Rithm Capital Corp: Top 10 REIT with 9.17% Yield and Low Price-to-Book Ratio

Rithm Capital Corp has been named a Top 10 REIT by Dividend Channel, with a 9.17% yield and a price-to-book ratio of 0.9. The company's recent share price of $10.90 represents an attractive valuation, and its strong quarterly dividend history and favorable long-term growth rates make it an interesting stock for investors to research further.

Rithm Capital Corp (NYSE: RITM) has been named a Top 10 REIT by Dividend Channel, boasting a 9.17% yield and a price-to-book ratio of 0.9. The company's recent share price of $10.90 represents an attractive valuation, making it an intriguing investment for those looking into real estate investment trusts (REITs).

Rithm Capital Corp's recent acquisition of Paramount Group (PGRE), a New York City and San Francisco-focused Class A office REIT, is set to expand its asset footprint in commercial real estate and asset management. The transaction, valued at approximately $1.6B or $6.60 per share, is expected to drive distributable earnings growth and improve the REIT's diversification Rithm Capital: Acquisition, Yield, And Upside^[1].

The acquisition is particularly notable given the current state of the office market. The COVID-19 pandemic led to a significant shift in work habits, resulting in increased vacancy rates and a deterioration of income trends for office real estate. However, Rithm Capital anticipates a rebound in the office market, which could potentially lead to an asymmetric return profile for investors Rithm Capital: Acquisition, Yield, And Upside^[1].

Rithm Capital's core business continues to generate the majority of its revenue and earnings from mortgage origination and servicing, representing approximately 85% of its total net income in the second quarter of FY 2025. The company's strategy to diversify its operations has been evident in its acquisition of Sculptor Capital Management in 2023, which helped build out its third-party asset management business Rithm Capital: Acquisition, Yield, And Upside^[1].

In terms of dividend coverage, Rithm Capital is performing well. In Q2'25, the REIT generated earnings available for distribution of $0.54/share, resulting in a distribution coverage ratio of 2.2X compared to 2.1X in Q1'25. This strong dividend sustainability is a key factor in its attractive yield Rithm Capital: Acquisition, Yield, And Upside^[1].

Despite its strong fundamentals, Rithm Capital is still trading at a discount to book value, highlighting potential investor concerns about its diversified business model and exposure to mortgage servicing rights (MSRs). However, the REIT's history of making accretive acquisitions and its ability to continue to high-grade its earnings suggest that an upside revaluation to book value is possible Rithm Capital: Acquisition, Yield, And Upside^[1].

Rithm Capital's biggest risk lies in its large exposure to MSRs, which tend to decline in value when the Federal Reserve lowers interest rates. This risk is particularly relevant given the Federal Reserve's likely continued lowering of interest rates Rithm Capital: Acquisition, Yield, And Upside^[1].

In conclusion, Rithm Capital Corp's recent acquisition of Paramount Group, along with its strong dividend history and favorable long-term growth rates, makes it an interesting stock for investors to consider. However, potential risks related to interest rates and MSRs should also be taken into account.