Latest news with #Kantrowitz
CNBC
4 hours ago
- Business
- CNBC
Student loan forgiveness paused under a popular repayment plan. Here's what to know
The U.S. Department of Education has temporarily paused debt forgiveness under a popular repayment plan for student loan borrowers. In an FAQ on the department states that loan forgiveness for borrowers enrolled in the Income-Based Repayment plan is on hold while it responds to court orders. IBR is one of the department's income-driven repayment plans, also called IDRs. Congress created the first IDR plans back in the 1990s to make student loan borrowers' bills more affordable. The plans cap people's monthly payments at a share of their discretionary income and cancel any remaining debt after a certain period, typically 20 years or 25 years. More from Personal Finance:Trump's 'big beautiful bill' slashes CFPB funding78% say Trump's tariffs will make it harder to deal with debtTax changes under Trump's 'big beautiful bill' — in one chart IBR will be one of only a few repayment options left to millions of borrowers, after recent court actions and the passage by Congress of President Donald Trump's "big beautiful bill." That legislation phases out several income-driven repayment plans. Here's what to know about the delay in debt relief for IBR borrowers. Student loan forgiveness is paused for IBR borrowers because of court actions involving the Biden-administration-era SAVE, or Saving on a Valuable Education, plan, the department said. Former President Joe Biden touted SAVE as the most affordable income-driven repayment plan in history, but its generous terms soon became a point of controversy for Republicans. In February, the 8th U.S. Circuit Court of Appeals sided with GOP-led states that sued to block the SAVE plan rule, which had sweeping impacts on student loan repayment. For example, under the rule, certain periods during which borrowers postponed their payments would count toward their forgiveness timeline. With SAVE blocked, borrowers no longer get credit during those forbearances. "So the U.S. Department of Education will need to make changes to the qualifying payment counts," said higher education expert Mark Kantrowitz. Ellen Keast, deputy press secretary at the Education Dept., said IBR discharges would resume "as soon as the Department is able to establish the correct payment count." The hold on IBR discharges shouldn't impact student loan borrowers who are still years away from debt forgiveness, experts said. However, they may not receive credit for any periods during which their bills were paused. If you're pursuing debt erasure under IBR, your payments made under the plan (or another income-driven repayment plan) will still be bringing you closer to debt cancellation, as long as you are enrolled in IBR when you become entitled to that relief. If you expected your debt to be forgiven shortly, you should continue making payments, Kantrowitz said. You don't want to be flagged as late. "Any excess payments will be refunded," Kantrowitz said.
CNBC
a day ago
- Business
- CNBC
Bitcoin could pull back with equities in the coming weeks, warns Piper Sandler
Bitcoin has notched new records this year as more investors embrace its digital gold narrative – but Piper Sandler warns the crypto is still vulnerable to stock market moves and could stumble in the coming weeks should tariff or rate related worries hit risk assets. "We recommend taking profits on stocks that have benefitted most from relief rally since early April," Michael Kantrowitz, Piper Sandler's chief investment strategist and head of portfolio strategy, said in a note Tuesday. "Markets have flipped from pricing in an inflationary recession on April 8th to a Goldilocks backdrop today. The stocks most at risk after this move are those higher beta, lower-quality names that have seen huge multiple expansion without any improvement in the earnings outlook." With bitcoin, he added, "there remains a very tight directional correlation [with] equity market risk … thus, if we do get a sell-off in risk on assets, for any macro risk that gets priced in, bitcoin would likely decline as well over the near term." The flagship cryptocurrency has been one of the top performing assets since the market low on April 9, returning 54% since then and hitting an all-time high as recently as last week . The gains have been fueled by institutional adoption via bitcoin ETFs as well as corporate treasury buying. The S & P 500 has gained half that amount in the same period. Bitcoin investors are no strangers to big drops, but the coin's maturity has noticeably led to reduced volatility this year, with many of its moves in reaction to broader risk sentiment being smaller than the big swings that made it famous. For example, on April 3, just after President Donald Trump introduced his sweeping tariffs, bitcoin fell 5% compared to the S & P's 4% decline. Still, the move shows bitcoin nevertheless tends to move in tandem with stocks in periods of broad macro fear and risk-off selling. Piper Sandler says there's little risk priced in for the Aug. 1 tariff deadline, but surprise to the upside could disrupt the current Goldilocks environment – economic conditions are neither too hot nor too cold – and the firm expects modestly higher consumer price index readings in the next three to four months. That "could complicate the current narrative that interest rates are moving lower in the near term," Kantrowitz said. August also tends to be a weak month for bitcoin and markets in general, given lower volume amid the summer lull. To be sure, the firm's recommendation that investors trim their riskiest positions is "more of a contrarian and tactical call for risk management rather than a bearish call on U.S. equities," Kantrowitz said. "While valuations are expensive, we expect earnings to continue to propel equities higher, albeit with less speculative leadership." —CNBC's Michael Bloom contributed reporting.
Business Insider
3 days ago
- Business
- Business Insider
Seeking Up to 15% Dividend Yield? Piper Sandler Suggests 2 Dividend Stocks to Buy
Stock investing is all about returns, and the markets have delivered just that since hitting their trough in April. The S&P 500 bottomed out at 4,983 and has since rebounded 26%, bringing its year-to-date gain to 7% and pushing it to record levels. But is there room for more gains? Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Make smarter investment decisions with TipRanks' Smart Investor Picks, delivered to your inbox every week. Piper Sandler chief investment strategist Michael Kantrowitz, in a recent interview, explains why he believes that markets haven't hit their ceiling yet, but he acknowledges that all gains have their limits. 'I think it's important to recognize or acknowledge that the last three months' moves were largely pricing out of macro risk. Whether you look at PEs, which have rebounded, or credit spreads, which have compressed, it's been a very macro-led tape where kind of a rising tide has lifted all boats. Going forward, we should not expect this to sustain the same level of returns, of course,' Kantrowitz stated. But investors are still looking for profits, and when the market ceiling is facing limits, high-yield dividend stocks offer a sound choice to maximize portfolio returns. Against this backdrop, Piper Sandler analyst Crispin Love has highlighted two high-yielding dividend stocks to buy – including one with a yield approaching 15%. Let's give them a closer look. We'll start with AGNC, a real estate investment trust, or REIT, whose activities mainly revolve around agency mortgage-backed securities. These assets are guaranteed against credit losses by Federal entities – Fannie Mae, Freddie Mac, and Ginnie Mae – providing a level of protection for investors. AGNC is an internally managed REIT, with a long-term goal of delivering solid returns to its shareholders. That goal is reflected in the company's highly focused investment strategy. AGNC has built a portfolio where 98% of its assets are agency MBS, including pass-through certificates, collateralized mortgage obligations (CMOs), and 'to-be-announced' securities (TBAs) – all carrying federal guarantees that help mitigate credit risk. As of March 31, the portfolio stood at $78.9 billion in value, with over 95% allocated to 30-year fixed-rate assets, underscoring AGNC's preference for stable, long-duration instruments. AGNC's consistent dividend policy is a key reason it stands out among income investors. In fact, the company pays dividends monthly – a less common but appealing feature for those seeking regular income. This monthly cadence allows investors to better match dividend inflows with ongoing expenses. AGNC's most recent declaration came on July 9 for an August 11 payment, maintaining its 12-cent monthly rate. That equates to 36 cents per quarter and $1.44 annually, translating to a generous forward yield of 15.5%. While its dividend track record is attractive, it's worth examining AGNC's underlying financials to assess the sustainability of those payouts. In its latest quarterly report for Q1 2025, the company posted net interest income of $159 million and a non-GAAP EPS of 44 cents. Although NII fell short of expectations by $284 million, the earnings per share came in 3 cents above the consensus. In setting out the Piper Sandler view here, analyst Crispin Love explains why he believes that this REIT will continue to deliver on the dividend. 'Since AGNC's 1Q25 earnings, agency spreads have tightened slightly following significant volatility around Liberation Day. We believe near-term spread levels and mortgage rates should be somewhat range-bound, but we could see continued rate volatility in 2025 given the macro landscape and uncertainty related to economic growth, inflation, and tariffs. Going forward, we believe AGNC can maintain its current dividend level, with AGNC generating mid-to-high teens returns over the near-term,' Love opined. Love's comments back up his Overweight (i.e., Buy) rating on the stock, and his $10 price target implies a one-year upside potential of 8%. Together with the dividend yield, the total one-year return on this stock may approach 23.5%. (To watch Love's track record, click here) Rithm Capital (RITM) The second dividend stock we'll look at is Rithm Capital, a REIT that was founded in 2013 and for the past decade-plus has provided a compelling investment option in mortgage servicing rights (MSRs). Early on, Rithm focused on MSR management; today, its portfolio is more varied, holding a diverse set of real estate assets. In addition to mortgage servicing rights, these assets include residential mortgage loans, commercial real estate, single-family rentals, business purpose loans, and even consumer loans. Building on this expanded investment scope, Rithm took a major strategic step in late 2023 by acquiring the asset management firm Sculptor Capital Management. The $719.8 million deal significantly broadened Rithm's operational reach and brought Sculptor's sizable asset base under its umbrella. The impact of this acquisition is evident in the company's numbers. Rithm now boasts $7.8 billion in total equity and a book value of $12.39 per common share. Its total assets stand at $45 billion, while assets under management have grown to $35 billion – a figure reflecting the addition of Sculptor's portfolio. Diving into specific segments, the company holds over $5.5 billion in mortgage origination and servicing and nearly $850 million in residential transitional lending. These robust figures support Rithm's overarching goal: to deliver stable and attractive long-term returns to shareholders. A key part of that strategy is the dividend, which the company has paid consistently for 12 years. The current quarterly dividend stands at 25 cents per common share, declared most recently on June 18 for a July 31 payment. At the annualized rate of $1, this payout translates to a forward yield of 8.4%. That yield appears well-supported by the company's latest financials. In 1Q25, earnings available for distribution (EAD) came in at $275.3 million, or 52 cents per share – 5 cents ahead of expectations and more than enough to cover the dividend. Checking in again with Piper Sandler's Crispin Love, we find that the analyst has a lot to say about Rithm – and it's mostly positive. 'With 30-year mortgage rates keeping the origination outlook still far from a normalized environment, we are focused on names that can perform in this higher for longer backdrop. One name that stands out to us for multiple reasons is RITM. Rithm is a diversified business across mortgage and asset management and is currently trading at just 5x earnings. On the mortgage side, RITM is the #3 mortgage servicer in the US which is an annuity like business that can actually outperform in higher rate backdrops. In addition, management is contemplating a potential spin of its mortgage business (Newrez), which could serve as a catalyst to shares. And lastly, RITM continues to grow in asset management following its acquisition of Sculptor in late 2023 with the potential for more acquisitions or partnerships in the space,' Love noted. The analyst quantifies this stance with an Overweight (i.e., Buy) rating, along with a $14 price target that points toward a one-year gain of 17.25%. Add in the dividend yield, and the return for RITM over the coming year can hit as high as ~26%. All in all, there are 6 recent analyst reviews on record for Rithm Capital and they are all positive – for a unanimous Strong Buy consensus rating. (See RITM stock forecast) To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks' Best Stocks to Buy, a tool that unites all of TipRanks' equity insights.
Business Insider
5 days ago
- Business
- Business Insider
Your ETF investment might be dragging down your portfolio returns — here's why
Buying an ETF is a common recommendation for investors looking for diversification, but the popular investment vehicle might not be doing the job you're expecting it to, according to one Wall Street strategist. Michael Kantrowitz, chief investment officer and head of portfolio strategy at Piper Sandler, isn't a big fan of owning broad indices, especially in today's highly concentrated market. ETFs are supposed to put investing into easy mode, especially for retail investors. Anybody can purchase a basket of securities to diversify their portfolio — just pick a theme, buy the ticker, and wait. While they're definitely a helpful tool for investors, Kantrowitz urges caution. "By buying an index fund today, compared to 15 or 20 years ago, you've got a lot more idiosyncratic company-specific risk today," Kantrowitz told Business Insider. "You think you're buying an index, but you're really just exposed to seven or 10 stocks. If the AI story takes a dip, it doesn't necessarily hit all stocks, but it could really hit those index funds." Indeed, market concentration among the top Big Tech companies is at record highs. According to Apollo's chief economist Torsten Sløk, the top 10 companies in the S&P 500 are trading at a higher valuation than that seen during the dot-com bubble. Investors who buy an S&P 500 fund for diversification are actually getting an over 30% weighting in the Magnificent Seven. Additionally, using sector-specific ETFs to diversify isn't always a good idea either, Kantrowitz added. ETFs can be susceptible to tracking error, meaning that the fund doesn't precisely follow the underlying index. SEC rules stipulate that no more than 25% of a diversified fund's assets can be allocated to a single stock, which often forces sector ETFs to cap their exposure to dominant names like Apple or Nvidia, even if those companies make up a much larger share of the actual index. For example, in 2024 the S&P 500 technology sector posted a 38% gain. However, the Technology Select SPDR Fund (XLK) only rose 25%. This pattern is especially prominent in sectors with high concentration, which include communications services and consumer discretionary, Kantrowitz said. "Because there are concentration issues and weighting schemes in these ETFs, you think you're buying something and it's actually not what you're getting," he said. That doesn't mean all ETFs are prone to this risk. Lean more into active management, Kantrowitz advises, including ETFs and mutual funds, as well as individual stock picks. Kantrowitz also isn't writing off large-cap quality stocks, such as some of the Big Tech names that have dominated the index. But if you're looking for diversification, it's a good idea to look outside of traditional index ETFs.
CNBC
09-07-2025
- Business
- CNBC
Trump is right about the Fed needing to lower rates, says Piper Sandler
Piper Sandler agrees with Donald Trump that the Federal Reserve needs to lower rates, as the president's barbs at Chair Jerome Powell grow louder. "Politics aside, [Trump] isn't wrong. Just because the overall economy and market, which is increasingly a reflection of the largest businesses and wealthiest consumers, appears to be chugging along doesn't mean that lower rates aren't warranted," Michael Kantrowitz, the firm's chief investment strategist, wrote. "Historically speaking, every single broad-based improvement in the U.S. economy began with an improvement in housing, and for that to occur we'll need to see lower rates." Kantrowitz noted that just a modest decline in short- and long-term interest rates could lead to greater breadth in economic activity and stronger corporate earnings — both of which he said have been lacking in recent years. He also pointed to a somber housing market as another reason to lower rates. Kantrowitz said growing inventory and price declines as factors that pose a threat to economic growth. His note to clients comes as investors await the release of the Federal Open Market Committee's minutes from its June meeting, which will be out at 2 p.m. ET. They also come as Trump increasingly calls for the Fed to lower rates. On Wednesday, Trump said in a Truth Social post that fed rates are "AT LEAST 3 [percentage] Points too high." Trump is also reportedly considering naming a "shadow chair" until Powell departs his role. Despite Trump's comments and worries over the Fed's credibility, the U.S. stock market remains near record levels. The S & P 500 scaled to an all-time high last week and is up 6% for the year. .SPX YTD mountain S & P 500 performance over the past year. Still, a strong market does not assuage what he sees as intense levels of weak affordability and economic bifurcation. "The scar tissue from 2022's inflation shock has left policy makers and investors overly concerned that lower rates could cause another resurgence of inflation," he added. "This is recency bias at it's best, we are not in the COVID backdrop any longer and tariffs as an inflation risk akin to the 2022 experience is exaggerated." Mortgage rates have remained in a narrow range since early April, leading to historically low demand as homebuyers remain bogged down by overinflated house prices and low supply. Last week saw a strong jump in total mortgage application volume compared with the previous week, however, after a drop in mortgage rates.
