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Author has a degree in Engineering and is an avid investor in the market. Experience in industrial materials and structures. In college studied atomic & nuclear physics as well as material engineering. Eastern European
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  • NewCastle a Stock ready to Soar to its historical mean. 0 comments
    Dec 23, 2010 10:24 AM | about stocks: NCT, AGNC, NLY, DRI, RYN, DEI, BDN, RWT, FSP, GTY, FUR, CLNY, VNO, SPG, BXP, EQR, PSA, HCP, STAR, C, BAC, WFC, MS
    Once NewCastle uses up its Loss CarryForward, its shares should soar back to their historical mean of $25-$30 range.

    Why would a $6.93/shr stock shares soar to their historical mean range, its called Hefty Dividend payouts.

    For instance based on the last 9 months if there were no carry over losses, (NYSE:NCT) would have paid rougly $7.20 eps in dividends based on the roughly $8 EPS it earned.

    Why does (NCT) have to pay 90% of its earnings as a dividend you ask?

    (NCT) is listed as a REIT in the tax code:

    In order to avoid taxation at the corporate level, NewCastle, like other REITs, is required to pay out at least 90% of its taxable income as dividends to shareholders.
    Therefore at $7/shr (NCT) would have a 100% dividend yield payout in the future based on the 9 months earnings so far this year .

    Investors would flood into (NCT) to take advantage of the High dividend yield, sending the stock price higher therefore lowering the dividend yield per share payout.

    On an historical mean the share price vs. dividend payout has peaked at $25 to $35/shr

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