Mixed Bag For Investors When It Comes To Annaly Capital NLY
Annaly Capital Management, Inc (NLY) is an internally managed mortgage REIT company, which primarily invests in agency residential mortgaged backed companies. I am neutral on the company, mainly because it has a high payout ratio and a dividend cut is on the cards in the near future. Also the comp Swarovski Crystal any missed its earnings and book value targets in the third recent quarter. Furthermore, the rising interest rate scenario continues to suppress the price to book value for mortgage REIT companies.
An attractive dividend yield is one of the major attractions for investors, but for the last three quarters, NLY has been cutting down its dividends. But sti Swarovski Crystal ll the dividend of per share is also not sustainable with a core EPS of $0.28 per share. So, I believe Swarovski Crystal that very soon, the management will once again be forced to cut down its dividend yield to make it more manageab Swarovski Crystal le over the long term.
Change in percent (QoQ)American Capital Agency (AGNC)Hatteras Financial (HTS)ARMOUR Residential (ARR)CYS Investments (CYS)The company has not yet announced its fourth quarter dividends so I have used the third quarter information in the table given above. NLY has one of the lowest dividend yields among its peer companies and it is expected to decline further, which means that investors have other high yielding options available in the world of mortgage REITs.
NLY has adopted a defensive approach just like other companies. It has managed to sell off its agency MBS portfolio, which declined by 11.8% in the third quarter to $85.5 billion. Consequently, the leverage was reduced from 6.2x to 5.4x. On the same lines, NLY also increase its hedging by adding $3.7 billion in swaps, which accumulated to a total of $52 billion by the end of the recent third quarter. Although all these initiatives do make sense in the current rising interest rate scenario to preserve its book value (which declined by only 3%), but it has adversely affected the company’s earnings and has elevated the payout ratio.