Mortgage Corporations

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Hi,

I am thinking of purchasing a small amount of MCAN Mortgage Corporation (MKP), Atrium Corporation, or another mortgage corporation in a registered account for a high yield and some limited capital gains (MCAN is now yielding 9.42%) . Do you think that the dividend of MCAN is at risk? If so, under what circulstances? Out of the mortgage corporations, if you checked into them in detail, do you have any preferences?

Thanks

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Asked on February 11, 2024 12:34 pm
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Private answer

The dividend, at least as of the company's recent earnings, is well covered. We have around $1.10 in dividends paid while the company has earned $1.66 in 2023.

The company is clearly benefitting from higher interest rates. It will be interesting to see if the company pays out a special dividend in 2023 like it did in 2022/2021. If so the yields could come in even higher than they are now.

It is a solid company. With it being a small cap mortgage lender I'd certainly adjust positions according to overall risk tolerance, but in terms of the distribution coverage ratios look solid at this time.

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Posted by Dan Kent
Answered on February 13, 2024 7:55 am
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