On Thursday, May 29, Altisource Residential announced it would be increasing its quarterly dividend by 12.5%.
Two portfolio-related transactions helped boost the company's most recent earnings which beat estimates by $0.02/share.
The company's net income as well as its upcoming dividend distributions could demonstrate significant long-term growth especially if its portfolio-related acquisition activity remains steady.
As an investor whose portfolio includes a majority of income-generating stocks, dividend-related events are always something I tend to keep a close eye on. That said, it is these events that have a tendency to influence my decision in terms of which stocks I should keep on my radar and which ones I should not. With that said, and in the wake of its latest dividend increase, I wanted to highlight several reasons why I've chosen to stay bullish on shares of Altisource Residential (NYSE:RESI).
A Brief Summary of the Company:
Altisource Residential Corporation is engaged in the acquisition and ownership of single-family rental assets. Its primary sourcing strategy to acquire these assets includes purchase of sub-performing and non-performing mortgages as well as single-family homes at or following the foreclosure sale (these are classified as "REO" or "REO Properties"). The company's management intends to pursue opportunities to acquire single-family rental assets throughout the United States as long as such assets meet the company's desired property characteristics and provide acceptable long-term returns.
Dividend Summary and Recent Behavior:
On Thursday, May 29, Altisource announced a quarterly dividend increase of $0.05/share, which brings its upcoming dividend payout to $0.45/share. It should be noted that the increase will be paid on June 23 for shareholders on record as of June 9. This boost represents a 12.5% increase from its prior dividend of $0.40/share, which was paid to shareholders on March 24.
Most Recent Earnings Performance:
The company released its quarterly earnings results on the morning of April 29, and demonstrated what I believe to be a fairly solid quarter. It reported earnings of $0.77 a share, which was $0.02 cents above analysts' estimates. Revenues came in at $74.52 million while the company managed to resolve nearly three times as many loans on a quarter-over-quarter (822 vs. 288) basis.
In terms of the company's first quarter portfolio-related activity, Altisource showed strength in numbers as it completed the acquisition of an aggregate of 4,200 non-performing mortgage loans ("NPLs") with an aggregate market value of underlying properties of $900 million. The company also agreed to purchase a portfolio with an aggregate of 915 mortgage loans and real estate owned ("REO") properties having an aggregate market value of underlying properties of $180 million.
If this particular behavior can be kept up over the next several quarters there's a very good chance that both the company's net income and subsequent distributions could see a considerable increase over the next 12-18 months.
For those of you who may be considering a position in Altisource Residential, I strongly recommend keeping a close eye on the company's recent trend performance, its ability to continue to maintain its dividend, and its ability to continue to enhance shareholder value over the next 12-24 months, as each of these factors could play a role in the company's long-term growth.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.