Deutsche Bank: Redwood Trust Declares 4Q Dividend

Redwood Trust's RWT 4Q dividend was in line with our estimate and flat sequentially. The dividend is payable on January 21, 2011 to stockholders of record on December 31, 2010. The company announced its intention to maintain a regular quarterly dividend of $0.25 per share during 2011, which is in line with our estimates. We believe it is likely that dividends will continue to be treated as return of capital in 2011 as losses continue to be realized on a taxable basis. Redwood Trust seeks to minimize or eliminate interest rate risk and manage credit and prepayment risk. An increase in home owners or commercial borrowers defaulting on their mortgages beyond expectations could cause Redwood to incur higher credit losses, which would adversely impact the company's returns. Deutsche Bank has a $20 PT and a Buy rating on RWT RWT closed Monday at $14.04