It's tough to argue with the results from Income Investor selection iStar Financial (NYSE:SFI).

As a REIT, U.S. GAAP results are useful for evaluating iStar, but they don't give a clear picture of the company's cash earnings. To get closer to those cash results, we must adjust for certain non-cash items such as depreciation expense. The company provides an adjusted earnings figure, which is close to what I consider an acceptable measurement, so we'll use that for comparisons. In its first quarter, iStar's adjusted earnings were $121.3 million, or $0.93 per diluted share. This compares favorably to last year's first-quarter results of $105.1 million and $0.90 per share. It also means the company earned a 19.2% return on its equity, which is impressive for a financial firm.

iStar currently pays a quarterly dividend of $0.825 per share. With the company's adjusted earnings easily exceeding its dividend, the current payout, which yields 6.9%, seems safe from a cash flow perspective. The company doesn't include ongoing maintenance capital expenditures in its adjusted earnings, but I don't think they would make a material difference in this case.

The earnings growth comes with a balance sheet that hasn't materially changed. The company did increase its debt load and its debt-to-equity ratio, but it also refinanced some of its debt at lower rates and increased its future earnings potential with additional assets.

With lending operations like Redwood Trust (NYSE:RWT) and diversified property ownership and management like Washington REIT (NYSE:WRE), iStar is not your run-of-the-mill investment. But this same diversity makes iStar a bit unique. The company receives a stable, slow growth income stream from property ownership and a higher-growth, more volatile income stream from lending.

The company has entered a joint venture with two other real estate companies from London to pursue investment opportunities in Europe. The investment should bring additional growth and geographic diversification to the business.

As one of the original Income Investor selections in September 2003, iStar has returned 59.5% for subscribers and beaten the market by more than 8% over that period. Much of that return has come from dividends, and today, iStar still yields a beefy 6.9%. Considering its continued investment in its portfolio, yield, and growth outlook, iStar still looks like an intriguing investment today.

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At the time of publication Nathan Parmelee had no financial position in any of the companies mentioned. The Motley Fool has an ironclad disclosure policy.