential to determine which offers a better investment opportunity at present [2]. Group 1: AGNC Investment Corp. - AGNC employs an active portfolio-management strategy, regularly adjusting its holdings and implementing hedges to respond to market changes, positioning itself defensively against volatility [3]. - As of June 30, 2025, AGNC maintained a significant interest rate hedge covering 89% of its outstanding balance, which may enhance cash flow stability and support long-term growth [4]. - The company holds $73.3 billion in Agency mortgage-backed securities (MBS), benefiting from government guarantees, which are expected to yield attractive risk-adjusted returns despite market volatility [5]. - AGNC's liquidity, including unencumbered cash and Agency MBS, was reported at $6.4 billion as of June 30, 2025, with a modest increase in leverage to 7.6X [6]. - AGNC has a high dividend yield of 14.66%, exceeding the industry average of 12.12% [17]. - The Zacks Consensus Estimate indicates a year-over-year earnings decline of 15.4% for AGNC in 2025 [20]. Group 2: Starwood Property Trust, Inc. - Starwood Property specializes in commercial mortgage-backed securities (CMBS) and manages a portfolio of nearly $27 billion as of June 30, 2025, allowing for stable income generation [7]. - The company has actively optimized its portfolio through strategic acquisitions and divestitures, including the sale of 16 retail properties for $387.1 million in February 2024 [8]. - Starwood's liquidity position is strong, with cash and cash equivalents of $475 million and no short-term debt as of June 30, 2025 [10]. - Starwood is trading at a 12-month forward price-to-tangible book (P/TB) of 1.06X, which is a discount compared to the industry average, making it a more attractive option for value investors [14]. - The Zacks Consensus Estimate for Starwood suggests a year-over-year earnings decline of 6.4% for 2025, but a rise of 7.7% for 2026 [23]. Group 3: Comparative Analysis - In the past six months, STWD shares increased by 4.8%, while AGNC shares rose by 1.7%, outperforming the industry growth of 0.8% [11]. - AGNC is trading at a premium, while STWD trades at a discount, indicating a stronger earnings outlook for STWD [9][14]. - STWD's dividend yield is 9.53%, supported by more sustainable fundamentals and a clearer path to earnings growth compared to AGNC [17][28]. - AGNC is characterized by a defensive income strategy through Agency MBS and hedging, while STWD demonstrates greater resilience and flexibility with disciplined portfolio management [27][28]. - Currently, AGNC holds a Zacks Rank of 4 (Sell), whereas Starwood Property has a Zacks Rank of 1 (Strong Buy), indicating a preference for STWD among investors [29].

Mortgage Market Overview - Mortgage rates are currently at the lowest levels of 2025, with the average 30-year mortgage rate at 6.58% as of August 21, 2025, unchanged from the previous week and down from 6.91% at the start of 2025 [1][9] - The decline in mortgage rates reflects market optimism for potential Federal Reserve rate cuts later in the year, along with changing inflation and bond market dynamics [4] mREITs Performance and Outlook - mREITs such as Apollo Commercial Real Estate Finance (ARI), Annaly Capital Management (NLY), and Orchid Island Capital (ORC) are expected to benefit from lower mortgage rates, which are lifting mortgage originations and driving stronger refinancing activity [5][9] - With improving purchase originations and refinancing activities, mREITs are likely to see book value improvement as Agency market spreads tighten, enhancing net interest spread and financial performance [7][9] Apollo Commercial Real Estate Finance (ARI) - Apollo Commercial has a portfolio of $8.6 billion in loans, primarily secured by properties in the U.S. and European gateway cities, with 96% of its lending consisting of floating-rate loans [10] - Despite a 23.9% year-over-year decline in net interest income (NII) in the first half of 2025, NII is expected to rise due to declining mortgage rates, with a current dividend yield of 9.9% and a payout ratio of 96% [11] Annaly Capital Management (NLY) - Annaly manages an $89.5 billion portfolio, with a focus on residential credit, mortgage servicing rights (MSRs), and Agency mortgage-backed securities (MBS), which helps reduce volatility and interest rate sensitivity [14][15] - NLY's NII increased to $493.2 million in the first half of 2025 from $47.1 million a year ago, supported by improving purchase originations and refinancing, with a current dividend yield of 13.6% and a payout ratio of 99% [16][17] Orchid Island Capital (ORC) - Orchid focuses on Agency residential mortgage-backed securities (RMBS) and has seen its NII rise to $42.9 million in the first half of 2025, compared to net interest expenses of $3.2 million in the same period last year [22] - The company currently offers a dividend yield of 20.4% and has increased its dividend twice in the past five years, with earnings estimates indicating significant year-over-year growth of 450% and 39.7% for 2025 and 2026, respectively [23]

Group 1 - The Federal Reserve's control is primarily over the effective Federal funds rate, which influences short-term rates, while long-term rates are driven by the 10-year Treasury yield [3][4] - Recent history shows that when the Fed cut rates, long-term Treasury rates increased, indicating a disconnect between Fed actions and market responses [4][5] - Inflation remains above target, but recent CPI reports suggest potential for lower Fed rates, which could lead to higher long-term Treasury rates [5][6] Group 2 - Mortgage REITs (mREITs) operate by borrowing at short-term rates and lending at long-term rates, profiting from the spread between these rates [8][9] - The current market conditions favor mREITs, as lower short-term rates and steady long-term rates enhance their profitability [10][12] - AGNC Investment Corp. is highlighted as a strong mREIT candidate, currently yielding 15%, with potential for increased profits as short-term rates decline [14][16] Group 3 - AGNC's financial performance shows an average asset yield of 4.87% against a repo cost of 4.44%, indicating a healthy spread that could widen with falling short-term rates [14][16] - The company has maintained its dividend despite market fluctuations, suggesting resilience and potential for future increases if conditions remain favorable [16][17] - AGNC trades at 1.1 times book value and six times forward earnings, with expectations that a wider gap between Fed rates and 10-year Treasury yields could positively impact its share price [17]

Group 1 - The article focuses on Dynex Capital (NYSE: DX) from the perspective of preferred shareholders, providing insights into its performance and positioning within the mortgage REIT sector [1] - It highlights the preferred shares of Dynex Capital (NYSE: DX.PR.C) and places them in the context of the broader mREIT market, indicating the importance of understanding their relative performance [1] Group 2 - The article suggests exploring additional resources such as Systematic Income and their Income Portfolios, which are designed with yield and risk management in mind [1] - It also mentions the availability of Interactive Investor Tools for navigating various investment markets, including BDC, CEF, OEF, preferred, and baby bond markets [1]

Core Insights - AGNC Investment Corp. reported second-quarter 2025 results that missed both revenue and earnings estimates due to ongoing tariff concerns and volatility in the mortgage market [1][9] - The tangible book value (TBV) decreased by 7% year over year to $7.81, indicating a decline in the underlying portfolio's value [2][9] - The average net interest spread narrowed to 2.01% from 2.69% a year ago, reflecting increased hedge costs and diminishing benefits [3][9] Financial Performance - AGNC's economic return on tangible common equity was negative 1%, slightly worse than the negative 0.9% from the same quarter in 2024 [3] - Despite challenges, AGNC's average asset yield improved to 4.87% from 4.69% year over year, suggesting potential for better income generation [4] - The company maintains a high dividend yield of 14.8%, compared to the industry average of 12.3%, with a payout ratio of 89% [12] Market Outlook - AGNC continues to focus on agency mortgage-backed securities (MBS), which are guaranteed by U.S. government agencies, positioning itself as a strong player in this market segment [6] - The CEO expressed a favorable outlook for levered and hedged agency MBS investments, noting that mortgage spreads remain elevated by historical standards [7] - Mortgage rates have been declining, with the average 30-year fixed-rate mortgage at 6.74% as of July 24, 2025, down from 6.78% a year ago, which may improve housing affordability and loan demand [8][10] Strategic Initiatives - AGNC has a stock repurchase plan authorized for up to $1 billion through December 31, 2026, which may support share price stability [16] - Year-to-date, AGNC shares have gained 13.7%, outperforming the industry average of 9% [17] - The company is trading at a forward price-to-tangible book (P/TB) multiple of 1.25X, above the industry average of 0.99X, indicating a premium valuation [20]