If You Invested $10,000 in Annaly Capital Management in 2012, This Is How Much You Would Have Today
Annaly Capital Management (NYSE: NLY) is currently offering up a dividend yield of more than 16%. That's a figure that should catch the eye of all investors, not just those interested in dividends. But don't think you can buy the stock and collect huge quarterly dividend checks for the rest of your life. Here's why this real estate investment trust (REIT) has been a big letdown for income investors over the past decade.
Although Annaly sports a mid-teens dividend yield, the average REIT, using the Vanguard Real Estate Index ETF as a proxy, offers a yield of just 3.7%. An S&P 500 index fund, meanwhile, has an even lower yield of roughly 1.6%. If all that mattered was the yield, Annaly would be the hands-down winner. In fact, there are very few companies, let alone REITs, that could match up.
But dividend yield doesn't exist in a vacuum. Yields move in the opposite direction as share prices. Which is where things start to get very interesting, because Annaly has long had a relatively high yield. Only the REIT's dividend has been cut repeatedly since 2010. The stock price has followed the dividend down, which has propped up the yield.
Source Fool.com
