Starwood Property Trust's dividend is in jeopardy because it has a 100% payout ratio and falling distributable profits, especially in commercial and residential lending. The trust's portfolio has dropped by $2.0 billion compared to last year, indicating a tough credit situation and high office vacancy rates. As a result, Starwood Property Trust's stock is now rated as 'Hold' due to the heightened risk to dividends and a lack of safety in distributable earnings.
Market fluctuations can create chances for investors. Energy Transfer and Starwood Property Trust provide yields between 7% and 9%, which can help diversify portfolios and generate high income. ET has a solid 7% yield backed by reliable cash flows and growth in natural gas exports, while STWD offers a 9.7% yield thanks to its varied portfolio and strong financial position.
STWD gains from lower expenses. However, the year-over-year drops in book value and revenue are a setback.
Starwood Property Trust, Inc. (NYSE:STWD) will hold its Q4 2024 Earnings Conference Call on February 27, 2025, at 10:00 AM ET. The call will feature company representatives including Zachary Tanenbaum, Barry Sternlicht, Jeffrey DiModica, and Rina Paniry, along with analysts from various financial institutions. Currently, all participants are in listen-only mode.
Starwood Property Trust (STWD) reported quarterly earnings of $0.48 per share, which is higher than the Zacks Consensus Estimate of $0.46 per share. This is a decrease compared to earnings of $0.58 per share from the same period last year.
I consider Starwood Property Trust a good investment because it offers a high dividend yield of 9.9%, has strong cash flow, and a solid profit margin. Although it doesn't have a history of increasing dividends and its credit ratings are below investment grade, the company has decreased its office property investments and focused more on multi-family housing, which lowers its risk. However, there is still some risk from interest rates since the Federal Reserve has stopped cutting rates for the time being.
I have a positive outlook on Starwood Property Trust because it offers steady dividends and has a solid financial standing, which makes it a dependable choice for income. Even with recent price changes, STWD has kept its quarterly dividend at $0.48, showing resilience during tough economic times and periods of high interest rates. With a diverse and high-quality asset portfolio, along with anticipated rate cuts in 2025, STWD is well-prepared for future growth and rising property values.
Starwood Property Trust, Inc. has successfully completed various capital market transactions in December 2024. They repriced $1.4 billion in corporate term loans and raised $783 million in new corporate debt at the lowest spreads ever. Additionally, they extended the average maturity of their corporate debt from 2.2 years to 3.5 years, including a new issue of $500 million in senior unsecured sustainability notes.
I am changing my rating for Starwood Property Trust to a hold because of lower dividend coverage and uncertain economic conditions. While STWD has a varied portfolio and has consistently paid dividends, recent drops in earnings could threaten the stability of those dividends. Although interest rate cuts in 2024 might create growth opportunities, high rates could still harm earnings.
GREENWICH, Conn., Dec. 17, 2024 /PRNewswire/ -- Starwood Property Trust, Inc. (NYSE: STWD) (the "Company") has announced that it has set the price for its private offering of $500 million in unsecured senior notes with a 6.500% interest rate, maturing in 2030 (the "Notes"). This amount was increased from the earlier planned $400 million.