In the trailing twelve months, MKP paid out $35M as dividends, and net income was around $77M in the same period. So the dividend was covered by the recent earnings. Overall, it has a strong record of dividends, including semi-regular special dividends. That said, MKP is a highly leveraged entity, long-term debt is around $1.7B against equity of $532M. Long-term debt/equity is around 3.4x, which is high. The company has been operating with that leverage level for many years and of course this is common for the mortgage sector. But it is a risk, and the company is very closely tied to real estate and interest rates. It is also on the smallish side at ~$600M market cap. We would see it as OK, but high risk income, and would size a position accordingly. Note the dividend is taxed as interest.
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