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Who Needs Bonds When You Can Buy Oritani? A 6% Dividend With An Upside On A Sale!

|Includes: Oritani Financial Corp. (ORIT)

Oritani is a 3.3 billion (assets) thrift located in Township of Washington, New Jersey. The company earns 4.44% on its 2.7 billion dollar loan portfolio.

This bank is a solid earner and pays out 100% of earnings each year as a dividend which for the past 3 years has been right around $1.

CEO Kevin Mitchell owns 1.8% of the company's stock and has maintained a super clean book of loans with 51 basis points of non-performing loans backed by a reserve of 110 basis points.

The 68 year old CEO Kevin Lynch owns 12 million of the stock and if the company is sold it would likely command 160% of tangible book value which would be just under $19.00.

The stock has recently been under $15.00.

The company currently still has excess capital which buyers would not pay a premium for. The equity/asset ratio is now 15.44% but was over 25% in 2011.

ORITANI has been working down their excess capital which was 25% 2011 to 15.44% now. Of course they would like to get top dollar for their bank and they know they will not get paid any premium for the excess capital. However when the ratio equals 10% this bank will bring a nice premium.

The Beta on Oritani is .63.

So with Oritani you have a 6% plus dividend with a possibility of a sale in the next few years. With the current drop in stock prices, this is a nice place to park your cash.

I consider ORIT to be a safe harbor name in a difficult market with fantastic upside.

Disclosure: I am/we are long ORIT.