Stock Review: Thornburg Mortgage
Thornburg Mortgage TMA has dropped to around $23.50 today, making it a stock you should take a look at. I have owned and watched this stock for several years, and it has consistently traded between $23 and $28 a share.
The reason for the fixed trading range is the $.68 quarterly dividend that TMA has paid for the last 11 quarters. This give a yield range of 9% to 12%. When the yield reaches the high end of the range (low end of the stock price range) it has historically been a good time to buy the stock.
Thornburg Mortgage is a mortgage REIT specializing in jumbo, adjustable rate, high quality mortgages. Through the hot real estate market they avoided the types of mortgages that are causing other mortgage companies problems today. Their portfolio is 100% AA or AAA. Currently their 60 day delinquent mortgages are only .21% of their $24.7 billion portfolio, vs. an industry average of 2.32%. Average loan-to-value is an excellent 67%.
Several years ago Thornburg started originating their own loans in addition to buying mortgage securities. This has helped them grow the portfolio and improve profitability. New originations have continued to increase for the last several quarters, contrary to industry figures.
I always enjoy listening to their quarterly conference calls. The management team really understands the business and it shows they are trying maintain profitability and minimize the risks. The next time they have an earning report, tune in and check them out.
Finally, if you like to write call options, the implied volatility on TMA options is very high right now and writing some $25 strike price options would be a nice income bump.
Disclaimer: I own shares of Thornburg Mortgage stock.
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Tim,
Thanks for your submission to the Festival of Stocks. It looks like TMA was taken down with the rest of the mortgage related stocks last week. Based on your post, it seems TMA has a chance to rebound. Good luck.
This post will be included in the Festival.