BrightSpire Capital Stock: High Yielding Chart but Bearish (NYSE: BRSP)

Marie Vonotna

Mortgage REITs have been a tough place to store money this year as interest rates have risen. The industry’s relative weakness against the broader national stock market has lasted for more than a year. The iShares Real Mortgage Real Estate ETF (REM) had a strong first half of 2021, but has since underperformed SPY by around 20% over the past 13 months. Income investors might wonder if REITs are worth it right now, given that default risk-free, short-term Treasuries are yielding north of 3%.

Mortgage REITs have underperformed SPY since mid-2021

Mortgage REITs have underperformed SPY since mid-2021

Stockcharts.com

Still, there are big dividend yields to be had among some niche REIT players. One such name is BrightSpire Capital (NYSE: BRSP). According to Bank of America Global Research, BRSP is an internally managed commercial mortgage REIT focused on originating, acquiring, financing and managing a portfolio of CRE debt investments and net leased properties in the United States. United. CRE debt investments are primarily first mortgages. The BRSP can selectively create mezzanine loans and preferred equity investments, often in conjunction with the creation of the corresponding first mortgages on the same properties.

New York-based $1 billion market cap REIT posts 10.44% 12-month return The Wall Street Journal. Its last $0.20 ex-dividend date was June 29 and will be paid this Friday (July 15). After falling to $0.10 per payout, BRSP has increased the dividend in each of the past five quarters. BrightSpire also recently announced a $100 million share buyback program that will end on April 30, 2023, according to BofA.

BrightSpire Dividend History

BrightSpire Dividend History

Compustat

As for valuation, forward earnings suggest the stock is trading at an attractive price. BofA analysts see EPS surging above $1.00, before growth stalls in 2024. Of course, REITs are required to distribute at least 90% of earnings as dividends, so even if the EPS growth is slowing, investors can still earn a solid return. In addition, a share buyback program is also accretive.

BrightSpire Benefits, Evaluation, Return Predictions

BrightSpire Benefits, Evaluation, Return Predictions

BofA Global Search

BrightSpire’s next earnings release date is confirmed to be Wednesday, August 3, BMO, according to Wall Street Horizon.

Calendar of Corporate Events: Second Quarter Results August 3 BMO

Calendar of Corporate Events: Second Quarter Results August 3 BMO

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The technical grip

While BRSP has a good P/E ratio and a juicy dividend yield, the chart tells a more bearish story. After trading above $20 per share in 2018, the stock has been in a downtrend for almost four years. A key bearish breakdown occurred in early 2020 when the stock fell below $11. Sure enough, an impressive rally from the March 2020 low of $2.46 met resistance at this 2019 low. A round top pattern continues through today. I see support around $6 – a pivot point in 2020 – while $11 remains resistance.

BRSP: Rounded top after bearish breakdown below $11. $6 pickup.

BRSP: Rounded top after bearish breakdown below $11.  $6 pickup.

Stockcharts.com

The essential

BrightSpire sports a high dividend yield and low P/E multiple, but a bearish chart makes me cautious on this REIT. I argue that buying the dip when stocks approach $6 makes sense. Additionally, booking profits on a move towards $11 are justified based on the technicals.

Sallie R. Loera