Starwood Property Trust, Inc. (STWD): A Bull Case Theory

We came across a bullish thesis on Starwood Property Trust, Inc. on X.com by  @MoneyShow. In this article, we will summarize the bulls’ thesis on STWD. Starwood Property Trust, Inc.'s share was trading at $18.10 as of February 26th. STWD’s trailing and forward P/E were 18.01 and 9.98 respectively according to Yahoo Finance.

Starwood Property Trust Inc. (STWD) stands out as a conservative, income-focused REIT for 2026, supported by a diversified lending platform that generates stable distributable earnings. The company, the largest commercial mortgage REIT in the U.S., benefits from the backing of Barry Sternlicht’s extensive real estate network, providing a competitive edge in a market where capital is scarce and underwriting discipline is uneven.

STWD has demonstrated a remarkable ability to preserve its dividend and maintain book value through every credit cycle, highlighting the resilience of its business model. The firm offers an attractive dividend yield of over 10%, fully covered by cash flows from its four-pronged operation, which includes commercial lending, infrastructure lending, a property portfolio, and special servicing.

Each segment provides stabilizing income streams: commercial lending remains the core, infrastructure lending diversifies risk, the property segment capitalizes on distressed opportunities, and special servicing becomes active during market stress.

The company has prudently shifted away from challenged office assets toward higher-performing industrial, multifamily, and specialty properties, maintaining conservative loan-to-value ratios that provide a substantial cushion against potential property price softness in 2026. Its balance sheet is strong, liquidity ample, and management has proactively extended debt maturities while safeguarding the dividend.

In the current environment, characterized by tight capital and a commercial real estate sector still in repair, Starwood’s experience, scale, and disciplined approach allow it to price risk effectively and capture attractive spreads without compromising credit quality. For investors seeking a reliable income play with both resilience and upside potential, STWD represents a compelling opportunity in 2026.

Previously, we covered a bullish thesis on Simon Property Group, Inc. (SPG) by David in April 2025, which highlighted SPG’s disciplined capital structure, growing dividends, and robust free cash flow supporting long-term income. SPG’s stock price has appreciated by approximately 36.84% since our coverage. @MoneyShow shares a similar view but emphasizes Starwood Property Trust’s (STWD) high-yield, diversified, and defensive REIT platform for 2026.

Starwood Property Trust, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held STWD at the end of the third quarter which was 25 in the previous quarter. While we acknowledge the risk and potential of STWD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than STWD and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.