Novastar Financial Inc. announced a second-quarter common stock dividend of 35 cents per share.

The company said the dividend is more than 16% greater than the one it paid in the first quarter, reflecting its expectations for its second- quarter performance.

A real estate investment trust, Novastar Financial invests in single- family residential subprime mortgage loans originated by Orange County, Calif.-based Novastar Mortgage.

It finances mortgage loans in its portfolio on a long-term basis by issuing collateralized mortgage obligations in transactions accounted for as debt. The company also buys mortgage securities.

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