Why Is Redwood Trust's Dividend Yield So High?
The past year has been downright awful for companies in the mortgage space. The majority of the blame lies with rising interest rates. Mortgage originators saw volumes collapse as rising rates removed the incentive for borrowers to refinance their homes. It also caused mortgage-backed securities to get sold off as bond fund managers sell their most liquid securities to meet redemption obligations.
This caused mortgages to underperform Treasuries and mortgage real estate investment trust (mREIT) stocks to underperform the stock market. This pushed dividend yields up to the point where these stocks become outliers. So why is Redwood Trust's (NYSE: RWT) dividend yield so high?
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Source Fool.com
