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Ellington Financial Inc.'s 12.85% dividend yield is attractive, but the company is a hard pass due to excessive leverage and high credit and liquidity risks. The company's financial health is weak and deteriorating, making its dividend unsafe. Macroeconomic uncertainties and risks such as interest rate, credit, and liquidity could severely impact Ellington Financial.
Ellington Financial: 2 High Yield Preferred Share Options
Ellington Financial, Inc. (NYSE:EFC ) Q3 2024 Earnings Conference Call November 7, 2024 11:00 AM ET Company Participants Alaael-Deen Shilleh - Associate General Counsel and Secretary Larry Penn - Chief Executive Officer Mark Tecotzky - Co-Chief Investment Officer JR Herlihy - Chief Financial Officer Conference Call Participants Trevor Cranston - Citizens JMP Francesco Labetti - KBW Matthew Erdner - Jones Trading Eric Hagen - BTIG Matthew Howlett - B. Riley Operator Good morning, ladies and gentlemen, and thank you for standing by.
EFC-A recently changed to a floating rate. Despite the 10% yield, investors should be aware of the risks. Since they haven't called EFC-E, there's a decent chance that they won't call them.
My investment focus has shifted to income generation, with Ellington Financial offering a 12% yield despite a recent dividend cut. EFC's dividend reduction from $0.15 to $0.13 per share and missed earnings expectations prompt a downgrade to Hold. The real estate sector shows signs of recovery with rate cuts, but EFC's future performance hinges on economic stability and effective hedging.
Ellington Financial is a real estate investment trust with high yielding preferred share options, including one set to pay 10.7% at floating this fall. Despite higher expenses impacting earnings, Ellington Financial has been able to increase net interest income and cover preferred dividends. Concentration of loans, geography, and potential performance issues are keeping me clear of common shares, but hopeful for Series A preferred shares.
24/7 Insights Investors love dividends, but selecting the right stocks can be a challenge.
Ellington Financial Inc. is a strong investment in the mREIT space, well positioned for when rates normalize and the housing industry rebounds. The company's diversified portfolio includes income from various sources, allowing for flexibility in managing holdings to adjust to different market climates. Despite recent dividend cuts, Ellington's performance remains strong, with potential for distributable earnings to increase and provide solid income for investors.