Starwood Property Trust

STWD

Market cap $6.82B

Starwood Property Trust under-earned its dividend for the third straight quarter in Q3, raising ongoing concerns about dividend sustainability. STWD's core earnings continue to decline, especially in commercial and residential lending, as higher expenses (provisions) and lower interest income from loans/securities weigh on the segment's performance. Dividend coverage dropped to 83% in Q3 '25, lagging rivals like Ladder Capital and Blackstone Mortgage Trust, both of which have stronger coverage trends.

The Dividend Harvesting Portfolio is positioned for long-term growth, benefiting from a lower rate environment and the ongoing A.I. revolution. Despite NVDA's stellar earnings, market volatility persists due to rising unemployment and uncertainty around Fed rate cuts, highlighting recession risks. Weekly additions include GPIQ, AMLP, and STWD, focusing on high-yield, income-generating assets while maintaining sector diversification and risk mitigation.

Investors love dividend stocks, especially those with ultra-high yields, because they provide a substantial income stream and offer significant total return potential.

AGNC has reduced its dividend several times over the past decade. Starwood has maintained its current dividend rate for more than a decade.

Starwood Property Trust offers a compelling 10.8% yield, trading near 52-week lows and below book value, presenting a bargain for income investors. STWD's diversified portfolio, strong liquidity, and stable credit quality support future earnings growth as new investments ramp up and acquisition integration progresses. Maintain a 'Buy' rating on STWD, as investors are paid well to wait for improved dividend coverage, and market pessimism appears overdone.

The Dividend Harvesting Portfolio reached all-time highs, now valued at $32,274.44 and generating $2,722.19 in forward annual dividend income. Recent additions to the portfolio include ONEOK (OKE) and Starwood Property Trust (STWD), both offering attractive yields and strong long-term prospects. Despite recent market volatility, I remain bullish for a year-end rally as the government reopens and the Fed prepares for potential rate cuts.

During times of turbulence and uncertainty in the markets, many investors turn to dividend-yielding stocks. These are often companies that have high free cash flows and reward shareholders with a high dividend payout.

Starwood Property Trust earns a Buy rating, reflecting confidence in its strategic diversification and management's strong track record. STWD's $2.2 billion acquisition of Fundamental Income marks a significant shift, adding a long-duration net lease portfolio to its asset base. The net lease move is a leveraged bet on falling interest rates, introducing new risks but also potential for enhanced long-term cash flow stability.

STWD's Q3 earnings miss estimates as book value slipped, though lower expenses and higher revenues offer some cushion.

Starwood Property Trust, Inc. ( STWD ) Q3 2025 Earnings Call November 10, 2025 10:00 AM EST Company Participants Zachary Tanenbaum - MD & Head of Investor Strategy Rina Paniry - CFO, Treasurer, Principal Financial Officer & Chief Accounting Officer Jeffrey Dimodica - President Barry Sternlicht - CEO & Non-Independent Executive Chairman of the Board Dennis Schuh - Chief Originations Officer Conference Call Participants Donald Fandetti - Wells Fargo Securities, LLC, Research Division Jade Rahmani - Keefe, Bruyette, & Woods, Inc., Research Division Richard Shane - JPMorgan Chase & Co, Research Division Douglas Harter - UBS Investment Bank, Research Division Presentation Operator Greetings, and welcome to the Starwood Property Trust Third Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.