Annaly Capital: 14% Yield Trap Or Opportunity?

Summary

  • Annaly Capital has seen its shares drop, which made its dividend yield climb to a hefty 14%.
  • But should investors buy NLY for its high yield? History suggests that chasing yield is not a winning strategy.
  • Profits will come under pressure, book value is dropping, and a dividend cut seems quite possible.
  • Looking for a helping hand in the market? Members of Cash Flow Club get exclusive ideas and guidance to navigate any climate. Learn More »

Yield Road Sign Post Over a Blue Sky

ryasick

Article Thesis

Annaly Capital (NYSE:NLY) has, like many of its peers, dropped quite a lot over the last year. That has made its yield jump to a very high level of 14%. If the company manages to maintain the dividend at the

Is This an Income Stream Which Induces Fear?

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This article was written by

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Jonathan Weber holds an engineering degree and has been active in the stock market and as a freelance analyst for many years. He has been sharing his research on Seeking Alpha since 2014. Jonathan’s primary focus is on value and income stocks but he covers growth occasionally.

He is a contributing author for the investing group Cash Flow Club where along with Darren McCammon, they focus on company cash flows and their access to capital. Core features include: access to the leader’s personal income portfolio targeting 6%+ yield, community chat, the “Best Opportunities” List, coverage of energy midstream, commercial mREITs, BDCs, and shipping sectors,, and transparency on performance. Learn More.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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