From Seekingalpha · Brad Thomas · · 40s
Starwood Property Trust Dividend Trap
Starwood Property Trust's 15.3% dividend yield risks a 60-70% chance of cut within 12 months.
In brief
Starwood Property Trust's 15.3% dividend yield risks a 60-70% chance of cut within 12 months. Starwood Property Trust's 15.3% dividend yield faces a 60-70% probability of dividend cut within 12 months due to earnings undercoverage. Originally reported by Seekingalpha.
Starwood Property Trust Dividend Yield
Starwood Property Trust offers a 15.3% dividend yield but distributable earnings fall short.
High Payout Ratio Risk
This results in a 132% payout ratio and high risk of a dividend cut within 12 months.
Credit Headwinds
STWD's diversified platform faces credit headwinds, particularly in multifamily and net lease segments.
Elevated Leverage
Leverage is elevated at 9.5x debt-to-EBITDA and a 71% debt ratio, constraining financial flexibility.
The short version
Starwood Property Trust's 15.3% dividend yield faces a 60-70% probability of dividend cut within 12 months due to earnings undercoverage.
