NRZ Doubles Its Dividend and Looks to Increase Again

NYSE: NRZ | New Residential Investment Corp. News, Ratings, and Charts

NRZ – The potential to either restore dividends to nearly pre-pandemic levels or to start on a path of steady dividend growth is clear with: NRZ, GMLP and PAA.

At the start of the pandemic-triggered economic crisis, a large portion of stocks in the high-yield sectors slashed or suspended dividend payments. For example, Hoya Capital Real Estate reports that 31 of 42 mortgage real estate investment trusts (REITs) cut or suspended dividends from March through June.

Other sectors, such as equity REITs, business development companies (BDCs), and energy midstream companies, had large numbers of dividend cuts. Now, almost half a year after the pandemic kicked the stuffing out of income stocks, I am starting to look for those companies that will bring back higher dividend rates.

There are two main reasons behind the dividend cuts we’ve seen in 2020.

One reason is that the pandemic and related economic shutdown so disrupted a company’s business that the profits and cash flow to pay dividends stopped. An example of this effect is lodging REITs. These REITs own hotels managed by the hotel companies.

Unlike most other REIT sectors, lodging REITs participate in the profits, and in the second quarter, empty hotels meant no profits or cash flow to pay dividends. With continued lack of business travel due to the pandemic, it is unclear when hotels will again be full enough to generate profits and dividends for REIT investors.

The other reason is that the uncertainty brought about by the pandemic pushed companies to slash dividends to retain cash. These are companies that continued to generate revenue and cash flow but were not confident that would continue.

With the 2020 second-quarter earnings results, there now is a better picture of the continuing cash flow that could be used to pay dividends. The financial results from these companies show they have the potential to either restore dividends to nearly pre-pandemic levels or to start on a path of steady dividend growth.

Here are three stocks that could soon start to increase dividends.

New Residential Investment (NRZ)

In late March, finance REIT New Residential Investment (NRZ) cut its dividend by 90%, going from $0.50 per share down to $0.05.

In June, with the next announcement, the dividend was doubled to 10 cents. Second-quarter core earnings came in at $0.34 per share, down from $0.48 reported for the first quarter.

The New Residential business will benefit from the strong housing market. Profits should quickly recover to the 2019 levels of $0.60 per share each quarter.

I expect the dividend increases to continue each quarter.

Golar LNG Partners (GMLP)

In April, Golar LNG Partners (GMLP) slashed its dividend by 95%, dropping the $0.4042 quarterly dividend rate down to $0.0202.

On August 14, Golar released its second-quarter financial results; included in the report was the fact that distributable cash flow covered the two-cent dividend by 20 times. That means the company generated enough free cash flow to pay the old 40 cent dividend.

I do not expect Golar to restore the old dividend, but I would not be surprised if they soon boost the rate ten-fold, to around $0.20 per share per quarter.

Plains All American Pipelines LP (PAA)

Also, in April, crude oil pipeline company Plains All American Pipelines LP (PAA) reduced distributions by 50%, down to $0.18 per share. For the 2020 second quarter, Plains reported distributable cash flow (DCF) of $0.41 per share, down from $0.73 for the 2019 second quarter.

With earnings, the company provided full-year DCF guidance of $2.23 per share, down from $2.91 in 2019.

However, the $0.72 annualized dividend is almost four-times covered, so I expect Plains to give a nice dividend increase soon, most likely in January 2021.

Want More Great Investing Ideas?

Top Dividend Stock to Own! Download Free Report Today

Buy These 3 High-Yield Dividend Stocks All Under $15

Buy and Hold These 3 Dividend Stocks Forever


NRZ shares rose $0.02 (+0.25%) in after-hours trading Tuesday. Year-to-date, NRZ has declined -49.82%, versus a 6.30% rise in the benchmark S&P 500 index during the same period.


About the Author: Tim Plaehn


Tim is the lead income and dividend investing analyst at Investors Alley. He is the editor for The Dividend Hunter, a popular investment research advisory focusing on high-yield dividend stocks for investors who want a steady and growing income. Prior to joining Investors Alley Tim was a stock broker, financial planner, and F-16 fighter pilot and instructor in the U.S. Air Force. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
NRZGet RatingGet RatingGet Rating
GMLPGet RatingGet RatingGet Rating
PAAGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Bullish or Bearish Stock Set Up?

The S&P 500 (SPY) record highs sounds pretty darn bullish on the surface. Yet as we dig below the surface there are some curious signals that point more Risk Off. This is especially true as we come into the next Fed meeting after a round of data that points to inflation still being too high...only further delaying the first rate cut. What does this all mean for stocks from here? Steve Reitmeister offers his latest views on the market outlook along with a preview of his top picks to stay on step ahead of the market. Read on for more...

3 High-Yield Dividend Stocks to Boost Your Portfolio

Even though inflation appears to be cooling down, it still remains above the Fed’s 2% target. Amid ongoing geopolitical tensions, investors could consider looking into high-yield dividend stocks, Verizon Communications (VZ), Altria Group (MO), and Ares Capital (ARCC). Keep reading...

3 Fintech Stocks Revolutionizing Financial Services

Fintech is causing a revolutionary shift in the financial services market and this could be the right time to scoop up fundamentally strong fintech stocks like PayPal Holdings (PYPL), NerdWallet (NRDS), and Qifu Technology (QFIN). Read more...

3 Value Stocks With Strong Fundamentals to Buy Now

Value investing is highly favored as it focuses on purchasing undervalued stocks with solid fundamentals, providing the potential for high returns with lower risk and a disciplined, long-term approach. Therefore, it could be wise to invest in fundamentally sound, value stocks Expedia Group (EXPE), Incyte (INCY), and Albertsons Companies (ACI) for substantial long-term returns. Keep reading...

Stock Alert: Breakout or Fake Out?

The S&P 500 (SPY) officially made new highs this week. Perhaps a reason to celebrate more gains on the way...or perhaps there are signs this move is hollow leading to more downside soon on the way. To help solve this riddle, 44 year investment veteran Steve Reitmeister shares his views along with a trading plan and top picks to stay on the right side of the action. That is what Steve Reitmeister will cover in his latest commentary below. Read on for more...

Read More Stories

More New Residential Investment Corp. (NRZ) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All NRZ News