EIC Stock: 17.2%-Yielding Opportunity Hiding in Market Volatility
May 2, 2025
Why EIC Stock Is Down But Not Out
Take a look at Eagle Point Income Company Inc (NYSE:EIC). Since EIC stock was first profiled in Income Investors in early March 2025, it has dropped close to nine percent thanks to the big gyrations in the stock market.
While the decline in the stock price is sizeable and charts suggest that bearish sentiment is prevailing, this could all be a blessing in disguise for income investors.
You see, very rarely do you get cash-generating machines like Eagle Point Income Company going on sale like what’s happening these days. This isn’t some speculative growth stock with no profits—it’s a well-oiled dividend-paying machine that throws off cash month after month.
What Does Eagle Point Income Company Do?
As the name suggest, Eagle Point Income Company is a closed-end fund (CEF) with the primary focus of providing income investors with a high level of income. The fund invests in junior debt tranches of collateralized loan obligations (CLOs). At times, the company might also invest up to 35% of its assets in CLO equity securities and related securities and instruments. (Source: “About EIC,” Eagle Point Income Company Inc, last accessed April 29, 2025.)
Some keywords to keep in mind here.
A “closed-end fund” refers to a company that raises money from investors that it uses to invest to generate returns.
A “collateralized loan obligation (CLO)” is a collection of loans bundled together, and investors, like those holding EIC stock, buy different portions of it. Some portions are more secure and offer lower returns, while others are riskier but provide higher yields. Eagle Point Income Company focuses on the safer, high-quality portions of CLOs.
Why Has EIC Stock Dropped?
EIC stock has come under pressure recently, and the reasons are more “macro” based rather than company-specific issues.
So, what happened?
Well, there are essentially two big reasons why EIC stock has sold off.
Firstly, the overall stock market has been soft. Broader volatility across the market tends to hurt income stocks as well. This is because investors shift in and out of risk depending on how the headlines are looking.
Secondly, yields on U.S. Treasuries witnessed a big jump in quite a short period. This usually causes ripple effects across the entire debt market. When “risk-free” government bonds start yielding more, investors begin to demand higher returns from everything else.
So, instruments like CLOs become riskier, and investors demand a higher return; these are usually Eagle Point’s bread and butter.
In addition to this, higher Treasury yields also increase the odds of a default, especially for lower-rated debt. Even though Eagle Point Income Company focuses on the higher-rated tranches of CLOs, the sentiment across the credit market gets hit broadly when defaults become a talking point.
But here’s the key: none of this reflects fundamental weakness in Eagle Point’s portfolio. The decline in price has more to do with fear than facts at the moment. Once investors come to their senses, they might start to bid EIC stock higher.
A Cash-Generating Machine
Now, the blessing in disguise…
With the decline in EIC stock, its dividend yield has jumped to 17.2%. Eagle Point pays $2.40 per share on an annual basis.
There aren’t many places these days where you can earn close to double-digit income with a relatively diversified and professionally managed portfolio.
The best part with EIC stock? Income investors get a monthly income, and there’s some certainty to it, too. So, if an investor does it right, EIC stock could provide them with some serious cash flow.
Consider this: in February, Eagle Point announced that investors would get $0.20 per share in April, May, and June 2025. (Source: “EAGLE POINT INCOME COMPANY INC. ANNOUNCES SECOND QUARTER 2025 COMMON AND PREFERRED DISTRIBUTIONS,” Eagle Point Income Company Inc, February 12, 2025.)
With EIC stock, you generally have a good idea of what kind of income you’ll get in the coming months.
And you should also know that EIC stock has a long history of paying monthly dividends. It has paid each month since 2019.
Chart courtesy of StockCharts.com
The Lowdown on EIC Stock
It is very likely you’ll never hear about Eagle Point Income Company Inc in the mainstream financial press. That’s because it’s a boring company. However, in my opinion, it should be on every income investor’s radar.
EIC stock offers an inflation-crushing dividend and a consistent monthly income. Obviously, the assets Eagle Point holds in its portfolio are generally deemed risky, but this closed-end fund is managed by seasoned managers.
Over the past few weeks, EIC stock has been down, but it’s not out.
Also of note: 18% of all outstanding EIC shares are held by insiders. This should entice them to make sure Eagle Point performs well.
