Annaly Capital Management: Should You Buy Its 11% Dividend Yield?
- Annaly is currently offering an 11% dividend yield and is trading at a 15% discount to its book value.
- The dividend of Annaly has historically experienced great volatility, but the sum of the dividends has been extraordinary.
- However, the company has invested 80% of its funds in 30-year fixed-rate securities, and hence it faces great risks from the upcoming hikes in the interest rates.
- On the other hand, as the Fed has become increasingly friendly to the market since the last recession and does not want to surprise it, its moves have become predictable.
- Therefore, if the management of Annaly is fairly competent, it will hedge its positions in time and hence it will be able to protect its profit.