Sometimes I look at a company’s financials and think, “Where is the money coming from to pay the dividend?”

Going through New York Mortgage Trust’s (Nasdaq: NYMT) 10-K this week, I thought this very thing.

The company simply does not make enough money to pay its hefty dividend. And it hasn’t for years.

But let’s look at the numbers.

New York Mortgage Trust is a mortgage REIT. It invests in mostly residential mortgages, some of which are distressed (the borrower has stopped paying).

It makes money by borrowing at lower short-term rates and investing at higher long-term rates. The difference is net interest income (NII), a key metric for mortgage REITs.

In 2016, NII was $0.59 per share. During the year, it paid out $0.96 per share in dividends.

The prior year, it was the same story.

NII was $0.70, and the company generously paid out $1.02 in dividends.

In fact, over the past four years, the company has never been able to afford its dividend.

And you can see from the chart that NII per share is headed in the wrong direction.

While total NII has actually gone higher, the company has nearly quadrupled its share count over the past five years, so NII per share is falling.

As a result, so is the dividend.

You can’t blame management for lowering the dividend when there isn’t enough cash to pay it. But that doesn’t mean we have to like it.

New York Mortgage Trust is a serial dividend cutter.

That’s the ultimate deal breaker for SafetyNet Pro.

The company has cut the dividend eight times in the past 12 years, including last quarter.

Jimmy McMillan gained fame proclaiming that the rent in New York is “too damn high.”

After looking at New York Mortgage Trust, I can say the same thing about its dividend.

Dividend Safety Rating: F