Recently Credit Suisse became positive on Newcastle Investment (NCT), mainly due to its robust yield of 11%. It joins several other analyst firms to notice the firm this year. In this anemic yield environment, the company deserves a hard look from income investors.
"Newcastle Investment Corp. operates as a real estate investment and finance company that invests in and manages a portfolio consisting primarily of real estate securities." (Business description from Yahoo Finance)
6 Reasons NCT makes sense for income investor at just $7 a share:
- The stock yields 11.2% based on the current 80 cent annual dividend payout. Credit Suisse believes this distribution will increase to 92 cents in FY2013.
- In addition to Credit Suisse initiating the shares as an "outperform", Compass Point initiated NCT as a "Buy" in March and Barclays initiated the shares as an "outperform" in April of this year.
- The company has crushed earnings estimates three of the past four quarters and consensus earnings estimates for FY2012 have risen substantially over the past three months.
- NCT is projected to come in with 9% to 10% revenue growth for both FY2012 and FY2013.
- Analysts' price targets range from $7.75 to $10 a share on NCT, reasonable given the 11% yield.
- NCT is selling at less than 5 times forward earnings and insiders are holding onto their shares after being huge buyers of the stock last summer.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in NCT over the next 72 hours.
