RE:RE:RE:RE:Normal course issuer olive15 wrote: I'm new to Atrium. Can someone pls explain the appeal of mortgage investment companies? I see these as pure dividend plays that are bets on the domestic housing market. In early 2016, AI stock traded at 12.50. On Feb 22, 2020, they hit a high of 14.79. So it took 3.5 years to rise 18%. At best, a modest gain. But more concerning to me is what has been made so clear by the pandemic meltdown: when the housing market runs out of steam, alternative lenders will get hit hard.
My thinking: most CAD banks and insurance cos offer much better value, better risk/reward scenario. Though dividends paid are lower than AI, banks and insurers still pay a healthy yield (increasing the dividend once or twice per year), and offer more in terms of sp gain. With a highly diversified business model, and several revenue generators, a housing market slowdown is not going to tear down a bank/insurer. So, as a long term investor, why would I choose a company like Atrium over RBC or TD?
Agreed there is risk etc and def more of a divy play but at current 8.5% excluding special it is pretty good. One thing to note is majority of mortgages have a low ltv The weighted average loan-to-value ratio in our mortgage portfolio is 59.0%, with 93.9% of the portfolio below 75% loan-to-value. Which offers a nice cushion in a downturn. "Conventional mortgages are those mortgages with a loan-to-value of less than or equal to 75%. Seventy-five percent (75%) loan-to-value is the industry norm for determining a conventional versus non-conventional mortgage. Non- conventional mortgages are those mortgages with a loan-to-value in excess of 75%."