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Welcome to the forum David! I am interested in entering a home builder stock when they hit bottom since they are obviously very economy cyclical. The dividends are so attractive. I was looking at a few different tickers lately. I know I shouldn't wait for blue skies or I will miss much of the run. I am thinking a good entry point may be after a few FED rate hikes which are almost certain to come.
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11-26-2018, 08:55 AM
(This post was last modified: 11-26-2018, 08:57 AM by fenders53.)
I hope I don't discourage you in any way but we are naturally skeptical around here. IMO it's for our own good, and we make each other better stock pickers. When I see a stock recommended here I often give it a 10 minute look and look for warning signs. I am looking for a few REITs so I checked out NRZ. REITs often have high DIVs but when they get over 10% I need to know what happens next year if the BIZ dips. IIRC from yesterday here is what I found easily, and I hope you can calm my concerns.
-Publicly traded about 3 years, it's had a good run so far.
-Chart looks pretty bad currently, is any of this based on fundamentals or just a tough market?
-Not followed by many analysts yet but those that do rate it overweight
-The DIV is about 11%, the payout rate is about 80% and projected to rise to the 90%+ range. That's a red flag because I don't want to own it if they cut the dividend in half. That is ALWAYS a painful day.
-PE is sub 5, that's pretty low even for a REIT, Why?
-Profit margins are good so they are doing something right.
-And most importantly, how do they make money? I thought they were involved in home building at first, but it is a residential REIT. Are they renting? Loaning money? I didn't try to dig up an earnings conference call. Just curious if you can summarize their BIZ in a few sentences?
Thanks
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It’s been over a year that I looked into the company but one of the great things that happened this year was the acquisition of Shellpoint managing partners, a national mortgage lender, which will boost the revenues and save the company money. I truly believe it is a solid company and even if at some point the dividend goes down a little, it’s still making me more short term money now that I can invest.
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I agree. You have to dig in to see what the company is doing along with the balance sheet and once you see that then you can make a better choice. Fundamentals.
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CY being sold for a nice profit
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