Published Fri, 12 Apr 2019 13:13:36 -0400 on Seeking Alpha
As a semi-retiree, I depend on my dividend income to pay the bulk of my bills. So identifying great companies paying above-average dividends is a big part of my investment strategy. That is why when Annaly Capital Management (NLY) came across my desk, I thought that it was worth further investigation. Paying a 12% dividend it looks attractive but I have concerns about companies that look too good to be true, concerns about what happens when the bubble bursts and they are forced to cut that dividend. If a company is paying an overly generous dividend but is lacking the earnings to back that dividend up, then you are gambling more than investing. I am concerned that Annaly may be one of those companies.
Mortgage-backed securities create some challenges
Annaly Capital Management, Inc. is a diversified capital manager that invests in and finances residential and commercial assets. The company invests in various types of agency mortgage-backed securities, non-agency residential mortgage assets, and residential mortgage loans, and originates and invests in commercial mortgage loans, securities, and other commercial real estate investments. It also provides financing to private equity-backed middle market businesses, and operates as a broker-dealer. Annaly Capital Management Inc. was founded in 1996 and is based in New York, New York.
Source: Annaly 2018 financial Report
It was not too long ago that mortgage-backed securities were kind of a dirty word precipitating... Read more