RBC Lifts MFA Financial Target, Sees Potential for ROE Expansion

MFA Financial, Inc. (NYSE:MFA) is included among the 15 Best Stocks to Buy Now for Passive Income.

On March 5, RBC Capital raised its price recommendation on MFA Financial, Inc. (NYSE:MFA) to $11 from $10. It reiterated a Sector Perform rating on the shares after the company reported its fourth-quarter results. The firm said it is gaining clearer visibility into MFA’s potential for ROE expansion. At the same time, the analyst expects some near-term noise in the company’s distributable EPS due to credit loss realizations.

During the Q4 2025 earnings call, CEO Craig Knutson said the environment for fixed income investors improved meaningfully in 2025 after several difficult years. He suggested the shift felt like emerging from a prolonged downturn. Knutson pointed to a positively sloped yield curve and lower market volatility as signs of a more supportive macro backdrop. He added that the company is entering 2026 with favorable momentum and sees these conditions as helpful tailwinds.

Knutson also reviewed the company’s strategic progress. He said MFA deployed more than $100 million of excess cash into targeted investments during the quarter. The company also completed $1.9 billion in purchases of loans and securities. Those acquisitions included about $1.2 billion in agency securities purchased early in the quarter, $443 million in non-QM loans, and $226 million in new business-purpose loans originated through Lima One Capital.

He also noted that the company continued working through troubled assets. According to Knutson, more than $150 million of delinquent loans were resolved during the quarter. The resolutions freed up capital that could be redeployed into investments expected to generate returns in the mid-teens on equity.

MFA Financial, Inc. (NYSE:MFA) is a specialty finance company that invests in residential mortgage loans, residential mortgage-backed securities, and other real estate assets. Its targeted investments primarily include residential whole loans and residential mortgage securities.

While we acknowledge the potential of MFA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.