Up to date on March thirty first, 2025 by Felix Martinez
Atrium Mortgage Funding Company (AMIVF) has two interesting funding traits:
#1: It’s a high-yield inventory primarily based on its 10.1% dividend yield.
Associated: Checklist of 5%+ yielding shares.
#2: It pays dividends month-to-month as a substitute of quarterly.
Associated: Checklist of month-to-month dividend shares
You’ll be able to obtain our full Excel spreadsheet of all 76 month-to-month dividend shares (together with metrics that matter, like dividend yield and payout ratio) by clicking on the hyperlink under:
Combining a excessive dividend yield and a month-to-month dividend may make Atrium Mortgage Funding Company interesting to income-oriented traders. As well as, the corporate is the main non-bank lender in Canada, and thus, it has a dependable enterprise mannequin. On this article, we are going to focus on Atrium Mortgage Funding Company’s prospects.
Enterprise Overview
Atrium Mortgage Funding Company is a non-bank lender that gives residential and business mortgage companies in Canada. The corporate affords varied kinds of mortgage loans, corresponding to land and improvement financing, building and mezzanine financing, and business time period and bridge financing companies for residential, multi-residential, and business actual property properties. Atrium Mortgage Funding Company was based in 2001 and is headquartered in Toronto, Canada.
Atrium Mortgage Funding Company invests in business and residential mortgages from clients who can’t borrow funds from conventional banking channels. To scale back its danger, the corporate has a diversified mortgage portfolio and does its finest to keep up a disciplined underwriting coverage.
A typical mortgage within the firm’s portfolio has an rate of interest of 6.99%- 12.99%, a period of 1-2 years, and month-to-month mortgage funds. Atrium Mortgage Funding Company’s mortgage portfolio presently has a weighted common rate of interest of 10.93%, consisting of 88% residential and 12% business mortgages.
Supply: Investor Presentation
The corporate tries to cut back working bills and supply secure dividends to its shareholders with minimal volatility. To this finish, it maintains a high-quality mortgage portfolio characterised by a conservative underwriting coverage.
Because of its prudent administration, Atrium Mortgage Funding Company has provided constant returns to its shareholders over the past decade. Throughout this era, the corporate’s return on fairness has steadily remained 600-800 foundation factors above the yield of the Canadian authorities’s 5-year bond.
Because of its strong enterprise mannequin, Atrium Mortgage Funding Company has proved extraordinarily resilient all through the coronavirus disaster. That is spectacular, because the pandemic would usually be anticipated to have an effect on the corporate’s debtors, who can’t borrow funds from massive monetary establishments. The resilience of Atrium Mortgage Funding Company to the pandemic is a testomony to the energy of the corporate’s enterprise mannequin.
The corporate reported robust 2024 monetary outcomes, with a internet earnings of $47.9 million and earnings per share of $1.06 (primary) and $1.05 (diluted), regardless of this being a 7.1% decline from 2023. The corporate maintained a high-quality mortgage portfolio, with 96.7% in first mortgages and a median loan-to-value ratio of 61.9%. A particular dividend of $0.16 per share was declared, payable on March 19, 2025, bringing the overall dividend for the yr to $1.0625 per share.
Atrium diminished Stage 2 and three loans from $129.7 million in Q3 to $79 million in This autumn whereas increasing its credit score facility by $25 million to $340 million and elevating $28.8 million via an oversubscribed fairness providing. Revenues declined 1.3% to $97.3 million, and whole belongings fell barely to $864.3 million. The mortgage portfolio ended the yr at $863.2 million, down from $876.7 million because of increased repayments.
With a weighted common rate of interest of 9.98% and strategic shifts towards lower-risk lending, Atrium stays well-positioned for 2025. The corporate anticipates diminished competitors from non-bank lenders and elevated funding capability to assist progress. Following an OSC overview, Atrium restated its 2023 money circulate assertion with out impacting total financials.
Progress Prospects
Atrium Mortgage Funding Company has carried out remarkably over the past 9 years. Administration’s give attention to minimizing working bills and offering secure returns to shareholders has definitely paid off.
However, the corporate has posted primarily flat earnings per share over the past 9 years. Subsequently, traders shouldn’t count on significant earnings progress going ahead. In different phrases, Atrium Mortgage Funding Company’s dependable efficiency comes at a worth: lackluster progress prospects.
Given Atrium Mortgage Funding Company’s rock-solid enterprise mannequin and lackluster efficiency document, we count on roughly flat earnings per share 5 years from now.
Dividend & Valuation Evaluation
Atrium Mortgage Funding Company is presently providing an exceptionally excessive dividend yield of 10.1%, many occasions the 1.3% yield of the S&P 500. The inventory is thus an fascinating candidate for income-oriented traders, however U.S. traders must be conscious that the dividend they obtain is affected by the prevailing alternate charge between the Canadian greenback and the USD.
Atrium Mortgage Funding Company has an elevated payout ratio of over 100%. Nonetheless, it’s in a robust monetary place, with its curiosity expense presently consuming barely lower than 25% of its whole curiosity and dividend earnings. Consequently, the corporate isn’t more likely to minimize its dividend considerably anytime quickly.
It’s also exceptional that Atrium Mortgage Funding Company has maintained a strong dividend document over the past decade.
Supply: Investor Presentation
Total, shareholders ought to relaxation assured that Atrium Mortgage Funding Company’s base dividend is protected, and the corporate will possible proceed paying a particular dividend yr after yr.
However, the corporate has hardly grown its dividend in USD over the past ten years as a result of depreciation of the Canadian greenback versus the USD. Given the low single-digit progress charge of the dividend in Canadian {dollars}, it’s prudent for U.S. traders to count on minimal dividend progress going ahead.
In reference to the valuation, Atrium Mortgage Funding Company has been buying and selling for 10.2 occasions its earnings per share for the final 12 months. Given the corporate’s resilient enterprise mannequin and lackluster progress prospects, we assume a good price-to-earnings ratio of 12.0 for the inventory. Subsequently, the present earnings a number of is barely decrease than our assumed truthful price-to-earnings ratio. If the inventory trades at its truthful valuation stage in 5 years, it’ll get pleasure from a 1.9% annualized return acquire.
Bearing in mind the flat earnings per share, the ten.1% dividend yield, and a 1.9% annualized enlargement of valuation stage, Atrium Mortgage Funding Company may supply a 12% common annual whole return over the following 5 years. It is a good anticipated whole return, however we advocate ready for a decrease entry level so as to improve the margin of security and improve the anticipated return from the inventory.
Last Ideas
Atrium Mortgage Funding Company is characterised by prudent administration and a defensive enterprise mannequin. As well as, the inventory is providing an exceptionally excessive dividend yield of 10.1%. The corporate has an elevated payout ratio of 100% however a robust stability sheet and a constant dividend document. Consequently, its dividend must be thought of protected, although traders shouldn’t count on significant dividend progress anytime quickly. Total, the inventory appears undervalued proper now.
Furthermore, Atrium Mortgage Funding Company is characterised by extraordinarily low buying and selling quantity. Which means it could be exhausting to determine or promote a big place on this inventory.
Don’t miss the assets under for extra month-to-month dividend inventory investing analysis.
And see the assets under for extra compelling funding concepts for dividend progress shares and/or high-yield funding securities.
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