This Is Why Annaly Capital Can't Keep Up With Its REIT Competition

Annaly Capital's (NYSE: NLY) big draw is its dividend yield. Today that yield is roughly 12.6%, which is huge. But it really isn't historically out of line for this real estate investment trust (REIT), given that the yield has been above 10% for most of the last decade. And yet, if history is any guide, dividend investors would be much better off buying lower-yielding REITs like Realty Income (NYSE: O). Here's what you need to know.

Annaly Capital's yield is high today and it has been high for the past decade. How high? Well, its 12.6% yield dwarfs the 5.6% yield you would get from Realty Income or the even lower 4.5% yield of the average REIT, using the Vanguard Real Estate ETF as a proxy. This is not even remotely a new phenomenon, since this same relationship has basically been in place for at least the past 10 years.