10 Ultra-High Dividend Small-Cap Stocks You Should Know About, Part 1

Two Harbors Investment Corp (NYSE:TWO)

– Elite Investors with Long Positions (as of September 30): 19

– Aggregate Value of Elite Investors’ Holdings (as of September 30): $136.4 million

Shares of Two Harbors Investment Corp (NYSE:TWO) have undergone a gradual decline since June, which has caused them to now trade down by nearly 20% year-to-date. This decline has made the $0.26 per share quarterly dividend paid by the REIT highly lucrative, translating into an annual dividend yield of almost 13%. Hedge funds that owned the stock largely held on to their conviction for it during the third quarter, with the number of funds reporting a stake in the REIT declining by one during the period. On December 3, analysts at JPMorgan Chase & Co. reiterated their ‘Outperform’ rating on Two Harbors Investment Corp (NYSE:TWO), while at the same time lowering their price target on it to $11 from $12. Billionaire Israel Englander’s Millennium Management continued to remain the largest shareholder of Two Harbors Investment Corp in our database at the end of September, even after reducing its stake in the REIT by 11% during the third quarter, to 3.54 million shares.

New Residential Investment Corp (NYSE:NRZ)

– Elite Investors with Long Positions (as of September 30): 33

– Aggregate Value of Elite Investors’ Holdings (as of September 30): $674.4 million

Moving on, New Residential Investment Corp (NYSE:NRZ) is another REIT whose shares have suffered a gradual decline since June. However, because of their strong start to the year, they are currently trading down by only 13.5% year-to-date. The 14% decline that New Residential Investment Corp (NYSE:NRZ)’s stock suffered during the third quarter did cause its popularity among hedge funds to go down a bit, as there were 38 funds that reported owning a stake in the REIT as of the end of June. Nevertheless, the 33 funds that owned a stake in it at the end of September still owned 22.30% of the outstanding shares of the REIT. We believe that New Residential Investment Corp is one of the best small-cap stocks to buy at these levels, not only because it boasts an annual dividend yield of 16.66%, but also because it is trading at a forward price-to-earnings multiple of only 5.82 and price-to-book multiple of just 0.96. Anand Parekh‘s Alyeska Investment Group was among the hedge funds that increased its stake in New Residential Investment Corp substantially during the third quarter, by 20%; it held over 5.7 million shares of the REIT on September 30.

Northstar Realty Finance Corp (NYSE:NRF)

– Elite Investors with Long Positions (as of September 30): 59

– Aggregate Value of Elite Investors’ Holdings (as of September 30): $1.53 Billion

With a quarterly dividend payout of $0.75 per share, which amounts to an annual dividend yield of 18.27%, commercial real estate company Northstar Realty Finance Corp is the numero uno ultra-high dividend small-cap stock that you should definitely know about. On November 2, the company announced the completion of the  spin-off of NRE, its European real estate business, and also the exercising of its one-for-two reverse stock split. Prior to this, the stock of Northstar Realty Finance Corp (NYSE:NRF) endured a turbulent third quarter, losing 20%. This underperformance during the third quarter also weighed on the stock’s popularity during that time, with five fewer elite funds reporting a stake in it as of the end of September than did at the end of June. Having increased its stake in Northstar Realty Finance Corp by 12% to over 19 million shares, Robert Pitts‘ Steadfast Capital Management emerged as its largest shareholder at the end of September among funds that we cover.

Disclosure: None