Unpacking the Dividend Prospects of MFA Financial Inc
MFA Financial Inc(MFA, Financial) recently announced a dividend of $0.35 per share, payable on 2023-10-31, with the ex-dividend date set for 2023-09-29. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into MFA Financial Incs dividend performance and assess its sustainability.
What Does MFA Financial Inc Do?
MFA Financial Inc is a specialty finance company that invests in and finances residential mortgage assets. Its principal business objective is to deliver shareholder value through the generation of distributable income and through asset performance linked to residential mortgage credit fundamentals. The company selectively invests in residential mortgage assets with a focus on credit analysis, projected prepayment rates, interest rate sensitivity and expected return. The company is an internally managed real estate investment trust or REIT.
A Glimpse at MFA Financial Inc's Dividend History
MFA Financial Inc has maintained a consistent dividend payment record since 1998. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down MFA Financial Inc's Dividend Yield and Growth
As of today, MFA Financial Inc currently has a 12-month trailing dividend yield of 14.99% and a 12-month forward dividend yield of 14.11%. This suggests an expectation of decrease dividend payments over the next 12 months.
Over the past three years, MFA Financial Inc's annual dividend growth rate was -19.50%. Extended to a five-year horizon, this rate increased to -18.80% per year. And over the past decade, MFA Financial Inc's annual dividends per share growth rate stands at -10.40%.
Based on MFA Financial Inc's dividend yield and five-year growth rate, the 5-year yield on cost of MFA Financial Inc stock as of today is approximately 5.29%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, MFA Financial Inc's dividend payout ratio is 0.00.
MFA Financial Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks MFA Financial Inc's profitability 4 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 8 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. MFA Financial Inc's growth rank of 4 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Next Steps
In conclusion, while MFA Financial Inc has a commendable dividend payment history, its negative growth rates, high payout ratio, and low profitability and growth ranks raise questions about the sustainability of its dividends. Investors must consider these factors when making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
