8.9% Covered Yield, Potential For 2018 Dividend Hike, And Big Upside

The Federal Reserve just hiked interest rates and is prepared to lift rates three more times in 2018. This REIT has positive interest rate sensitivity, and is poised to benefit from interest rate growth. Interest rate growth could result in a dividend hike in 2018. Shares are undervalued. I see ~14 percent valuation upside ahead, plus dividends. An investment in the stock yields 8.9 percent.

Starwood Property Trust, Inc. (STWD) provides investors with a stream of recurring, high-quality dividend income. But the mortgage REIT has more to offer than that: Starwood Property Trust has upside tied to an increase in interest rates that could yield both a higher dividend and a higher equity valuation in 2018. An investment in this mortgage REIT throws off an 8.9 percent yield.

Source: Seeking Alpha

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