Will Annaly Benefit From Its Portfolio Diversification Efforts?

Better Dividend Stock: Toronto-Dominion Bank vs. Annaly Capital Management

Yahoo

3 hours ago

Yahoo

Better Dividend Stock: Toronto-Dominion Bank vs. Annaly Capital Management

Annaly Capital Management is a mortgage REIT that offers a monster yield. Toronto-Dominion Bank is a large Canadian bank that provides a solid payout. Annaly's lofty yield is enticing, but TD Bank may be the better dividend stock. 10 stocks we like better than Annaly Capital Management › Annaly Capital Management (NYSE: NLY) has an ultra-high 14%-plus dividend yield. Toronto-Dominion Bank (NYSE: TD) has a yield of "just" 4.1%. In some ways, these two dividend stocks aren't even playing in the same league. Indeed, if dividend reliability and dividend growth are important to you then you'll definitely be better off with Toronto-Dominion Bank. Here's what you need to know. Annaly Capital is what is known as a mortgage-focused real estate investment trust (REIT). It buys mortgages that have been pooled together into bond-like securities. This is a unique niche of the overall REIT sector and Annaly Capital is more like a mutual fund than a landlord. The goal is to make the difference between the interest Annaly earns and its operating costs, which notably include the cost of debt. Annaly is actually a perfectly fine mortgage REIT. And it has a massive dividend yield, as noted above. But don't let that yield distract you from one important fact. Annaly is a total return investment, which requires dividend reinvestment. If you spend your dividends here you will likely end up being very disappointed. That's because Annaly has a long history of cutting its dividend. And the share price tends to follow along with the dividend, going up and down along with the direction of dividend changes. The graph below summarizes a lot of information. Notice that total return (the blue line) is pretty impressive. But the dividend (the orange line) and the stock price (the purple line) have been very volatile. Sure, the yield today is huge. But if you spend that dividend instead of reinvesting it, well, history suggests that your outcome here probably won't be very good. Compare the volatility with Annaly to the stability offered by Toronto-Dominion Bank. During the Great Recession, when some of the largest U.S. banks were forced to cut their dividends, TD Bank, as it is more commonly known, held its dividend steady. Even when TD Bank's U.S. arm was found to have laundered money and regulators hit the bank with a large fine and an asset cap, TD Bank increased its dividend despite the business setback. In fact, TD Bank has reliably paid a dividend since 1857. So while the yield is lower, at 4.1%, than Annaly offers, investors can go in with more confidence that the dividend will be paid at the same rate, or even higher. That 4.1% yield, by the way, is well above the 2.6% yield of the average U.S. bank and well above the 1.3% yield offered by the S&P 500 today. So while TD Bank isn't offering a 14%-plus yield, the payout is still relatively attractive. There are a couple of key factors to consider here. TD Bank hails from Canada, where banking regulations are particularly strict. That has resulted in a conservative ethos within the banking sector, and within TD Bank. The regulation in Canada has also resulted in entrenched positions for the largest banks, of which TD Bank is one. Thus, TD Bank's foundation here is incredibly strong. TD Bank's stock has actually performed fairly well recently as investors have become less concerned about the regulatory issue noted above. However, given the relatively high yield it is still a strong dividend option. So if you were considering taking on the risk of Annaly Capital's business model, you might actually be better off taking on TD Bank and its regulatory risk issue. Yes, the yield is lower, but if you are trying to live off of the income your portfolio generates, still-out-of-favor TD Bank is the stronger long-term option. Before you buy stock in Annaly Capital Management, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Annaly Capital Management wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $699,558!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $976,677!* Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 30, 2025 Reuben Gregg Brewer has positions in Toronto-Dominion Bank. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Better Dividend Stock: Toronto-Dominion Bank vs. Annaly Capital Management was originally published by The Motley Fool

3 Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 9% -- Which Make for No-Brainer Buys in July

Yahoo

2 days ago

Yahoo

3 Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 9% -- Which Make for No-Brainer Buys in July

Dividend stocks have more than doubled up the average annual return of non-payers over the previous 51 years (1973-2024). Amid one of the priciest stock market's in history, amazing deals can still be found among ultra-high-yield income stocks -- i.e., those with yields of 5% or greater. Three high-octane dividend stocks, with yields ranging from 5.1% to 14.9%, have the right blend of macro and company-specific catalysts to thrive. 10 stocks we like better than Annaly Capital Management › For more than a century, Wall Street has been a bona fide wealth-creating machine. Though other asset classes, including bonds, commodities, and real estate, have also delivered positive long-term returns, none of these other investments has come particularly close to matching the average annual return of stocks over the last 100 years. With thousands of publicly traded companies and exchange-traded funds (ETFs) to choose from, there's probably one or more securities that can help investors meet their goals. But among the countless ways investors can grow their wealth on Wall Street, few have proved more successful over long periods than buying and holding high-quality dividend stocks. Companies that pay a regular dividend to their shareholders are typically profitable on a recurring basis, capable of providing transparent long-term growth outlooks, and have demonstrated their ability to navigate a challenging economic climate. Best of all, dividend stocks tend to outperform. In The Power of Dividends: Past, Present, and Future, the analysts at Hartford Funds, in collaboration with Ned Davis Research, compared the performance of dividend stocks to non-payers from 1973 to 2024. They found that dividend stocks more than doubled the average annual return of non-payers (9.2% vs. 4.31%), and did so while being notably less volatile. Even with the benchmark S&P 500 hitting record highs, amazing deals can still be found among ultra-high-yield dividend stocks -- i.e., companies whose yields are at least four times higher than the current yield of the S&P 500 (1.24%, as of June 27). The following three ultra-high-yield stocks, which are sporting an average yield of 9.02%, make for no-brainer buys in July. The first sensational buy that income seekers can confidently add to their portfolios as we turn the page to the second-half of 2025 is mortgage real estate investment trust (REIT) Annaly Capital Management (NYSE: NLY). While Annaly's nearly 14.9% yield may appear too good to be true, the company recently raised its quarterly payout and has averaged a double-digit yield over the trailing two decades. Throughout much of this decade, mortgage REITs have been disliked by Wall Street. This industry is highly sensitive to rapid changes in monetary policy and interest rates. The Federal Reserve increasing interest rates at the fastest clip in four decades from March 2022 to July 2023 increased short-term borrowing costs for companies like Annaly and lowered their net interest margin. The good news for Annaly Capital Management and its mortgage REIT peers is that we're entering a favorable environment for growth. The nation's central bank is now in a rate-easing cycle, and declining interest rates usually allow mortgage REITs to expand their net interest margin. In other words, they can still buy mortgage-backed securities with robust yields, but short-term borrowing costs tend to decline. Well-telegraphed monetary policy shifts during a rate-easing cycle are ideal for Annaly. Something else to consider is that Annaly Capital Management's $84.9 billion investment portfolio is heavily skewed toward highly liquid agency assets. An "agency" security is backed by the federal government in the unlikely event of default on the underlying asset. This added layer of protection is what affords Annaly the luxury of utilizing leverage to its advantage and pumping up its profits. With the innerworkings of the mortgage REIT industry becoming more favorable, Annaly trading at a slight discount to its book value, as of the March-ended quarter, makes it a smart buy for income-seeking investors. A second ultra-high-yield dividend stock that makes for a no-brainer buy in July is pharmaceutical titan Pfizer (NYSE: PFE). Its current yield tops 7% and looks to be sustainable, based on growth forecasts from management. Whereas the S&P 500 has rallied to a fresh record high, Pfizer stock has struggled under the weight of its own prior success. Investors sent shares of the company higher during the height of the COVID-19 pandemic for having developed a vaccine (Comirnaty) and oral therapy (Paxlovid). But between 2022 and 2024, combined sales of these COVID-19 therapeutics declined from more than $56 billion to $11 billion, respectively. Another drop-off is expected this year, with Paxlovid sales falling off in a big way in the March-ended quarter. While it might be unnerving to see Pfizer's COVID-19-related revenue decline, keep in mind that this area of focus didn't exist at the end of 2020. Any recurring sales from this segment is a bonus from where things stood 4.5 years ago. Furthermore, Pfizer's net sales from all segments actually grew by more than 50% between 2020 and 2024. In spite of weaker sales tied to its COVID-19 franchise, Pfizer's product portfolio, as a whole, is only getting stronger. On top of continued strength from Pfizer's specialty care segment, there's plenty of optimism that follows its $43 billion acquisition of cancer-drug developer Seagen in December 2023. This deal added more than $3 billion in annual sales, provides ample opportunity to boost margins via cost synergies, and should meaningfully bolster Pfizer's oncology pipeline. Ongoing improvements in cancer screening and diagnostics, coupled with strong pricing power for brand-name cancer drugs, bodes well for Pfizer's oncology division. The final piece of the puzzle is Pfizer's historically inexpensive valuation. Amid one of the priciest stock markets in history, shares of Pfizer can be scooped up for around 8 times forecast earnings in 2025 and 2026. This compares to an average forward price-to-earnings (P/E) ratio of 10.2 over the trailing-five-year period. The third ultra-high-yield dividend stock that stands out for all the right reasons and can be purchased with confidence by income investors in July is The Campbell's Company (NASDAQ: CPB). The 146-year-old food company formerly known as Campbell's Soup Company sports a nearly 5.1% dividend yield, which is an all-time high. Campbell's stock is effectively hovering at a 16-year low due to two factors. First, demand in the snack food category has recently weakened, which isn't unique Campbell's. The other issue (also not unique to Campbell's) is President Donald Trump's recently imposed steel tariffs, which are expected to take a bite out of the margins of food companies that can their products. While these are tangible headwinds, they're both relatively short-term in nature and overlook some of the factors that make The Campbell's Company a solid long-term investment. Perhaps the most obvious catalyst for Campbell's is that it sells basic need goods, such as food and beverages. No matter how well or poorly the U.S. economy and stock market perform, consumers need food and beverages to survive. This leads to highly predictable operating cash flow for Campbell's in any economic climate and makes it a particularly attractive stock to own during periods of heightened volatility and uncertainty. Furthermore, Campbell's went on the offensive last year to improve its product portfolio and make its operations more efficient. It announced the closure of a plant, as well as $230 million in investments through fiscal 2026 (Campbell's fiscal year usually ends in late July) in existing plants to bolster production efficiency and buoy margins. Ongoing innovation and the occasional acquisition are ways Campbell's looks to deliver volume growth and support the value of its brands. The valuation is also compelling. With Campbell's stock at levels not consistently witnessed since 2009, shares can be purchased for around 10 times forecast earnings this year. This equates to a 31% discount to the company's average forward P/E ratio over the past half-decade. Before you buy stock in Annaly Capital Management, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Annaly Capital Management wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $697,627!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $939,655!* Now, it's worth noting Stock Advisor's total average return is 1,045% — a market-crushing outperformance compared to 178% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 30, 2025 Sean Williams has positions in Annaly Capital Management and Pfizer. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Campbell's. The Motley Fool has a disclosure policy. 3 Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 9% -- Which Make for No-Brainer Buys in July was originally published by The Motley Fool

Yahoo

2 days ago

Yahoo

3 Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 9% -- Which Make for No-Brainer Buys in July

Dividend stocks have more than doubled up the average annual return of non-payers over the previous 51 years (1973-2024). Amid one of the priciest stock market's in history, amazing deals can still be found among ultra-high-yield income stocks -- i.e., those with yields of 5% or greater. Three high-octane dividend stocks, with yields ranging from 5.1% to 14.9%, have the right blend of macro and company-specific catalysts to thrive. 10 stocks we like better than Annaly Capital Management › For more than a century, Wall Street has been a bona fide wealth-creating machine. Though other asset classes, including bonds, commodities, and real estate, have also delivered positive long-term returns, none of these other investments has come particularly close to matching the average annual return of stocks over the last 100 years. With thousands of publicly traded companies and exchange-traded funds (ETFs) to choose from, there's probably one or more securities that can help investors meet their goals. But among the countless ways investors can grow their wealth on Wall Street, few have proved more successful over long periods than buying and holding high-quality dividend stocks. Companies that pay a regular dividend to their shareholders are typically profitable on a recurring basis, capable of providing transparent long-term growth outlooks, and have demonstrated their ability to navigate a challenging economic climate. Best of all, dividend stocks tend to outperform. In The Power of Dividends: Past, Present, and Future, the analysts at Hartford Funds, in collaboration with Ned Davis Research, compared the performance of dividend stocks to non-payers from 1973 to 2024. They found that dividend stocks more than doubled the average annual return of non-payers (9.2% vs. 4.31%), and did so while being notably less volatile. Even with the benchmark S&P 500 hitting record highs, amazing deals can still be found among ultra-high-yield dividend stocks -- i.e., companies whose yields are at least four times higher than the current yield of the S&P 500 (1.24%, as of June 27). The following three ultra-high-yield stocks, which are sporting an average yield of 9.02%, make for no-brainer buys in July. The first sensational buy that income seekers can confidently add to their portfolios as we turn the page to the second-half of 2025 is mortgage real estate investment trust (REIT) Annaly Capital Management (NYSE: NLY). While Annaly's nearly 14.9% yield may appear too good to be true, the company recently raised its quarterly payout and has averaged a double-digit yield over the trailing two decades. Throughout much of this decade, mortgage REITs have been disliked by Wall Street. This industry is highly sensitive to rapid changes in monetary policy and interest rates. The Federal Reserve increasing interest rates at the fastest clip in four decades from March 2022 to July 2023 increased short-term borrowing costs for companies like Annaly and lowered their net interest margin. The good news for Annaly Capital Management and its mortgage REIT peers is that we're entering a favorable environment for growth. The nation's central bank is now in a rate-easing cycle, and declining interest rates usually allow mortgage REITs to expand their net interest margin. In other words, they can still buy mortgage-backed securities with robust yields, but short-term borrowing costs tend to decline. Well-telegraphed monetary policy shifts during a rate-easing cycle are ideal for Annaly. Something else to consider is that Annaly Capital Management's $84.9 billion investment portfolio is heavily skewed toward highly liquid agency assets. An "agency" security is backed by the federal government in the unlikely event of default on the underlying asset. This added layer of protection is what affords Annaly the luxury of utilizing leverage to its advantage and pumping up its profits. With the innerworkings of the mortgage REIT industry becoming more favorable, Annaly trading at a slight discount to its book value, as of the March-ended quarter, makes it a smart buy for income-seeking investors. A second ultra-high-yield dividend stock that makes for a no-brainer buy in July is pharmaceutical titan Pfizer (NYSE: PFE). Its current yield tops 7% and looks to be sustainable, based on growth forecasts from management. Whereas the S&P 500 has rallied to a fresh record high, Pfizer stock has struggled under the weight of its own prior success. Investors sent shares of the company higher during the height of the COVID-19 pandemic for having developed a vaccine (Comirnaty) and oral therapy (Paxlovid). But between 2022 and 2024, combined sales of these COVID-19 therapeutics declined from more than $56 billion to $11 billion, respectively. Another drop-off is expected this year, with Paxlovid sales falling off in a big way in the March-ended quarter. While it might be unnerving to see Pfizer's COVID-19-related revenue decline, keep in mind that this area of focus didn't exist at the end of 2020. Any recurring sales from this segment is a bonus from where things stood 4.5 years ago. Furthermore, Pfizer's net sales from all segments actually grew by more than 50% between 2020 and 2024. In spite of weaker sales tied to its COVID-19 franchise, Pfizer's product portfolio, as a whole, is only getting stronger. On top of continued strength from Pfizer's specialty care segment, there's plenty of optimism that follows its $43 billion acquisition of cancer-drug developer Seagen in December 2023. This deal added more than $3 billion in annual sales, provides ample opportunity to boost margins via cost synergies, and should meaningfully bolster Pfizer's oncology pipeline. Ongoing improvements in cancer screening and diagnostics, coupled with strong pricing power for brand-name cancer drugs, bodes well for Pfizer's oncology division. The final piece of the puzzle is Pfizer's historically inexpensive valuation. Amid one of the priciest stock markets in history, shares of Pfizer can be scooped up for around 8 times forecast earnings in 2025 and 2026. This compares to an average forward price-to-earnings (P/E) ratio of 10.2 over the trailing-five-year period. The third ultra-high-yield dividend stock that stands out for all the right reasons and can be purchased with confidence by income investors in July is The Campbell's Company (NASDAQ: CPB). The 146-year-old food company formerly known as Campbell's Soup Company sports a nearly 5.1% dividend yield, which is an all-time high. Campbell's stock is effectively hovering at a 16-year low due to two factors. First, demand in the snack food category has recently weakened, which isn't unique Campbell's. The other issue (also not unique to Campbell's) is President Donald Trump's recently imposed steel tariffs, which are expected to take a bite out of the margins of food companies that can their products. While these are tangible headwinds, they're both relatively short-term in nature and overlook some of the factors that make The Campbell's Company a solid long-term investment. Perhaps the most obvious catalyst for Campbell's is that it sells basic need goods, such as food and beverages. No matter how well or poorly the U.S. economy and stock market perform, consumers need food and beverages to survive. This leads to highly predictable operating cash flow for Campbell's in any economic climate and makes it a particularly attractive stock to own during periods of heightened volatility and uncertainty. Furthermore, Campbell's went on the offensive last year to improve its product portfolio and make its operations more efficient. It announced the closure of a plant, as well as $230 million in investments through fiscal 2026 (Campbell's fiscal year usually ends in late July) in existing plants to bolster production efficiency and buoy margins. Ongoing innovation and the occasional acquisition are ways Campbell's looks to deliver volume growth and support the value of its brands. The valuation is also compelling. With Campbell's stock at levels not consistently witnessed since 2009, shares can be purchased for around 10 times forecast earnings this year. This equates to a 31% discount to the company's average forward P/E ratio over the past half-decade. Before you buy stock in Annaly Capital Management, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Annaly Capital Management wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $697,627!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $939,655!* Now, it's worth noting Stock Advisor's total average return is 1,045% — a market-crushing outperformance compared to 178% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 30, 2025 Sean Williams has positions in Annaly Capital Management and Pfizer. The Motley Fool has positions in and recommends Pfizer. The Motley Fool recommends Campbell's. The Motley Fool has a disclosure policy. 3 Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 9% -- Which Make for No-Brainer Buys in July was originally published by The Motley Fool Sign in to access your portfolio

Will Annaly Benefit From Its Portfolio Diversification Efforts?

Hashtags

Try Our AI Features

Comments

Related Articles

Better Dividend Stock: Toronto-Dominion Bank vs. Annaly Capital Management

3 Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 9% -- Which Make for No-Brainer Buys in July

3 Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 9% -- Which Make for No-Brainer Buys in July

Will Annaly Benefit From Its Portfolio Diversification Efforts?

Hashtags

Try Our AI Features

Comments

Related Articles

Better Dividend Stock: Toronto-Dominion Bank vs. Annaly Capital Management

3 Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 9% -- Which Make for No-Brainer Buys in July

3 Ultra-High-Yield Dividend Stocks -- Sporting an Average Yield of 9% -- Which Make for No-Brainer Buys in July

Get Started Now: Download the App