Dividend Power: Annaly Since the Turn of the Century
Is it worth sticking with Annaly Capital Management (NYSE:NLY)? We know that one of the most painful sectors to have been holding stocks over the last few quarters has been the mortgage real estate investment trusts (or, mREITs). In this article, I really want to talk to those who have made their purchases within the last two years. With the exception of those who initiated their positions within the last 4 weeks, you are likely deep in the red.
I argue that those who have bought at higher prices should consider taking advantage of lower prices to lower their cost average, while collecting the dividends going forward. As the share price has come down there has been a double whammy with the dividend cuts quarter after quarter. Many of my readers question if it is really is worth holding this thing. Truthfully, there are safer yields out there, even within the sector. Javelin Mortgage (NYSE:JMI) is a great place to look in my opinion if you are considering dumping Annaly and looking for a better position in the sector.
For those that want out, the telecoms pay well as do master limited partnerships. However, although the cycle of mREITs moves with interest rates timing buys and pyramiding down to lower cost base are imperative. At the same time the power of the dividend, particularly when reinvested, can deliver strong returns. It requires patience, strong will, and trust in the management. These three qualities are hard to come by in investors as emotions always run high when unrealized losses mount on paper. However, I will show you why the dividend is not something to sneeze at.