Key Highlights

  • PennyMac Mortgage Investment Trust (PMT) pays $0.40 per quarter, a Yield of about 18.93%; the next ex-dividend date is Oct. 8.
  • Q2 Net Income was $0.23 per share, a 6% return on equity, well below the dividend.
  • The $0.28 drop equaled about 1.3x the 14-day average true range, and about $17.16 million traded versus a typical $12.68 million.

PennyMac Mortgage Investment Trust (NYSE:PMT) fell 3.2% to $8.45, a new 52-week low, while peers rose. The mortgage REIT is down 33.2% this year and yields about 18.9%, but Q2 net income of $0.23 per share fell well short of its $0.40 quarterly dividend, and management says higher mortgage rates are reducing production and revenue.

PennyMac Mortgage's Dividend yield has climbed to about 18.9 percent. PennyMac Mortgage invests in residential mortgage Credit and mortgage servicing rights, and works alongside PennyMac Financial Services, one of the largest U.S. mortgage lenders.

Rising rates cut both ways for PMT. Mortgage servicing rights gain value when rates rise, because fewer borrowers refinance. But higher mortgage rates also reduce new Loan production, and management said at a conference this week that higher rates are "reducing production and revenue." With Q2 Earnings well below the payout, investors are pricing in the risk of a dividend cut.

PennyMac Mortgage (PMT) Falls While Peers Rise

Adamas Trust rose 0.2% and Invesco Mortgage Capital 0.6%, for a peer median of +0.4%, so PMT's decline was company-specific. PMT traded between $8.44 and $8.78 and finished near the low. It is down 9.0% over the past month, and its 52-week range is $8.44 to $13.81. The market Capitalization is about $737 million, with 87,202,362 shares outstanding.

PMT Technical Levels

PMT trades below its major moving averages. The 14-day RSI is 28.9. RSI measures buying versus selling pressure on a 0 to 100 scale, and readings under 30 are oversold.

MACD is -0.22, below its -0.16 signal line. MACD tracks momentum, and the widening gap shows selling pressure is building.

ADX is 33.6. ADX measures trend strength, and readings above 30 confirm a strong downtrend.

Support is $8.44. Resistance is $8.79, then $9.06.

Leverage and Analyst View

PMT's Debt-to-Equity Ratio is 12.37, high even for a mortgage REIT. Net Margin was 8.8% and Return on Equity 8.9%. The consensus is Buy, with a 1.88 score, and one data provider shows an average target near $11.29.

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