One of the Most Undervalued Income Stocks On The Market Today

By Tim Plaehn, Investors Alley, Friday, August 7

Rithm Capital (RITM) is a company that has tremendously expanded its business over the last few years, but that growth has not shown up in its share price. I believe investors will eventually realize that this company should have a much higher share price. Maybe you can help.

Known as New Residential Corp when it launched in 2013, Rithm Capital started as a finance real estate investment trust (REIT), investing in mortgage servicing rights (MSRs) and other mortgage-related securities. Until the pandemic, the company was a steady dividend growth REIT.

The pandemic forced the company to slash its dividend by 90%, from $0.50 quarterly to $0.05. The dividend started growing immediately, but topped out at $0.25 in September 2021. It has stayed at that level since.

The bigger changes at Rithm Capital have been the expansion of its business operations into a diversified asset management company. Here are the currently owned businesses:

Asset-generating businesses are those with $54 billion under management.

Alternative Asset Management businesses are those with $61 billion under management.

● Sculptor Management was acquired for $720 million in November 2023.

● Crestline Management L.P., with $20 billion under management, was acquired on December 1, 2025.

Rithm Capital is now a multi-business company with $120 billion in assets. The company is very profitable. For the 2026 second quarter, earnings available for distribution (EAD) of $0.60 per share nicely exceeded the Wall Street consensus of $0.50. The company beat estimates for 17 out of the last 19 quarters. Analysts are consistently wrong about Rithm’s earnings potential.

Rithm Capital’s second-quarter book value was $12.33 per share.

Currently, RITM trades for $9.90, a 20% discount to the book value. The share price is down 20% over the last year, despite the tremendous profits. The $1.00 annual dividend is more than 200% covered.

My theory is that investors still view Rithm Capital as only operating as a finance REIT. The diversified businesses are not reflected in the share value.

If RITM traded for 1.2 times book, it would be at $15 per share. If it traded at 10 times annual EAD, it would be over $20.

Fortunately, this stock offers a 10% yield on its very stable dividend.