This comprehensive analysis evaluates Rithm Capital Corp.'s (RITM) dividend performance and sustainability against seventeen peer mortgage REITs (mREITs). The article meticulously examines RITM's recent dividend rates, yield percentages, and critical sustainability indicators such as quarterly core earnings and earnings available for distribution (EAD). By comparing these metrics with industry peers, the analysis provides a detailed understanding of RITM's financial health and its capacity to maintain future dividend payouts. Furthermore, it offers projections for RITM's dividend in the first and second quarters of 2026 and concludes with a strategic buy, sell, or hold recommendation, grounded in a valuation methodology that assesses the company's current book value and market price. This in-depth comparative study serves as a valuable resource for investors seeking to gauge RITM's standing within the mREIT sector and the robustness of its dividend strategy.
The current discussion builds upon the initial part of this analysis, which explored RITM's recent financial performance and compared its key metrics, including book value as of September 30, 2025, with those of seventeen mREIT competitors. This foundational understanding is crucial for interpreting the in-depth dividend analysis presented in this segment. The core objective here is to scrutinize RITM's dividend per share rates, yield percentages, and various dividend sustainability metrics against its peers. Supporting documentation for historical data is provided in Table 11, offering a clear reference point. A more detailed examination of RITM's dividend sustainability is further elaborated in Table 12.
By meticulously evaluating these financial indicators, investors can discern which mREITs are likely to maintain stable dividend rates, which face a higher risk of dividend reductions, and which possess the potential for dividend increases or special distributions. The reliability of this analytical framework, both retrospectively and prospectively, has been consistently demonstrated. While this analysis offers a robust starting point for evaluating investment opportunities, it should not be the sole determinant for initiating a position in any specific stock or sector. The article will conclude with a comparative assessment of RITM and its seventeen mREIT counterparts across several key areas: trailing twelve-month (TTM) yields based on stock prices as of December 19, 2025 (including one-year and five-year dividend changes), annual forward yields based on the same stock prices, and annual forward yields derived from estimated current book values (BV as of December 19, 2025). Additionally, a current recommendation for RITM (buy, sell, or hold), along with price targets and projected dividend per share rates for Q1 and Q2 2026, will be provided. It is important to note that mREIT companies are categorized into various classifications, and for the purpose of this series, four distinct types are considered, as outlined in Part 1 for a comprehensive overview.
Examining RITM's dividend trajectory over the past eleven years reveals a pattern of gradual increases, with the quarterly dividend rising from $0.35 per common share in Q3 2014 to $0.50 by Q4 2019. However, in response to the COVID-19 pandemic in Q1 2020, RITM, like many industry peers, conservatively reduced its quarterly dividend to $0.05 per common share. This period was marked by widespread panic, leading to margin calls on most sector participants and creating a cascading effect across the market for both agency and non-agency mortgage-related investments. This swift and severe liquidity crisis forced many companies to deleverage and raise cash, with varying degrees of impact on their investment portfolios and dividend policies. Some peers even suspended dividends for multiple quarters amidst the high levels of economic uncertainty. For RITM, concerns primarily centered on potential stress on mortgage servicers due to an anticipated surge in missed mortgage payments and the servicers' obligation to advance principal and interest payments to investors.
Despite the initial turmoil, RITM swiftly rebounded, increasing its dividend to $0.10, $0.15, and $0.20 per common share in Q2, Q3, and Q4 2020, respectively. By Q3 2021, the dividend further climbed to $0.25 per common share, a rate that has since been maintained. This consistency is particularly noteworthy, as RITM stands out as one of the few exceptions to the general trend of net dividend reductions observed across the broader mREIT sector over the last three years, especially when compared to most agency, hybrid, and commercial whole loan mREIT sub-sectors.
As indicated in Table 11, RITM announced a dividend of $0.25 per common share for Q3 2025, maintaining the previous quarter's rate. On September 19, 2025, RITM's stock price was $12.11 per share. This translated to a trailing twelve-month (TTM) dividend yield of 8.26%, an annual forward yield to the stock price of 8.26%, and an annual forward yield to the company's book value (BV) as of September 30, 2025, of 7.79%. When benchmarked against PennyMac Mortgage Investment Trust (PMT), its peer in the originator + servicer mREIT category, RITM's TTM dividend yield, annual forward yield based on stock price, and annual forward yield based on BV were all notably below average (by at least 2.00%). As discussed in Part 1 of this analysis, RITM has historically maintained a lower at-risk leverage ratio compared to PMT. This trend aligns with the observation that lower leverage ratios typically correlate with below-average dividend yield percentages, although various other factors influence dividend sustainability, particularly during periods of market volatility like the COVID-19 pandemic. Nevertheless, leverage remains a crucial metric for consideration.
A critical measure for evaluating RITM's near-term dividend sustainability is its quarterly core earnings, now interchangeable with earnings available for distribution (EAD). These metrics most accurately reflect the company's true earning potential from its investment portfolio's performance. Table 12 provides a detailed analysis of RITM's quarterly core earnings/EAD.
Based on the data in Table 12, RITM reported core earnings/EAD attributable to common shareholders of $171.1 million, $297.9 million, $280.8 million, and $247.4 million for Q1, Q2, Q3, and Q4 2023, respectively. When converted to a per-share basis, these figures were $0.35, $0.62, $0.58, and $0.51, substantially exceeding the $0.25 per common share dividend for Q1-Q4 2023. This resulted in highly attractive quarterly dividend distribution payout ratios of 71%, 41%, 43%, and 49% for the respective quarters in 2023. This sustained low payout ratio throughout 2023, even after a dividend increase in Q3 2021 and despite rising short-term interest rates and borrowing costs in 2022, underscores RITM's strong dividend coverage.
In 2024, RITM continued its robust performance, reporting quarterly core earnings/EAD of $233.2 million, $231.1 million, $270.3 million, and $315.8 million for Q1, Q2, Q3, and Q4, respectively. On a per-share basis, this translated to $0.48, $0.47, $0.54, and $0.60. The corresponding quarterly dividend distribution payout ratios were 52%, 53%, 48%, and 41%, indicating a consistently strong and attractive payout ratio throughout 2024. This trend of healthy dividend coverage persisted into 2025, with RITM reporting core earnings/EAD of $275.3 million, $291.1 million, and $296.9 million for Q1, Q2, and Q3, respectively. Per-share figures were $0.52, $0.54, and $0.54, leading to payout ratios of 48%, 46%, and 47%. This sustained, attractive dividend distribution payout ratio has been a rare and consistent positive for RITM within the broader mREIT sector. Even when excluding the impact of capital asset sales on adjusted core earnings/EAD, the payout ratios remained favorable at 54%, 53%, and 53% for Q1, Q2, and Q3 2025, respectively. Looking ahead, financing rates are believed to have peaked in late 2023 and early 2024, with net interest spreads expected to widen throughout late 2025 and the first half of 2026. This positive outlook is further supported by the classification of 100% of RITM's 2023 and 2024 dividends as "ordinary income," with similar tax treatment anticipated for 2025, reinforcing the company's positive trajectory. Based on Table 11, RITM declared an unchanged dividend of $0.25 per share for Q4 2025. On December 19, 2025, the stock traded at $11.17, resulting in an 8.95% TTM dividend yield, an 8.95% annual forward yield to stock price, and a 7.55% annual forward yield to estimated current BV. While still below PMT in these yield percentages, RITM is expected to align with the originator + servicer mREIT average going forward. This suggests a significant "cushion" for future dividend sustainability, even with a modest decrease in core earnings/EAD in late 2025-2026.
RITM has demonstrated exceptional dividend sustainability, marked by robust core earnings/EAD and a consistently attractive distribution payout ratio. The company's proactive management during economic shifts, coupled with favorable market conditions, underpins its strong position. This detailed analysis, encompassing historical performance, market comparisons, and future projections, highlights RITM's potential for continued dividend stability and growth. The findings suggest that RITM presents a compelling investment opportunity for those prioritizing reliable income within the mREIT sector.