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Is Arbor Realty Stock Worth a Watch for its 12.6% Dividend Yield?
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The mREIT industry is witnessing a favorable trend with the recent decline in mortgage rates, a positive development for the housing market. Income-seeking investors have a large appetite for REIT stocks, as U.S. law requires REITs to distribute 90% of its annual taxable income in the form of dividends.
So, keeping an eye on mREIT stocks like Arbor Realty Trust, Inc. (ABR - Free Report) , which offers ultra-high dividend yield and high payout, will be wise now. Considering yesterday’s closing price of $13.61, ABR’s dividend yield currently stands at 12.6%.
This New York-headquartered REIT primarily focuses on originating and servicing loans for multi-family, single-family and other commercial real estate assets. Arbor manages a multibillion-dollar servicing portfolio specializing in government-sponsored enterprise products. Loans held for sale were $342.9 million, with financing associated with these loans totaling $335.2 million as of June 30, 2024.
Over the past five years, Arbor Realty has raised its dividend 13 times, with an annualized dividend growth rate of 9.9%. This is impressive compared with the industry’s average of 11.6% and attractive for investors as it represents a steady income stream.
Other mREIT companies like NexPoint Real Estate Finance, Inc. (NREF - Free Report) and AFC Gamma, Inc. (AFCG - Free Report) are also providing investors with solid dividend options. NREF has an annual dividend yield of 10.4%, while AFCG has a dividend yield of 6.8%.
Should one keep an eye on ABR stock to earn a high dividend yield? Let’s check the company's financials to understand the risks and rewards before making any decision.
Arbor Realty: Capital Distribution & Liquidity Position
Apart from regular quarterly dividend payouts, ABR has a share buyback program in place. In December 2023, the company’s board authorized a repurchase of $100 million worth of shares, increasing the total to $150 million. This followed an earlier $50 million repurchase announced in March 2023. As of June 30, 2023, almost $138.6 million shares remained available. The plan has no expiry date.
In terms of liquidity position, as of June 30, 2024, ABR's cash and cash equivalents were $956 million. The company’s due to borrowers totaled $758 million as of the same date.
The company’s capital position remains strong. Arbor Realty plans to return the excess capital to its shareholders prudently.
Why Does Arbor Realty’s Long-Term View Look Favorable?
Long-term bond yields have declined with the Fed's announcement of an interest rate cut starting in September. This resulted in a decline in mortgage rates. The average rate on the 30-year fixed-rate mortgage dropped to 6.46% as of Aug. 22 from 6.49% a week ago. A year ago, the metric averaged 7.23%.
Housing affordability challenges are expected to decline with lower mortgage rates. With rates trending lower and balanced supply/affordability playing out in the mortgage market, demand is set to increase in the coming days. This is likely to support the ABR’s financials further.
Also, rate cuts beginning in September will likely increase net interest spreads. This will ease earnings pressure for ABR, as it is currently reeling under high funding costs. This will help the company to increase its dividend payout, which might look attractive to investors.
The company has been witnessing steady organic growth over the past few years. ABR’s total revenues witnessed a compound annual growth rate (CAGR) of 3.5% over the past three years ending 2023. Further, its net interest income witnessed a CAGR of 36% in the same period.
Given the strong fundamentals, the company will be able to sustain its position in the current rapidly changing market.
In the past six months, shares of Arbor Realty have gained 1.6% against the industry’s decline of 1.2%.
Image Source: Zacks Investment Research
Conclusion
Despite several near-term headwinds, including increasing credit risk and a rise in non-performing loans, ABR is well-poised to counter the challenges and maintain profitability in the long term. The company offers a lucrative income option with a consistent dividend payout history.
Image: Shutterstock
Is Arbor Realty Stock Worth a Watch for its 12.6% Dividend Yield?
The mREIT industry is witnessing a favorable trend with the recent decline in mortgage rates, a positive development for the housing market. Income-seeking investors have a large appetite for REIT stocks, as U.S. law requires REITs to distribute 90% of its annual taxable income in the form of dividends.
So, keeping an eye on mREIT stocks like Arbor Realty Trust, Inc. (ABR - Free Report) , which offers ultra-high dividend yield and high payout, will be wise now. Considering yesterday’s closing price of $13.61, ABR’s dividend yield currently stands at 12.6%.
This New York-headquartered REIT primarily focuses on originating and servicing loans for multi-family, single-family and other commercial real estate assets. Arbor manages a multibillion-dollar servicing portfolio specializing in government-sponsored enterprise products. Loans held for sale were $342.9 million, with financing associated with these loans totaling $335.2 million as of June 30, 2024.
Over the past five years, Arbor Realty has raised its dividend 13 times, with an annualized dividend growth rate of 9.9%. This is impressive compared with the industry’s average of 11.6% and attractive for investors as it represents a steady income stream.
Other mREIT companies like NexPoint Real Estate Finance, Inc. (NREF - Free Report) and AFC Gamma, Inc. (AFCG - Free Report) are also providing investors with solid dividend options. NREF has an annual dividend yield of 10.4%, while AFCG has a dividend yield of 6.8%.
Arbor Realty Trust Dividend Yield (TTM)
Arbor Realty Trust dividend-yield-ttm | Arbor Realty Trust Quote
Should one keep an eye on ABR stock to earn a high dividend yield? Let’s check the company's financials to understand the risks and rewards before making any decision.
Arbor Realty: Capital Distribution & Liquidity Position
Apart from regular quarterly dividend payouts, ABR has a share buyback program in place. In December 2023, the company’s board authorized a repurchase of $100 million worth of shares, increasing the total to $150 million. This followed an earlier $50 million repurchase announced in March 2023. As of June 30, 2023, almost $138.6 million shares remained available. The plan has no expiry date.
In terms of liquidity position, as of June 30, 2024, ABR's cash and cash equivalents were $956 million. The company’s due to borrowers totaled $758 million as of the same date.
The company’s capital position remains strong. Arbor Realty plans to return the excess capital to its shareholders prudently.
Why Does Arbor Realty’s Long-Term View Look Favorable?
Long-term bond yields have declined with the Fed's announcement of an interest rate cut starting in September. This resulted in a decline in mortgage rates. The average rate on the 30-year fixed-rate mortgage dropped to 6.46% as of Aug. 22 from 6.49% a week ago. A year ago, the metric averaged 7.23%.
Housing affordability challenges are expected to decline with lower mortgage rates. With rates trending lower and balanced supply/affordability playing out in the mortgage market, demand is set to increase in the coming days. This is likely to support the ABR’s financials further.
Also, rate cuts beginning in September will likely increase net interest spreads. This will ease earnings pressure for ABR, as it is currently reeling under high funding costs. This will help the company to increase its dividend payout, which might look attractive to investors.
The company has been witnessing steady organic growth over the past few years. ABR’s total revenues witnessed a compound annual growth rate (CAGR) of 3.5% over the past three years ending 2023. Further, its net interest income witnessed a CAGR of 36% in the same period.
Given the strong fundamentals, the company will be able to sustain its position in the current rapidly changing market.
In the past six months, shares of Arbor Realty have gained 1.6% against the industry’s decline of 1.2%.
Image Source: Zacks Investment Research
Conclusion
Despite several near-term headwinds, including increasing credit risk and a rise in non-performing loans, ABR is well-poised to counter the challenges and maintain profitability in the long term. The company offers a lucrative income option with a consistent dividend payout history.
Therefore, income-seeking investors should keep this Zacks Rank #3 (Hold) stock on their radar as it will help generate robust returns over time. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.