Why Is Annaly Capital's Dividend So High?
Stock price and yield move in opposite directions. Very often, when investors are worried about a dividend cut, a stock's price will be pushed lower and the yield will rocket to unbelievable (and unsustainable) heights. When the cut eventually comes, the stock price doesn't actually change much because the market has already lowered it in anticipation of the cut.
That's exactly what is going on with Annaly Capital Management (NYSE: NLY) these days, which explains its lofty yield.
Before discussing the future of Annaly's dividend and dividend yield, it might be useful to have a quick look at this mortgage real estate investment trust's (mREIT's) business and history. For starters, it doesn't own properties, collecting rent on physical assets leased out to tenants. It owns pooled mortgage loans, which are often referred to as collateralized mortgage obligations (CMOs) or something similar. These securities trade based on supply and demand, with interest rates playing an important role in determining the valuations placed on them by investors.
Source Fool.com
