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Yahoo
3 days ago
- Business
- Yahoo
3 Reasons to Buy Annaly Capital Management Stock Like There's No Tomorrow
Key Points Annaly Capital Management is a mortgage REIT, a complex corner of the REIT sector. The company has a huge 14%+ dividend yield and it increased its dividend in 2025. There are reasons to like Annaly Capital, but make sure you understand what you are buying. 10 stocks we like better than Annaly Capital Management › The most eye-catching feature of Annaly Capital Management's (NYSE: NLY) stock is its 14%+ dividend yield. There are some strong reasons to consider buying the mortgage real estate investment trust (REIT). And yet there's a caveat here that income investors specifically will want to know before buying this stock like there's no tomorrow. Here are three reasons to like Annaly and one very big reason to avoid it. What does Annaly Capital Management do? As noted, Annaly is a mortgage REIT, which is a unique corner of the broader REIT sector. It buys mortgages that have been pooled together into bond-like securities, which is very different from buying physical properties and leasing them out to tenants. The mortgage securities Annaly buys are impacted by things like interest rates, housing market dynamics, and mortgage repayment rates. It would be hard for most investors to track this business. Annaly has done a commendable job of creating value for investors over time. Notably, the total return of the stock has kept pace with the total return of the S&P 500 index (SNPINDEX: ^GSPC) over the long term. And the stock's performance has been notably different from that of the S&P 500 index, suggesting that Annaly would provide attractive diversification benefits to a portfolio. Those two facts combined are reason one that investors might like to buy this stock, perhaps with abandon. Reason two is that Annaly just increased its dividend at the start of 2025. There's a saying among dividend investors that the safest dividend is the one that has just been increased. At the very least, that dividend hike suggests that Annaly's business seems to be doing well right now. The third reason to jump on Annaly's stock is interest rates. It seems increasingly likely that interest rates are going to be cut before they are increased again. The main asset Annaly owns is its portfolio of mortgage bonds. When interest rates fall, the value of bonds tends to rise. So an interest rate cut would likely create value here. The dividend yield is the reason to stay away from Annaly Notice that the huge size of Annaly's dividend yield isn't in the list above. At 14%+ you would think it would be, especially given the recent dividend hike. But there's some history here to examine. Notice in the chart below that the dividend has been extremely volatile over time, including a long period in which it was steadily reduced. And yet there's that strong total return performance. The key is that to achieve that strong total return, investors would need to reinvest their dividends. Investors trying to live off of the dividends they generate from their portfolios would have been sorely disappointed with an investment in Annaly Capital. Given that dividend volatility is pretty normal for a mortgage REIT, this dynamic isn't likely to change. Annaly Capital will probably be a bad investment for most dividend investors, who are likely looking for dividends that grow steadily over time. This is a stock that investors focused on asset allocation will appreciate, providing exposure to a unique asset class that performs differently from the broader equity space. The lofty dividend yield, in the end, isn't really the most important feature here. Make sure you understand what you are buying with Annaly The big problem is that some income investors reach for yield without taking Annaly's business model into consideration. And then there's a mismatch between what an investor wants and what an investor gets. Annaly isn't a bad company, but it probably won't be a great dividend stock for income investors. However, if you are an asset allocator, this total return stock could be an interesting buy right now. Should you invest $1,000 in Annaly Capital Management right now? 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 $665,092!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,050,477!* Now, it's worth noting Stock Advisor's total average return is 1,055% — 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 Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 3 Reasons to Buy Annaly Capital Management Stock Like There's No Tomorrow was originally published by The Motley Fool Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
4 days ago
- Business
- Yahoo
3 Dirt Cheap Stocks to Buy With $500 Right Now
Key Points Alphabet trades at a much cheaper valuation than its Magnificent Seven peers. Realty Income's low valuation is a big driver of its high dividend yield. Energy Transfer trades at one of the lowest valuations in its peer group. 10 stocks we like better than Alphabet › Following a brief dip earlier this year driven by tariff concerns, the S&P 500 has resumed its rally as those fears faded. As a result, we now find the broad market index fetching nearly 22 times its forward earnings. This level is nearing its highest points in the past quarter-century. Even in today's pricier market, several stocks trade at dirt cheap levels. Realty Income (NYSE: O), Energy Transfer (NYSE: ET), and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) stand out as very inexpensive stocks. For anyone with $500 to invest, these stocks make compelling buys right now. An AI bargain Tech titan Alphabet trades at the lowest valuation in the "Magnificent Seven," at around 19 times forward earnings. That's dirt cheap compared with those super growth stocks, which fetch more than 27 times forward earnings. What's holding back Alphabet's valuation? Concerns about AI's impact on its lucrative search business. However, as of the first quarter, AI chatbots have not dented its advertising revenue. Google's search revenue actually climbed 10% in the period, to almost $51 billion. Instead, the company is benefiting from AI. CEO Sundar Pichai stated in the first-quarter earnings release, "Search saw continued strong growth, boosted by the engagement we're seeing with features like AI Overviews, which now has 1.5 billion users per month." The company also recently rolled out its Gemini 2.5 AI model, which "is achieving breakthroughs in performance and is an extraordinary foundation for our future innovation," according to Pichai. The company is also expanding its other businesses, including Google Cloud, YouTube, and others. Alphabet's long-term growth potential makes it look like an especially attractive investment these days. A dirt cheap REIT As a leading real estate investment trust (REIT), Realty Income boasts a diversified portfolio that delivers stable rental income through long-term net leases. Management expects to generate between $4.22 and $4.28 per share of adjusted funds from operations (FFO) this year. With shares of the REIT recently trading below $57, the stock sells for less than 13.5 times its forward earnings. This bargain price is why it offers an attractive dividend yield of more than 5.5%. Rising interest rates have presented some headwinds for REITs such as Realty Income, making it more expensive to borrow money for new investments. Nevertheless, Realty Income continues its steady growth. The company made $1.4 billion worth of acquisitions in the first quarter, enabling it to raise its monthly dividend several times this year. Realty Income projects it will have the financial capacity to invest about $4 billion in portfolio expansion this year. If interest rates fall, which many expect will eventually happen, Realty Income would be able to make even more acquisitions. That would allow it to grow faster, which should boost its valuation. A bottom-of-the-barrel valuation Energy Transfer is one of the country's largest master limited partnerships (MLPs). The midstream company owns a large and diverse portfolio of energy infrastructure assets, such as pipelines, processing plants, storage terminals, and export facilities. Those assets generate stable cash flow, with 90% coming from fee-based structures. Despite its stable cash flow profile, Energy Transfer currently trades at the second-lowest valuation in its peer group. That's a big reasonit boasts a monster 7.5% distribution yield. Other than the fact that the MLP sends investors a Schedule K-1 federal tax form each year, there's no reason for Energy Transfer's discounted valuation. The MLP is in its strongest financial position in history, with a leverage ratio in the lower half of its target range. It also has a low distribution payout ratio, at less than half of its stable cash flow. Meanwhile, it's growing at a solid rate, with a reacceleration expected in 2026 and 2027 as it benefits from a slew of upcoming project completions. The growth from those projects will give it plenty of fuel to continue increasing its high-yielding distribution. Cheap stocks in a pricy market While the S&P 500's valuation is rising to expensive levels, there are still some very reasonably priced stocks out there worth buying. Alphabet, Realty Income, and Energy Transfer currently trade at dirt cheap valuations. With solid growth prospects despite some headwinds, they're great stocks to buy right now for those who have around $500 to invest. Should you invest $1,000 in Alphabet right now? Before you buy stock in Alphabet, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Alphabet 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 $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!* Now, it's worth noting Stock Advisor's total average return is 1,048% — 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 Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Matt DiLallo has positions in Alphabet, Energy Transfer, and Realty Income. The Motley Fool has positions in and recommends Alphabet and Realty Income. The Motley Fool has a disclosure policy. 3 Dirt Cheap Stocks to Buy With $500 Right Now was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 days ago
- Business
- Yahoo
What Halal Investors Should Know About PepsiCo (PEP)
PepsiCo, Inc. (NASDAQ:PEP) is included among the 11 Best Halal Dividend Stocks to Buy Now. A close up of a glass of a refreshing carbonated beverage illustrating the company's different beverages. The company recently reported its Q2 2025 earnings, with revenues of $22.7 billion, up 1% from the same period last year. It maintained strong momentum in its international operations, while its North American businesses showed improved execution and strengthened their competitiveness in important subcategories and distribution channels. PepsiCo, Inc. (NASDAQ:PEP) projects a modest rise in organic revenue for 2025, with core earnings per share remaining steady on a constant-currency basis. The company plans to return around $8.6 billion to shareholders, including $7.6 billion in dividends and $1 billion through share buybacks. PepsiCo, Inc. (NASDAQ:PEP) is a Dividend King, as the company has raised its payouts for 53 years in a row. The company offers a quarterly dividend of $1.4225 per share and has a dividend yield of 3.97%, as of July 17. While we acknowledge the potential of PEP as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and . Disclosure: None. Sign in to access your portfolio
Yahoo
4 days ago
- Business
- Yahoo
Is Texas Instruments (TXN) a Halal Dividend Stock for Tech-Savvy Investors?
Texas Instruments Incorporated (NASDAQ:TXN) is included among the 11 Best Halal Dividend Stocks to Buy Now. A robotic arm in the process of assembling a complex circuit board - showing the industrial scale the company operates at. On July 18, the company declared a quarterly dividend of $1.36 per share, which was in line with its previous dividend. It has been growing its payouts for 21 consecutive years. The stock supports a dividend yield of 2.51%, as of July 18. Texas Instruments Incorporated (NASDAQ:TXN)'s cash position showed the strength of its dividend. The company's operating cash flow over the past 12 months totaled $6.2 billion, highlighting the strength of its business model, the quality of its product offerings, and the advantages of 300mm production. Free cash flow during the same period amounted to $1.7 billion. Over the past year, the company allocated $3.8 billion to research and development and selling, general, and administrative expenses, invested $4.7 billion in capital expenditures, and returned $6.4 billion to shareholders. Texas Instruments Incorporated (NASDAQ:TXN) operates with a solid business model focused on analog and embedded processing solutions, backed by durable competitive advantages. A central aspect of its long-term strategy for growing free cash flow per share is its disciplined capital allocation. This involves selectively funding R&D initiatives, expanding capabilities, investing in manufacturing infrastructure, considering strategic acquisitions, and consistently returning value to shareholders. While we acknowledge the potential of TXN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and . Disclosure: None. Sign in to access your portfolio
Yahoo
4 days ago
- Business
- Yahoo
Can the BP share price reach £5? Here's what needs to happen
Over the past year, the BP (LSE:BP.) share price has slid by around 11%. The loss for shareholders has been offset by its impressive dividend yield. And over the last few months, this downward trajectory did start to change course, with the shares of this oil giant rising by almost 20% since April. [fool_stoc_chart ticker=LSE:BP.] As a result, the energy stock is now trading around £4 per share. Yet if the analyst team at Barclays is correct in its convictions, this price may rise to as high as £5.25 by this time next year. So, what's behind this bullish stance? And what needs to happen for BP shares to rise to this level? Investigating performance requirements At the heart of Barclays' analysis lies BP's massive strategic reset that was unveiled in early 2025. The pivot away from renewables and back towards traditional fossil fuels means production volumes are expected to rise as high as 2.5m barrels of oil equivalent per day (boepd) by 2030. At the same time, the forecast assumes that management will succeed in hitting its target 16% return on capital by 2027, and that the compounded annual growth rate of free cash flow will exceed 20% between 2024 and 2027. The latter comes paired with the assumption that BP will also deliver up to $5bn of structural annual savings by 2027, and that net debt falls from $27bn today to a target of $18bn over the same time period. Needless to say, the journey to £5 a share is highly conditional, and many of the required feats are far easier said than done. Having said that, there are some early signs of progress towards these various goals. The progress so far The first half of 2025 has seen some encouraging steps forward. While unpleasant for employees, the company has successfully reduced its required workforce by 5% and hit pause on many low-return projects. These moves have translated into record operating efficiency. At the same time, up to $4bn of capital is expected to be raised by the end of this year courtesy of its divestment plan. The proceeds are intended to be reinvested as well as being used to pay down debts. And with three new project starts in the first quarter, along with six additional discoveries, BP also seems to be making progress towards ramping up production volumes. Not everything is going smoothly Suppose BP can continue to post encouraging results? In that case, improved investor sentiment may be capable of pushing its share price above the £5 threshold. However, some upcoming headwinds could prove challenging. Despite launching new projects, the disposal of existing ones in Egypt and Trinidad has actually pushed first-quarter production in the wrong direction. At the same time, oil & gas prices are proving to be quite volatile this year, with uncertainty brewing as a result of conflicts in the Middle East. This could compromise the predictability of cash flows, making it harder for management to allocate capital effectively. So, should production volumes and fossil fuel prices continue to fall in the short term, the BP share price could do the same. All things considered, I think it's still too soon to determine whether management can deliver on its promises within its specified timeframe. And with potential selling catalysts on the horizon, investors may want to think about sitting on the sidelines for now. The post Can the BP share price reach £5? Here's what needs to happen appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025
