Arbor Realty Trust, Inc. (ABR) is set up as a real estate investment trust "REIT", and it is focused on investing in multi-family and commercial real estate-related bridge and mezzanine loans. It also invests in preferred equity and other real estate assets. This New York-based company was formed in 2003 and it is externally managed by Arbor Commercial Mortgage, LLC. As a real estate investment trust it is required to distribute at least 90% of its taxable income to shareholders. This is one reason why it offers a much higher than average dividend which currently yields over 8%. By contrast, the average stock in the S&P 500 Index yields just over 2%.
For the third quarter of 2012, the company reported improved
financial results. It announced quarterly net income of $2.1 million, or 7 cents per diluted common share. This compares favorably with a net loss for the quarter ended September 30, 2011 of $2.4 million, or 10 cents per diluted common share. It also reported adjusted book value at $11.16 per share and GAAP book value per share of $7.58.
On November 6th, Ivan Kaufman (the CEO) purchased 14,500 shares for a transaction value of $90,000. He followed up that purchase with a number of other purchases in the past few days, including a purchase of 10,000 shares on November 7, in a transaction valued at $53,500. Insiders usually already own stock and have options in the companies they work for, so when they buy additional shares, it can be a sign that the stock is undervalued and worth considering.
With an improvement in financial results, the shares trading well below book value, a generous yield of over 8% and recent insider buying, this stock makes sense for income investors to consider, especially on pullbacks due to market corrections.
Here are some key points for ABR:
Current share price: $5.38
The 52 week range is $3.20 to $6.67
Earnings estimates for 2012: n/a on Yahoo Finance
Earnings estimates for 2013: n/a on Yahoo Finance
Annual dividend: 44 cents per share which yields 8.2%
Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.