Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Growth & Yield Drivers Remain in Place for PennyMac Mortgage Investment Trust (PMT)


Since PennyMac operates as a mortgage REIT that invests largely in non-Agency MBS, its closest peers include Newcastle Investment Corp. (NYSE:NCT) and Nationstar Mortgage Holdings Inc (NYSE:NSM). Newcastle Investment actively manages a portfolio of real estate securities, loans, excess mortgage servicing rights, and other real estate related assets. The company’s investment in real estate securities is spread across residential and commercial security types, providing the company sufficient diversification. The company has a market cap of $1.85 billion and offers a dividend yield of 8.19%.

Nationstar Mortgage Holdings has a market cap of over $3.3 billion and a well diversified investment portfolio. The company engages in servicing of residential mortgage loans besides originating and securitizing single family mortgage loans to government sponsored entities. The company’s recent announcement of its acquisition of sizable mortgage servicing rights, which were in the pipeline, is believed to positively impact future earnings.


While gain on sale margins are normalizing, PennyMac’s volumes are expected to continue to grow, allowing for continued correspondent earnings growth. This gives me sufficient confidence that PennyMac will continue to offer a combination of growth through the correspondent channel coupled with a high dividend yield of 8.8% from the distressed investments.

The article Growth & Yield Drivers Remain in Place for PMT originally appeared on and is written by Adnan Khan.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.