Small Cap Home Loan Servicing Offers Large Yield

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Old big-cap companies are not the only ones that pay dividends. Small caps do too.Home Loan Servicing Solutions ( HLSS ) is one such issue.

The Cayman Islands-based firm, which buys mortgage servicing assets, offers investors a big yield. And while most companies pay dividends quarterly, Home Loan Servicing pays on a monthly basis.

Home Loan Servicing strives to pay out 90% of its net income to stockholders as dividends. But this policy is at the discretion of its board of directors.


In early February, the company declared a dividend of 13 cents a share. The distribution will be paid April 10 to shareholders of record March 26. The payout is unchanged from February's level, but its dividend has been raised by 30% since October.

On an annual basis, Home Loan Servicing pays shareholders $1.56 a share. This works out to a yield of about 6.6%, which is more than double that of the S&P 500. It has the second highest yield among the four dividend-paying stocks in the Finance-Mortgage & Related Service Group.America First Tax Exempt Investors ( ATAX ) has a slightly higher yield.

The company doesn't have a long track record of profitability. It started operations just a year ago, using proceeds from its initial public offering. Home Loan has an EPS Rating of 80, which means it's growing profit faster than four of every five stocks.

Home Loan Servicing has nearly doubled since going public. It is near a record high, but extended from a rebound off its 10-week moving average.

The stock has rallied in 12 of the past 15 weeks. It hasn't seen a down week in heavy volume since the week ended Nov. 16. Home Loan Servicing has a best-possible Composite Rating of 99.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: ATAX , HLSS

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