Is Annaly Capital the Best Ultra-High-Yield REIT Stock for You?
If you are like most dividend investors, you prefer stocks with higher yields. There's nothing wrong with that, but it does mean you need to be careful not to get so enamored with a stock's dividend yield that you overlook the risks you are taking on. This is exactly what you need to consider when you examine Annaly Capital Management (NYSE: NLY) and its massive 13.9% dividend yield.
Here's why you probably won't be among the investors who want to own this ultra-high-yield real estate investment trust (REIT).
Real estate investment trusts were created to give small investors the ability to participate in the institutional-level real estate sector. As an incentive, the business structure allows REITs to avoid corporate-level taxation as long as they pay out at least 90% of their taxable earnings as dividends. The caveat here is that shareholders have to count the dividends as regular income. Still, the sector tends to offer very generous dividend yields to investors.
Source Fool.com
