When it comes to investing in residential real estate assets, there are a lot of differences to be found among REITs. Mortgage REITs, for instance, invest in residential mortgage-backed securities. These investment vehicles often exhibit double-dividend yields thanks to their leveraged business models, but they can be somewhat risky -- especially as far as dividend safety is concerned.
REITs are notoriously difficult to analyze, because of their vastly complex investment portfolios. However, New Residential's core earnings trend looks promising.
New Residential's expertise in managing its investment portfolio also shows in its year-over-year book value growth, which remains a key metric for the evaluation of REIT structures.
New Residential is off to a convincing start as an independent company. MSRs, which mortgage originators are happy to sell, are an attractive investment opportunity, and New Residential focuses on MSRs to deliver stable fee income going forward.
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