With an eye-watering annualized yield of 13.4% MFA Financial (MFA) is back in the spotlight as one of the best dividend stocks.
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MFA Financial — headquartered in New York — is a real estate investment trust, or REIT, that finances and manages mortgage-backed securities. Last highlighted in this column in June, MFA Financial shares struggled for months as higher yields dampened investor sentiment.
Nevertheless, after hitting an 8.41 low in late October, the stock has rebounded and is now back above both the 50-day and 200-day moving average.
A Solid Q3 For Dividend Stock
The move higher comes thanks to a modest respite in yields in addition to solid company earnings. MFA Financial reported third-quarter results on Nov. 7, which saw earnings of 40 cents beat analyst estimates of 38 cents, while net income of $46.1 million also came above the consensus estimate.
Solid financial results come despite a poor macro-environment, with the 10-year Treasury rate climbing 80 basis points in the third quarter alone. MFA Financial is expected to return to profitability this year, according to MarketSmith data.
Lower share prices have also meant higher dividend yields, and investors can now cash in on a juicy 13.4% yield. That ranks miles ahead of the Treasury market and above every stock in the S&P 500. Investors can expect the company’s next quarterly dividend to be declared in mid-December.
Naturally, this yield is not free. MFA Financial is acutely sensitive to interest rates and recession risks.
However, there are promising signs. Implied volatility in the equity market has been drained, with the Cboe Market Volatility Index, or VIX, sitting at multiyear lows and a turbulent Treasury market finally shows signs of calming.
While not for conservative investors, those chasing yield can consider MFA Financial.
Shares of the dividend stock are forming a cup base with an 11.85 buy point, per MarketSmith pattern recognition. An early entry may appear around the 11 price level.
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