I'm Not Buying Annaly Capital. Here's Why.
I am a dyed-in-the-wool dividend investor, with a preference for high-yielding stocks. But I've learned the hard way that focusing on yield alone is a mistake. You need to understand a company's history and its business model before you jump aboard, or you risk being shocked by the one thing no dividend investor wants to see -- a dividend cut.
That is the concise explanation for why I'm not buying Annaly Capital Management (NYSE: NLY). For those who want more detail, here's a longer explanation.
Annaly certainly has an attractive dividend yield; it's running at roughly 12.5%. The thing is, yields don't normally get that high unless there's some real risk involved. That's definitely the case here and, for me anyway, the risks far outweigh the potential reward (which history suggests could be ephemeral anyway).
Source Fool.com
