Walker & Dunlop (NYSE: WD) has been around a long time, founded in 1937 and becoming one of the first companies to use FHA insurance to make single-family home loans during the Great Depression. Since then, the Bethesda, Maryland-based firm has expanded into multifamily and commercial real estate (CRE) financing for owners and developers in everything from first mortgages to construction; mezzanine; and student, affordable, and senior housing.
Now it's one of the largest CRE lenders in the country and a major provider of loans backed by the government-sponsored enterprises, including what it says may be the largest Fannie Mae (OTCMKTS: FNMA) portfolio in the business. Walker & Dunlop also makes coin moving commercial real estate debt between institutional capital sources such as life insurance companies, investment and commercial banks, pension funds, and issuers of commercial mortgage-backed securities (CMBS).
And it looks like a strong consideration for a buy among real estate stocks.
A history of growth
The company went public in 2010, when it had 157 employees in eight offices. In a November 2020 Investor Day presentation, Walker & Dunlop said those numbers had grown to more than 950 employees in 41 offices.
Walker & Dunlop is now the eighth-largest commercial mortgage servicer in the United States, with a servicing portfolio of $93.2 billion, total transaction volume of $32 billion, and total revenues of $817 million in 2019.
The final figures for 2020 aren't in yet, but the past year was another good one, as low interest rates fueled a financing and refinancing explosion in which Walker & Dunlop played a major role.
The company already can boast yearly revenue growth averaging 23% over the past 10 years, compared to the median of 5.3% for the S&P 500 and ahead of Wall Street titans like Apple (NASDAQ: AAPL), at 21.7% over that period; and Alphabet (NASDAQ: GOOGL), at 21.2%. Trailing 12-month net income has soared even more, posting 38% in compound annual growth, in the past decade.
Solid returns and payouts, with more promised
And while not a real estate investment trust (REIT), Walker & Dunlop has been paying out like one since it began paying dividends three years ago, including $0.36 per share each quarter in 2020, $0.30 four times in 2019, and $0.25 each quarter in 2018. That was good for a yield of 1.65% at a share price of $93.85 on Jan. 6.
More is on the way, the company says, telling investors in its third-quarter earnings call in October that it expects to increase its dividend again next quarter. And looking ahead, it says on its website, with total United States commercial debt outstanding currently over $3 trillion, "we have the national scale and reputation to capitalize on a large and growing market opportunity."
"We remain active in seeking out growth opportunities in the market, including recruiting and M&A opportunities as our financial performance and liquidity position give us the ability to take an offensive stance that will let us set us up for continued growth in the future," CFO Stephen Theobald said in that third-quarter earnings call.
The Millionacres bottom line
After dipping to a pandemic low of $24.55 a share, Walker & Dunlop is again near its recent all-time high of $94.84. With a P/E ratio of 14.16, a proven business model that has driven strong, steady growth since the Great Recession, and a propensity for payouts, Walker & Dunlop still makes a compelling case as a buy.