Broadmark Realty Capital Stock pays monthly dividends of 12.7%
Broadmark Realty Capital Inc. Short on news but big on dividends
Few people I talk to talk eloquently about the joys of higher interest rates, but lending institutions do. Broadmark Realty Capital Inc. (NYSE: BRMK) is a specialty real estate finance company with an active and diversified loan portfolio. The company makes a lot of money and passes much of that money on to its shareholders in the form of very high-yielding, stable dividends.
As the broader commercial real estate lending market is fiercely competitive, Broadmark Realty Capital pursues high-yield investments in the small and medium-sized business market. (Source: “Additional Earnings Presentation: First Quarter 2022”, Broadmark Realty Capital Inc, May 9, 2022.)
The company provides financing for commercial and residential real estate across the United States, typically between $2.0 million and $50.0 million.
Since opening in 2010, Broadmark Realty Capital Inc has deployed $3.8 billion in capital. Its active loan portfolio is $1.6 billion, comprised entirely of senior secured loans. The company also has strong liquidity, with $97.0 million in cash and $135.0 million undrawn on its line of credit, for total liquidity of $232.0 million.
While rising interest rates are a boon to most alternative lenders, Broadmark Realty Capital Inc has a corporate debt-to-equity ratio of around eight percent. Although this allows the company to take advantage of market opportunities, the rise in interest rates does not materially affect its balance sheet. Additionally, its shorter term loans work as a natural hedge against rapid interest rate fluctuations.
The company’s loan programs include construction, land development, bridge financing and heavy rehabilitation/redevelopment. If a project needs cash immediately, Broadmark Realty Capital Inc is the company to turn to. It has loan draw periods as short as one business day. This could help explain why 57% of its borrowers are repeat customers.
The company’s capital is used for a wide variety of commercial real estate investments, including:
- $34.0 million for mixed-use development in Austin, TX
- $33.0 million for a hotel in Heber City, UT
- $25.0 million for a multi-family building in Salt Lake City, UT
- $13.5 million for an apartment complex in Seattle, WA
- $2.8 million for condos in Washington, DC
- $1.3 million for luxury waterfront homes in North Carolina
- $795,000 for a brewery in Richland, WA
(Source: “Featured Real Estate Projects”, Broadmark Realty Capital Inc, last accessed July 4, 2022.)
Excellent first quarter financial results
For the first quarter ended March 31, Broadmark Realty Capital reported total revenue of $29.9 million, including $24.1 million in interest income and $5.8 million in commission income. The company’s first-quarter net profit was $18.1 million, or $0.14 per share. Its distributable earnings were $22.1 million, or $0.17 per share. (Source: “Broadmark Realty Capital Announces First Quarter 2022 Results”, Broadmark Realty Capital Inc, May 9, 2022.)
The company completed total originations of $189.6 million in the first quarter, at an average unleveraged return of over 10.0%. It ended the first quarter of 2022 with total liquidity of $232.4 million.
$0.07 Monthly dividend declared for BRMK stock
In June, Broadmark Realty Capital’s board of directors declared a monthly cash dividend of $0.07 per share, yielding 12.7%. The company has maintained this level of payout since the start of 2021. (Source: “Broadmark Realty Capital Declares Monthly Dividend for June 2022”, Broadmark Realty Capital Inc, June 15, 2022.)
Broadmark Realty shares had the misfortune to go public in November 2019, just months before the COVID-19 pandemic rocked the global economy. As a result, the company lowered its monthly dividend from $0.12 per share in December 2019 to $0.08 in the first months of 2020 and then to $0.06 per share in May of the same year. (Source: “Dividends”, Broadmark Realty Capital Inc, last accessed July 4, 2022.)
The company increased its monthly dividend in January 2021 to $0.07 and has maintained it ever since. Understandably, the dividend hogs are hoping the company will increase its monthly payout over the next few quarters. This possibility will depend on the economic environment for construction loans.
Broadmark Realty Capital Inc.’s super-high-yielding dividends have provided investors with shelter against the stock market‘s sell-off, which has seen BRMK shares fall 24% year-to-date and 30% one year to the next.
This sell-off should reverse on stronger demand for commercial construction loans, which should also help accelerate the monthly distribution of Broadmark Realty Capital shares.
Chart reproduced courtesy of StockCharts.com
The truth about Broadmark Real Estate Capital Stocks
Broadmark Realty Capital Inc is a well-diversified specialty real estate finance company that serves the commercial real estate market with short-term, high-yield senior loans.
The company’s strong balance sheet, significant financial strength and balanced approach to risk and returns position it well for future financial growth through all stages of the economic cycle.
And when BRMK’s stock price performance turns volatile, investors can take solace in its stable, super-high yielding monthly dividends.