Latest news with #S&P600
Yahoo
10-07-2025
- Business
- Yahoo
History Says the S&P 400 and 600 Indexes Could Be Poised to Soar
Over the last three and five years, large-cap stocks have outperformed small- and mid-cap stocks. The gap between the forward P/Es of the S&P 500 index and the S&P 400 and 600 indexes hasn't been this wide in decades. The last time the valuation gap reached this level, small- and mid-cap stocks made a big move for many years. 10 stocks we like better than S&P 400 Index - MidCap Price Return (USD) › If you've invested your money in the broader benchmark S&P 500 (SNPINDEX: ^GSPC) index over the last five years, then you've done quite well. The index recently registered all-time highs and was up close to 96% over the last five years (as of July 7). A large part of the success can be attributed to a handful of high-flying artificial intelligence (AI) stocks that have reached multitrillion-dollar market caps, effectively putting the rest of the index on their backs. However, value investors who like to go fishing for small- and mid-cap stocks in the S&P 400 (SNPINDEX: ^MID) and S&P 600 indexes haven't fared as well, lagging the S&P 500, especially for small-cap stocks in the S&P 600. Luckily, by some historical metrics, history says this could be about to change. While the five-year charts don't look so bad, the three-year chart is worse, especially for the S&P 600, which gained about 22.5% over the last three years, compared to the S&P 500's 63% gain. In fact, on a forward price-to-earnings basis, the gap between small- and mid-cap stocks and large-cap stocks in the S&P 500 hasn't been this wide in decades, according to Tobias Carlisle, a portfolio manager at the Acquirers Funds. As you can see above, small- and mid-cap stocks have more or less been stagnant over the last 3.5 years. They've faced difficulties from the high interest rate environment, which increases their cost of debt; concerns about a recession; and more recently uncertainty over tariffs and how that might impact their businesses. Carlisle points out that the last time this happened, the S&P 400 and 600 indexes went on to widely outperform large-cap stocks in the S&P 500 for well over a decade -- and he wasn't kidding. There are, of course, different periods of time within this larger time frame that large-cap stocks may have performed better or not underperformed as much, but small and medium caps pretty regularly held a lead. Part of the reason for this could have been the zero interest rate policy (ZIRP) that ensued after the Great Recession in 2008 all the way until the end of 2018. When rates fall and safer assets yield less, investors take more of a risk-on approach, which makes small- and mid-cap stocks more appealing. A ZIRP environment also carries other advantages, like a lower cost to borrow, as mentioned above, and can result in more economic activity. Investors should always keep in mind that while history often rhymes, it rarely repeats itself. That means that while data can be helpful in informing investment decisions, it doesn't predict the future, so there's certainly a chance that small- and mid-caps don't go on to outperform. It seems unlikely that the Federal Reserve will revert to a ZIRP environment anytime soon, unless the economy really struggles, and some are worried about a higher inflationary environment down the line, whether due to tariffs or U.S. fiscal concerns. That said, there are potential tailwinds that could lift small- and mid-cap stocks. The market is forecasting two interest rate cuts in the back half of the year, and some market strategists like Morgan Stanley see the rate cuts accelerating in 2026 -- they are calling for seven next year. Furthermore, at some point, President Donald Trump is likely to finalize tariffs, which, at the very least, will give businesses clarity, even if they are higher than expected. The recently passed U.S. budget reconciliation bill also firmed up tax cuts for corporations that were first implemented in Trump's first term, which could help with growth. Ultimately, I do think the more attractively priced small- and mid-cap groups are poised for a breakout at some point. It's not a guarantee, so don't bet the farm, but having some exposure to this group in your portfolio is a good idea. Before you buy stock in S&P 400 Index - MidCap Price Return (USD), consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 400 Index - MidCap Price Return (USD) wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $687,764!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $980,723!* Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 179% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of July 7, 2025 Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. History Says the S&P 400 and 600 Indexes Could Be Poised to Soar was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13-06-2025
- Business
- Yahoo
US Market's Undiscovered Gems Three Small Caps to Watch
Amidst the turbulence in global markets caused by geopolitical tensions and fluctuating oil prices, the U.S. stock market has been experiencing a mix of gains and setbacks, with major indices like the Dow Jones dropping significantly. Despite these challenges, small-cap stocks within the S&P 600 have shown resilience, offering potential opportunities for investors seeking undiscovered gems that could thrive in volatile conditions. Name Debt To Equity Revenue Growth Earnings Growth Health Rating West Bancorporation 169.96% -1.41% -8.52% ★★★★★★ Oakworth Capital 42.08% 15.43% 7.31% ★★★★★★ Metalpha Technology Holding NA 81.88% -4.97% ★★★★★★ FineMark Holdings 122.25% 2.34% -26.34% ★★★★★★ FRMO 0.09% 44.64% 49.91% ★★★★★☆ Valhi 43.01% 1.55% -2.64% ★★★★★☆ Gulf Island Fabrication 19.65% -2.17% 42.26% ★★★★★☆ Solesence 82.42% 23.41% -1.04% ★★★★☆☆ Reitar Logtech Holdings 31.39% 231.46% 41.38% ★★★★☆☆ Vantage 6.72% -16.62% -15.47% ★★★★☆☆ Click here to see the full list of 284 stocks from our US Undiscovered Gems With Strong Fundamentals screener. Below we spotlight a couple of our favorites from our exclusive screener. Simply Wall St Value Rating: ★★★★★★ Overview: Southern Missouri Bancorp, Inc. is the bank holding company for Southern Bank, offering a range of banking and financial services to individuals and corporate clients in the United States, with a market cap of $612.34 million. Operations: Southern Missouri Bancorp generates revenue primarily from its thrift/savings and loan institutions, totaling $172.93 million. Southern Missouri Bancorp, with total assets of US$5 billion and equity of US$528.8 million, is carving out a promising niche through strategic expansions into St. Louis and Kansas City. This bank shows robust growth, with earnings up 7.9% over the past year compared to the industry's 5.3%. It maintains a sufficient allowance for bad loans at 0.5% of total loans, indicating strong risk management practices. The company trades at a significant discount to its estimated fair value by about 50%, suggesting potential upside for investors who appreciate its low-risk funding structure and high-quality earnings profile. Southern Missouri Bancorp's growth is fueled by strategic expansions and operational efficiency improvements. Click here to explore the full narrative on Southern Missouri Bancorp. Simply Wall St Value Rating: ★★★★★☆ Overview: Global Ship Lease, Inc. operates by owning and chartering containerships under fixed-rate charters to container shipping companies globally, with a market capitalization of approximately $917.74 million. Operations: GSL generates revenue primarily through fixed-rate charters of its containerships, totaling approximately $715.23 million. The company's market capitalization is around $917.74 million. Global Ship Lease, a player in the shipping industry, has seen its earnings grow by 20% over the past year, outpacing the industry's -5% performance. The company's debt management is commendable with a net debt to equity ratio of 13%, and interest payments are well covered by EBIT at 23 times. Trading at 80% below estimated fair value suggests potential for investors seeking undervalued opportunities. Recent financials show revenue of US$190.98 million and net income of US$123.39 million for Q1 2025, reflecting robust profitability with basic earnings per share rising to US$3.4 from last year's US$2.54. Global Ship Lease's strategic fleet renewal and charter coverage aim for stable earnings growth. Click here to explore the full narrative on Global Ship Lease's investment potential. Simply Wall St Value Rating: ★★★★★☆ Overview: Valhi, Inc. operates in the chemicals, component products, and real estate management and development sectors across Europe, North America, the Asia Pacific, and internationally with a market cap of approximately $447.62 million. Operations: Valhi's revenue streams are primarily derived from chemicals ($1.90 billion), component products ($148.20 million), and real estate management and development ($66.50 million). Valhi's recent performance has been marked by a significant one-off gain of US$50.4M, contributing to an impressive earnings growth of 4082% over the past year, far outpacing the chemicals industry's -3.4%. The company's debt situation has improved, with its debt-to-equity ratio dropping from 81% to 43% over five years and a satisfactory net debt-to-equity ratio at 29.1%. Although free cash flow is not positive, Valhi's interest payments are well covered by EBIT at 7.7x coverage. Its price-to-earnings ratio stands attractively low at 3.8x compared to the US market average of 18.1x. Take a closer look at Valhi's potential here in our health report. Gain insights into Valhi's past trends and performance with our Past report. Click through to start exploring the rest of the 281 US Undiscovered Gems With Strong Fundamentals now. Hold shares in these firms? Setup your portfolio in Simply Wall St to seamlessly track your investments and receive personalized updates on your portfolio's performance. Unlock the power of informed investing with Simply Wall St, your free guide to navigating stock markets worldwide. Explore high-performing small cap companies that haven't yet garnered significant analyst attention. Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management. Find companies with promising cash flow potential yet trading below their fair value. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include SMBC GSL and VHI. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13-06-2025
- Business
- Yahoo
US Market's Undiscovered Gems Three Small Caps to Watch
Amidst the turbulence in global markets caused by geopolitical tensions and fluctuating oil prices, the U.S. stock market has been experiencing a mix of gains and setbacks, with major indices like the Dow Jones dropping significantly. Despite these challenges, small-cap stocks within the S&P 600 have shown resilience, offering potential opportunities for investors seeking undiscovered gems that could thrive in volatile conditions. Name Debt To Equity Revenue Growth Earnings Growth Health Rating West Bancorporation 169.96% -1.41% -8.52% ★★★★★★ Oakworth Capital 42.08% 15.43% 7.31% ★★★★★★ Metalpha Technology Holding NA 81.88% -4.97% ★★★★★★ FineMark Holdings 122.25% 2.34% -26.34% ★★★★★★ FRMO 0.09% 44.64% 49.91% ★★★★★☆ Valhi 43.01% 1.55% -2.64% ★★★★★☆ Gulf Island Fabrication 19.65% -2.17% 42.26% ★★★★★☆ Solesence 82.42% 23.41% -1.04% ★★★★☆☆ Reitar Logtech Holdings 31.39% 231.46% 41.38% ★★★★☆☆ Vantage 6.72% -16.62% -15.47% ★★★★☆☆ Click here to see the full list of 284 stocks from our US Undiscovered Gems With Strong Fundamentals screener. Below we spotlight a couple of our favorites from our exclusive screener. Simply Wall St Value Rating: ★★★★★★ Overview: Southern Missouri Bancorp, Inc. is the bank holding company for Southern Bank, offering a range of banking and financial services to individuals and corporate clients in the United States, with a market cap of $612.34 million. Operations: Southern Missouri Bancorp generates revenue primarily from its thrift/savings and loan institutions, totaling $172.93 million. Southern Missouri Bancorp, with total assets of US$5 billion and equity of US$528.8 million, is carving out a promising niche through strategic expansions into St. Louis and Kansas City. This bank shows robust growth, with earnings up 7.9% over the past year compared to the industry's 5.3%. It maintains a sufficient allowance for bad loans at 0.5% of total loans, indicating strong risk management practices. The company trades at a significant discount to its estimated fair value by about 50%, suggesting potential upside for investors who appreciate its low-risk funding structure and high-quality earnings profile. Southern Missouri Bancorp's growth is fueled by strategic expansions and operational efficiency improvements. Click here to explore the full narrative on Southern Missouri Bancorp. Simply Wall St Value Rating: ★★★★★☆ Overview: Global Ship Lease, Inc. operates by owning and chartering containerships under fixed-rate charters to container shipping companies globally, with a market capitalization of approximately $917.74 million. Operations: GSL generates revenue primarily through fixed-rate charters of its containerships, totaling approximately $715.23 million. The company's market capitalization is around $917.74 million. Global Ship Lease, a player in the shipping industry, has seen its earnings grow by 20% over the past year, outpacing the industry's -5% performance. The company's debt management is commendable with a net debt to equity ratio of 13%, and interest payments are well covered by EBIT at 23 times. Trading at 80% below estimated fair value suggests potential for investors seeking undervalued opportunities. Recent financials show revenue of US$190.98 million and net income of US$123.39 million for Q1 2025, reflecting robust profitability with basic earnings per share rising to US$3.4 from last year's US$2.54. Global Ship Lease's strategic fleet renewal and charter coverage aim for stable earnings growth. Click here to explore the full narrative on Global Ship Lease's investment potential. Simply Wall St Value Rating: ★★★★★☆ Overview: Valhi, Inc. operates in the chemicals, component products, and real estate management and development sectors across Europe, North America, the Asia Pacific, and internationally with a market cap of approximately $447.62 million. Operations: Valhi's revenue streams are primarily derived from chemicals ($1.90 billion), component products ($148.20 million), and real estate management and development ($66.50 million). Valhi's recent performance has been marked by a significant one-off gain of US$50.4M, contributing to an impressive earnings growth of 4082% over the past year, far outpacing the chemicals industry's -3.4%. The company's debt situation has improved, with its debt-to-equity ratio dropping from 81% to 43% over five years and a satisfactory net debt-to-equity ratio at 29.1%. Although free cash flow is not positive, Valhi's interest payments are well covered by EBIT at 7.7x coverage. Its price-to-earnings ratio stands attractively low at 3.8x compared to the US market average of 18.1x. Take a closer look at Valhi's potential here in our health report. Gain insights into Valhi's past trends and performance with our Past report. Click through to start exploring the rest of the 281 US Undiscovered Gems With Strong Fundamentals now. Hold shares in these firms? Setup your portfolio in Simply Wall St to seamlessly track your investments and receive personalized updates on your portfolio's performance. Unlock the power of informed investing with Simply Wall St, your free guide to navigating stock markets worldwide. Explore high-performing small cap companies that haven't yet garnered significant analyst attention. Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management. Find companies with promising cash flow potential yet trading below their fair value. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include SMBC GSL and VHI. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@
Yahoo
09-06-2025
- Business
- Yahoo
Small-caps 'compelling' as stagflation risks rise, says wealth advisor
STORY: "We are looking at the 30% discount to large cap U.S. stocks," said Diton. "That is dramatic." Diton also says small-cap stocks tend to outperform larger equities in times of stagflation, when inflation climbs and growth slows which economists say could happen as a result of tariffs. He recommends investors look in a particular index for the right investments. "You can look at the 600, the S&P 600 small cap, which is a higher quality index and only about 9% of those companies are unprofitable," he said. "That's where I'd be looking." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
08-06-2025
- Business
- Forbes
How To Lock In Yields Up To 17.1% In Historically Cheap Small Caps
Small-cap stocks haven't been this cheap in decades. This valuation advantage gets interesting when we add big fat dividends and today, we'll discuss five cheap small caps yielding between 8.3% and 17.1%. (That's no typo by the way—we only talk serious dividends here at Contrarian Outlook!) The Apples, Google and Microsofts of the world are priced like luxury goods. Smaller stocks, meanwhile, have been left at the discount rack. Let's shop: The valuation spread between the S&P 500 and S&P 600 hasn't been this wide since Bill Clinton was wondering whether dot-com was one word or two. Is a bust to follow again or are these big yields from small stocks really spectacular deals? Let's explore. Israel-based Platytika Holding (PLTK) is a gamemaker that primarily makes casino-themed titles for countries on just about every continent. Here in the U.S., Playtika's best-known titles include Bingo Blitz, Redecor and Domino Dreams. Playtika has done quite a bit of building by acquisition, purchasing Seriously, Youda Games, Innplay Labs and, most recently, SuperPlay, among others. (It tried to buy Angry Birds maker Rovio in 2023, but the deal eventually fell apart.) Playtika hasn't been a dividend stock for very long—it initiated its dividend program in late February 2024. About a year ago, when I examined PLTK among other 'inaugural dividends,' I mentioned its 10-cent-quarterly dividend translated into a nice 5% yield, but also more than 60% of the company's estimated earnings for 2024. By the time all was said and done, it ended up being closer to 70% of adjusted profits for last year. Fast-forward to today: PLTK hasn't raised its payout, but it now yields north of 8%. This is the 'wrong way' to raise a dividend. PLTK Total Returns Ycharts As I said in my previous writeup, the mobile game market is brutal, especially among the 'free to play' titles that Playtika specializes in. PLTK had been suffering from years of profit declines and flat sales, and sure enough, 2024 saw another drop in earnings and a modest decline in sales. And yet … the few pros who cover the stock are quite bullish about what comes next. While revenue growth estimates for the next two years aren't much to scream over, they're looking for a 32% jump in profits this year, and a respectable 23% improvement in 2026. Meanwhile, PLTK's woeful performance has driven the dividend higher and its valuation down to a dirt-cheap 6 times forward earnings. Still, Playtika is asking for a lot of faith in its growth prospects while (so far) providing very little evidence. Carlyle Secured Lending (CGBD) is a business development company (BDC) that's externally managed by a subsidiary of multinational asset manager Carlyle Group (CG). CGBD invests primarily in U.S. middle market companies with between $25 million and $100 million in annual EBITDA. And it predominantly deals in first-lien debt (83%), though it has single-digit exposure to second-lien debt, equity investments and even investment funds. Its 138 portfolio companies cover a couple dozen industries, including healthcare/pharmaceuticals, software, consumer services, and business services. Carlyle Secured Lending came public in 2017. And as we neared the end of 2024, I noted that shares had and spent most of their time putting up downright excellent returns. Things have changed—drastically!—since then. CGBD Total Returns Ycharts What went wrong? Two earnings reports have revealed some growing cracks in Carlyle's armor. In February, profits came in below estimates, thanks largely to a markdown on hotel management company Aimbridge Hospitality. It also doubled the number of companies on non-accrual (loans that are delinquent for a prolonged period, usually 90 days), from two to four. In May, the company reported disappointing earnings again, and an additional company went on non-accrual, bringing non-accruals up to 1.6% of the total portfolio at fair value. More importantly, the company announced it would only pay a base dividend of 40 cents per share. That's problematic for two reasons: Based on net investment income (NII) estimates for the rest of the year, dividend coverage could be tight; it's possible the company might need to rely on 'spillover' income to cover the payout for at least a quarter or two. CGBD is just a couple months removed from a potentially beneficial merger with another BDC, Carlyle Secured Lending III; even without any more specials, its base dividend translates into an 11%-plus yield; and shares now trade at a nice 16% discount to net asset value (NAV). But I'd like to see signs that CGBD is correcting its recent operational slide. Bain Capital Specialty Finance (BCSF) is a diversified BDC that provides a variety of financing solutions to 175 portfolio companies primarily in North America, but also Europe and Australia (a rarity for many BDCs). The lion's share of Bain Capital's investments are first-lien in nature—in addition to 64% exposure directly through portfolio companies, it also has almost 16% more through its investment vehicles. It also deals in equity and preferred equity interest, as well as second-lien and subordinated debt. Unlike CGBD, Bain Capital hasn't exactly lit the industry on fire, but it has caught its stride over the past couple of years. Other reasons to like it? A low cost of debt, a higher-than-average portfolio yield (made even better by its joint ventures), investment-grade debt and an 11% discount to NAV. However I'm nervous about its dividend situation. Dividend coverage has been a strength for the past couple of years, but that could be changing. In 2024, Bain Capital stopped a short streak of dividend hikes and kept its 42-cent regular dividend in place. It instead began paying 3-cent quarterly special dividends, which it has kept up with ever since. That 45 cents quarterly comes out to $1.80 per share in annual dividends. However, analysts expect net investment income to drop from $2.09 per share in 2024 to $1.84 per share this year and $1.82 per share in 2026. That means dividend ratios in the 98%-99% range, which leaves almost no room for error. If BCSF does run into difficulty over the next couple of years, we could see the special dividends reduced or taken away outright—certainly a better look than having to cut a regular dividend, but the practical end result is still less income, even if temporarily. On the other hand, the base-and-special system gives BCSF room to reward us more if Wall Street's expectations prove overly pessimistic. Let's move to another high-yield corner of the market: mortgage real estate investment trusts (mREITs). For the unfamiliar: The typical REIT deals in physical properties—apartments, strip malls, hospitals, casinos. But mortgage REITs deal in 'paper' real estate. They borrow at low short-term rates, lend that cash out in the form of mortgages based on long-term rates, then pocket the difference. If 'long' rates (like those on the 10-year Treasury) are steady or, better yet, declining, that's great news for mREITs. New loans pay less, so their existing loans become more valuable. That's been a mixed bag for mREITs in 2025, which enjoyed declining rates for the first couple months of the year, but have been suffering from a rebound ever since. First up is Two Harbors Investment (TWO), which deals in mortgage servicing rights (MSRs), agency residential mortgage-backed securities (RMBSs) and other financial assets. It also owns an operational platform, RoundPoint Mortgage Servicing LLC, and it has a direct-to-consumer originations business that's still in its early innings. Whenever we see a yield near 20%, it's almost always caused by a sharp decline in share prices. That's very much the case with Two Harbors, whose shares traded in the $60s before collapsing during COVID, only mildly rebounded, then deteriorated ever since to current prices around $10 per share. That action pretty accurately reflected a miserable operating picture: TWO Dividend Ycharts Still, we're talking about a 17%-plus yield. If there's any sort of redeeming value, it's worth looking into. Well, Two Harbors has been working on lowering its debt-to-equity ratio, the company's book value ticked up in the most recent quarter, and it trades at a low 70% of that (still relatively decimated) book value. But all of those positive bullet points have been canceled out by an 8-K filed near the end of May. Two Harbors announced it was taking a $198.9 million charge related to litigation dating back to 2020 against PRCM Advisers, its former external manager. That comes out to roughly $1.90 per share, or 13% of TWO's last reported book value of $14.66 per share. The potential danger is that this significant hit to book value could impact earnings available for distribution (EAD), putting its current dividend rate of 45 cents per share at risk. While the company doesn't report earnings until July, TWO typically announces its dividends in the middle of the month prior to the month in which it reports—so, in this case, we might know by sometime in mid-June. Too much dividend drama. Take Franklin BSP Realty Trust (FBRT), a mortgage REIT dealing in commercial mortgage-backed securities (CMBSs). Multifamily is king here, at more than 70% of the portfolio, but FBRT is happy to take on just about any type of commercial property—it also holds loans in hospitality, industrial, office, retail and other sectors. Virtually all of its portfolio is senior debt, and nearly 90% of that is floating-rate in nature. Collateralized loan obligations are the bulk of its financing sources at a hair over 80%, but Franklin BSP Realty Trust also has 11% exposure to warehouse lending (credit lines extended by banks to originate mortgages), 5% to repurchase agreements (repo), and sprinklings of unsecured debt and asset-specific financing. FBRT shares are down by double digits year-to-date, but now trade at an attractive 28% discount to book and a P/E of around 7 based on 2026 earnings estimates, which is pretty low among mREITs. And there are reasons for optimism—chiefly, the looming July close on the acquisition of NewPoint Holdings JV LLC. The deal to absorb this privately held commercial real estate finance company could set Franklin apart from other commercial mREITs. Again, though, the dividend situation is perhaps shakier than many of us would want. For one, the payout hasn't budged since the company started trading in 2021. Also problematic—real-estate owned (basically, foreclosures) and short-term non-market financing have been dragging on earnings. On the most recent conference call, CFO Jerome Baglien said, 'While we believe in the long-term earning power of the company to cover the dividend, if REO sales slow or volatile market conditions persist, it could be prudent to revisit our dividend in the short term.' There is a little good news: If earnings expectations stay on track, on the other side of FBRT's short-term drag is a path to more solid dividend coverage longer-term. Brett Owens is Chief Investment Strategist for Contrarian Outlook. For more great income ideas, get your free copy his latest special report: How to Live off Huge Monthly Dividends (up to 8.7%) — Practically Forever. Disclosure: none
