RAIT Financial Trust (NYSE:RAS) is in the REIT sector, one of the hottest sectors recently. The company reported a $0.24 earnings per share for Q4 2009, the first profitable quarter after a few quarters of big losses since Q4 2008. We bought it at $1.03 two months ago and its stock price was about to touch $3.00 on Friday, a near +200% return in just two months of our investment.
Below is the company's dividend distribution history after it went public:
1998 - $1.77
1999 - $2.04
2000 - $2.04
2001 - $2.12
2002 - $2.39
2003 - $2.46
2004 - $2.40
2005 - $2.43
2006 - $2.70
2007 - $2.56
2008 - $1.27 (it stopped its dividend since Q4, 2008 because of recession ) .
Most surprisingly, the stock was at the $1.00 level but its book value was $10.34 and just turned profitable two months ago. The company will report Q1 2010 results on Thursday April 29. The estimates are a loss of $0.11 per share but our calculation is a profit of around $0.30 per share.
If the company resumes its dividend by the end of this year and gradually increases its distribution level to the half of pre-recession year's' distribution level (around $1.20 per share) in 2014, a $100,000 investment at $1.03 per share will give you more than $100,000 yearly dividend.
That is, a $100,000 investment in 2010 may turn into $120,000 annual dividend in 5 years. In the meantime, the stock will be traded much higher than its current level, so $10.00 is quite conservative. Therefore your asset will become at least one million dollars. One million or more net asset + $120k annual dividend should be enough for peaceful retirement.
Disclosure: Long on RAS