3 Things You Need to Know If You Buy Annaly Capital Today
At a time when the S 500 index is yielding just 1.5%, finding a stock with a yield of 12.8% might seem like finding a needle in a haystack. That lofty yield is exactly what Annaly Capital Management (NYSE: NLY) is offering investors today. But it is not a needle in a haystack or a diamond in the rough. If history is any guide, it could very well turn out to be a yield trap.
Here are three facts you need to know if you are considering buying Annaly today.
As a real estate investment trust (REIT), Annaly is required to pass at least 90% of its income on to shareholders. That said, it does not do what most REITs do. A traditional REIT owns physical property and leases it out to tenants. That's a fairly simple business model designed to generate a consistent income stream. Instead, Annaly invests in mortgages.
Source Fool.com
