6 Commercial Mortgage REITs With Huge Dividends Can Benefit From Rising Interest Rates

BrightSpire Capital

BrightSpire Capital Inc. (NYSE: BRSP) operates as a CRE credit REIT in the United States, and it offers a very solid dividend. The company focuses on originating, acquiring, financing and managing a portfolio of CRE senior mortgage loans, mezzanine loans, preferred equity, debt securities and net leased properties.

The company qualifies as a REIT for federal income tax purposes. The company generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Colony Credit Real Estate.

The Raymond James analyst noted, “We expect BrightSpire Capital earnings to increase going forward due to the benefits of higher rates as well as higher portfolio leverage.”

Investors receive an 8.44% dividend. Raymond James has a $12.50 price target, while the consensus target is $11.20. The stock ended Thursday’s trading session at $9.01.

Granite Point Mortgage Trust

This stock recently bounced smartly off its 52-week low and looks to have solid upside potential. Granite Point Mortgage Trust Inc. (NYSE: GPMT) is a REIT that originates, invests in and manages senior floating-rate commercial mortgage loans and other debt and debt-like commercial real estate investments in the United States.

The company provides intermediate-term bridge or transitional financing for various purposes, including acquisitions, recapitalizations and refinancing, as well as a range of business plans, including lease-up, renovation, repositioning and repurposing of the commercial property. As of December 31, 2021, its investment portfolio includes 105 commercial real estate loan investments.

The analysts said this about positive developments at the company:

While we expect Granite Point Mortgage Trusts’ rate sensitivity to hit an inflection point in the third quarter, we expect distributable earnings to trough in the second quarter. Higher rates should become a tailwind later this year, but we expect recent actions to have a more immediate benefit. In April, the company closed or was in process of closing ~$200 million of new investments, repaid the remaining $100 million of the higher-cost senior secured term loan, and refinanced legacy funding vehicles. These actions are expected to add ~$0.12 per share to NII annually. Additionally, deployment of excess liquidity created from these recent actions could generate an additional ~$0.08–$0.12 per share annually.

Investors receive a 9.04% dividend. The Raymond James target price is $15. The consensus target is $13.75, and the stock closed at $11.06 on Thursday.

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