This Ultra-High-Yield Dividend Stock Battled Headwinds and Came Out On Top
Annaly Capital Management (NYSE: NLY) offers investors a tempting dividend yield. At more than 13%, it's 10 times higher than the S 500's dividend yield.
With that higher yield comes more risk. The mortgage real estate investment trust (REIT) uses lots of leverage to invest in mortgage-backed securities (MBS) backed by government agencies like Fannie Mae. While that leverage can boost its returns, it also enhances its volatility. That latter issue has caused the REIT to cut its dividend in the past. However, it successfully navigated more challenging market conditions in the second quarter, which should ease concerns about another dividend cut for now.
Annaly Capital Management generated $0.68 per share of earnings available for distribution (EAD) in the second quarter. That was enough to cover its current dividend payment of $0.65 per share. It was also an improvement from the first quarter, when EAD fell to $0.64 per share, putting it below the dividend level.
Source Fool.com
