Below, Investment U’s Income Expert, Marc Lichtenfeld, takes a look at New York Mortgage Trust’s dividend safety.

Though I haven’t lived in New York in more than 25 years, I still consider myself a New Yorker. It’s where I was born and raised.

I’m a lifelong Yankees fan, and I will argue to my dying breath about the superiority of New York bagels and pizza…

But one thing I don’t love is the dividend safety of New York Mortgage Trust (Nasdaq: NYMT).

The mortgage real estate investment trust (REIT), based on Park Avenue in Manhattan, pays a $0.05 per share quarterly dividend.

It makes money on the difference between how much it pays in interest on the money it borrows and how much it makes in interest on the money it lends or invests.

This profit is called net interest income (NII). New York Mortgage Trust’s NII is growing, which is a good thing.

In 2020, Wall Street expects the company to make $138 million in NII, up from $128 million last year and significantly up from the $79 million it earned in 2018.

But last year, the company paid out $188 million in dividends…

The $128 million it made in NII last year, while up sharply from the prior year, was not enough to cover the dividend.

New York Mortgage Trust Dividend Safety in 2020

This year, New York Mortgage Trust is expected to pay just $52 million in dividends.

This is because it eliminated payouts to shareholders in March and slashed the dividend by 75% in June from what it paid seven months prior.

In February 2019, the last time I covered New York Mortgage Trust, I said I expected a dividend cut because the company paid out more in dividends than it brought in and because it had a history of reducing its dividend.

This year, it should be able to cover its lower payout, but considering its dividend-cutting track record, it’s only a matter of time before it happens again.

New York Mortgage Trust has lowered its dividend payout five times in the past 10 years.

There’s an expression… “When someone shows you who they are, believe them.”

New York Mortgage Trust has shown it is a serial dividend cutter. It will disappoint shareholders again.

The company may raise the dividend if the economy rebounds and NII comes in where analysts expect…

But make no mistake about it. New York Mortgage Trust will cut its dividend when times get tough, just like it did in half of the years over the past decade.

Dividend Safety Rating: F

New York Mortgage Trust’s dividend safety is not high at all in 2020. In this case, the company’s past discretions are a good predictor for the future. During tough times, the dividend will likely be cut. For more information on the latest dividend ratings, sign up for the Wealthy Retirement e-letter below.