New Residential Investment Corp. is a rare type of mREIT that benefits from higher interest rates. If the Fed declines to raise rates New Residential could be negatively impacted at a fundamental level. Yet there is reason to believe the market won't care and could actually move shares higher. Despite strong fundamental performance and a sizable dividend New Residential Investment Corporation (NYSE:NRZ) underperformed in 2015 and faced continuing pressure in 2016. An association with mREITs and their interest rate sensitivity has pressured the company's shares as investors feared rising rates driven by a monetary tightening policy from the Fed.
Although New Residential would benefit from higher interest rates at a fundamental level, shares could actually rise if the Fed were to become more dovish since it could cause investors to buy back into mREITs. At this point I'm bullish on New Residential as the fundamentals at the company remain strong, the dividend remains large, and the current price shows the market it not yet appreciating either.
Source: Seeking Alpha
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Great Post. I believe that NRZ is subject to interest rates that are outside of their control. However, this stock definitely has the chance to pay me lots of dividends.
Long NRZ