Redwood Trust (RWT) declared a quarterly dividend of $0.18 per share for the second quarter, up 12.5% from the previous $0.16 per share dividend. Shares of the real estate investment trust rose 2.3% in Thursday’s extended market session.
Redwood Trust’s annual dividend of $0.72 per share now reflects a dividend yield of 6.1%.
Redwood Trust CEO Christopher J. Abate said, “We are pleased to increase the dividend we pay to shareholders. The Q2 dividend marks the third dividend increase in the past year and represents the strength of the earnings power from both our operating platforms and our investment portfolio.”
He added, “We remain committed to delivering a stable to growing dividend while continuing to strategically deploy capital going forward.” (See RWT stock analysis on TipRanks)
On April 28, Redwood Trust reported GAAP earnings of $0.72 per share in Q1 that outpaced the Street’s estimate of $0.34. GAAP book value per common share was $10.76 at the end of March 31.
Following the earnings announcement, Raymond James analyst Stephen Laws reiterated a Buy rating on the stock and increased his price target to $14.50 from $13.50. This implies 23.7% upside potential from current levels.
Laws said, “We expect continued book value growth from retained earnings, recovery of unrealized marks, and valuation gains from securitization calls. With more income being generated in the TRS, we expect RWT to retain a portion of earnings to fund accretive new investments.”
Consensus among analysts is a Strong Buy based on 5 Buys and 1 Hold. The RWT average analyst price target of $12.50 implies 6.7% upside potential from current levels. Shares have gained 89.6% over the past year.
Redwood Trust scores a ‘Perfect 10’ on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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