Latest news with #mortgageREIT
Yahoo
2 days ago
- Business
- Yahoo
Is Annaly Capital Management Stock a Millionaire Maker?
Key Points Annaly Capital Management is a mortgage REIT. The stock has an astonishingly large 13%+ yield. Annaly Capital is not a particularly attractive income stock, but it could still help some investors build seven-figure portfolios. 10 stocks we like better than Annaly Capital Management › The S&P 500 index is currently offering a slim little 1.2% yield. The average real estate investment trust (REIT) is yielding around 3.9%. Annaly Capital Management (NYSE: NLY), a mortgage REIT, is offering an over 13% dividend yield today! While you shouldn't buy Annaly Capital if you are looking for a reliable income stream, it can still be a key part of a millionaire-maker portfolio. Here's what you need to know. Annaly Capital is not a reliable income investment Annaly Capital will probably pop up on most dividend screens given the huge yield it offers. But yield alone is not a good reason to buy this stock, particularly if you need the income your portfolio generates to pay for living expenses. A simple graph can illustrate the issue. Notice the volatility of the dividend and how the stock price tends to track along with the dividend, up and down. Although the dividend was just increased, the longer trend here is downward. So, dividend investors who bought a decade ago because of a lofty dividend yield have ended up with less income and less capital. Not ideal for a dividend-focused investor. The problem is with the fact that Annaly is a mortgage real estate investment trust (REIT). This is a fairly complex niche of the broader REIT sector. Annaly basically buys mortgages that have been pooled into bond-like securities. Mortgages get repaid over time, with a portion of the payment covering interest expenses and a portion reducing the principal of the mortgage. So the huge yield here effectively results in the shrinking of the REIT's portfolio over time, thanks to the principal repayments. On top of that, you can add the impact of interest rates, housing market dynamics, and even mortgage repayment trends. Annaly is not a bad investment Here's the thing -- Annaly Capital actually does a fairly good job of achieving its goal. That goal, however, is generating an attractive total return. It is not focused on income, even though the dividend plays an important part in the story. The key is that in order to fully benefit from this REIT's approach, you have to reinvest the dividend, not spend it. As the chart above shows, Annaly's total return is roughly similar to that of the S&P 500 index over time. However, the chart highlights that the return profile has been different. That makes Annaly a very attractive option for investors looking to create a diversified asset allocation portfolio. Essentially, adding Annaly to an asset allocation portfolio can provide investors with returns that aren't directly tied to the general performance of the stock market. Or, to put it a different way, when stocks zig, Annaly could be zagging. The end result is a better total return for the overall portfolio. But if you spend the income this REIT throws off, you won't be able to fully benefit from this fact. Is Annaly a millionaire-maker stock? Annaly Capital probably isn't a millionaire-maker stock all on its own. But as a part of a larger asset allocation portfolio, this total return-focused mREIT could help you build a seven-figure nest egg. The other big takeaway here, however, is that Annaly is far more complex than a property-owning REIT, and most income-focused investors should probably avoid it despite the huge dividend yield it offers. 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 $636,563!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,108,033!* Now, it's worth noting Stock Advisor's total average return is 1,047% — a market-crushing outperformance compared to 181% 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 August 4, 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. Is Annaly Capital Management Stock a Millionaire Maker? was originally published by The Motley Fool
Globe and Mail
2 days ago
- Business
- Globe and Mail
Is Annaly Capital Management Stock a Millionaire Maker?
Key Points Annaly Capital Management is a mortgage REIT. The stock has an astonishingly large 13%+ yield. Annaly Capital is not a particularly attractive income stock, but it could still help some investors build seven-figure portfolios. 10 stocks we like better than Annaly Capital Management › The S&P 500 index is currently offering a slim little 1.2% yield. The average real estate investment trust (REIT) is yielding around 3.9%. Annaly Capital Management (NYSE: NLY), a mortgage REIT, is offering an over 13% dividend yield today! While you shouldn't buy Annaly Capital if you are looking for a reliable income stream, it can still be a key part of a millionaire-maker portfolio. Here's what you need to know. Annaly Capital is not a reliable income investment Annaly Capital will probably pop up on most dividend screens given the huge yield it offers. But yield alone is not a good reason to buy this stock, particularly if you need the income your portfolio generates to pay for living expenses. A simple graph can illustrate the issue. NLY data by YCharts. Notice the volatility of the dividend and how the stock price tends to track along with the dividend, up and down. Although the dividend was just increased, the longer trend here is downward. So, dividend investors who bought a decade ago because of a lofty dividend yield have ended up with less income and less capital. Not ideal for a dividend-focused investor. The problem is with the fact that Annaly is a mortgage real estate investment trust (REIT). This is a fairly complex niche of the broader REIT sector. Annaly basically buys mortgages that have been pooled into bond-like securities. Mortgages get repaid over time, with a portion of the payment covering interest expenses and a portion reducing the principal of the mortgage. So the huge yield here effectively results in the shrinking of the REIT's portfolio over time, thanks to the principal repayments. On top of that, you can add the impact of interest rates, housing market dynamics, and even mortgage repayment trends. Annaly is not a bad investment Here's the thing -- Annaly Capital actually does a fairly good job of achieving its goal. That goal, however, is generating an attractive total return. It is not focused on income, even though the dividend plays an important part in the story. The key is that in order to fully benefit from this REIT's approach, you have to reinvest the dividend, not spend it. NLY Total Return Level data by YCharts. As the chart above shows, Annaly's total return is roughly similar to that of the S&P 500 index over time. However, the chart highlights that the return profile has been different. That makes Annaly a very attractive option for investors looking to create a diversified asset allocation portfolio. Essentially, adding Annaly to an asset allocation portfolio can provide investors with returns that aren't directly tied to the general performance of the stock market. Or, to put it a different way, when stocks zig, Annaly could be zagging. The end result is a better total return for the overall portfolio. But if you spend the income this REIT throws off, you won't be able to fully benefit from this fact. Is Annaly a millionaire-maker stock? Annaly Capital probably isn't a millionaire-maker stock all on its own. But as a part of a larger asset allocation portfolio, this total return-focused mREIT could help you build a seven-figure nest egg. The other big takeaway here, however, is that Annaly is far more complex than a property-owning REIT, and most income-focused investors should probably avoid it despite the huge dividend yield it offers. 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 10 best stocks 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 $636,563!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,108,033!* Now, it's worth noting Stock Advisor's total average return is 1,047% — a market-crushing outperformance compared to 181% 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 August 4, 2025
Yahoo
26-07-2025
- Business
- Yahoo
AGNC Investment: After Another Tough Quarter, Can the Stock Maintain Its Dividend?
Key Points AGNC saw another tough quarter and MBS spreads rose. However, the mortgage REIT is expecting better times ahead when banks return to the MBS market. In the current environment, the mREIT looks like it can earn enough to maintain its current dividend, but it's getting tighter. 10 stocks we like better than AGNC Investment Corp. › The ongoing tariff situation, along with tensions between President Donald Trump and Federal Reserve Chair Jerome Powell, continued to make for a difficult mortgage-backed security (MBS) market in the second quarter. While mortgage real estate investment trust (mREIT) AGNC Investment (NASDAQ: AGNC) was able to navigate the market, the environment weighed on its results. With the stock yielding more than 15%, let's see if better days could be ahead and whether the stock can maintain its dividend. Rates remain in focus AGNC is an mREIT that primarily holds a portfolio of MBSes that are backed by government-sponsored agencies, such as Fannie Mae and Freddie Mac. MBSes are residential mortgages that are bundled into bond-like securities, and since they are backed by government-sponsored agencies, they are generally regarded as being largely free from the risk of default. However, like other bonds, interest rates have an effect on MBS values, and their yields trade at a spread to U.S. Treasury yields, which are considered the ultimate safe haven. A few years ago, mREITs came under significant pressure due to the Fed raising rates and MBS spreads widening, as the Fed let MBSes that it had acquired as part of earlier quantitative easing roll off its balance sheet. This also led to the highly publicized blowup of Silicon Valley Bank, which was heavily invested in MBSes at the time. Since then, with regulatory tightening, banks have shied away from owning longer-duration assets like MBSes. On its Q2 call, AGNC said that despite the Federal Reserve and Treasury Department indicating that beneficial regulatory reforms were coming, banks remained largely on the sidelines. It also noted that foreign investor demand appeared subdued due to a weak U.S. dollar and geopolitical risk. However, it noted that MBS spreads have tightened since quarter-end and that it expects banks and foreign investor demand to grow in the future. This dynamic could help the current wide MBS spread to narrow. Importantly, AGNC said comments from President Trump and Treasury Secretary Scott Bessent should help ease any investor concerns about the future of Fannie and Freddie and their role in the mortgage markets. Trump said that while he wants to take the GSEs (Fannie and Freddie) public, he will do so with the U.S. government keeping its implicit guarantee. In addition, Treasury Secretary Bessent said one requirement of privatization would be for MBS spreads to remain the same, and ideally, he wants them tightened. That should help take a major potential risk off the table for AGNC and other mREITs. One of the most important metrics for mREITs is their tangible book value (TBV), which is essentially the value of their portfolio. The market turmoil caused AGNC's TBV to fall 5%, or $0.44 per share, to $7.81 at the end of Q2, down from $8.25 per share at the end of Q1. It said it has risen 1% for July after deducting its dividend. Looking at other important metrics in the quarter, AGNC's average net interest spread was 2.01%, compared to 2.69% a year ago and 2.12% in the first quarter. The narrower spread stems from the lessening benefits of its hedges and higher hedge costs. Overall, AGNC generated $0.38 per share in net spread and income from dollar rolls (a hedging strategy equivalent to short-selling but specifically employed in MBS markets to avoid losses when MBS values decline), which it uses to pay out its dividend. It generated a negative 1% economic return on its tangible common equity, with its TBV falling $0.44 per share while it paid out $0.36 per share in dividends during the quarter. AGNC ended the quarter with higher debt, with 7.6 times tangible net book value "at risk" leverage (debt + net receivables or payables for unsettled investment securities outstanding/shareholder equity excluding goodwill). That compares to 7.5 at the end of the first quarter and 7.4 a year ago. The company said it was in a position to deploy capital at a measured pace, but that it has room to increase leverage slightly. During the quarter, it raised $800 million in equity through its ATM (at-the-market) program at a significant premium to its TBV. It had invested less than half the proceeds at quarter-end and will continue to put the money to work. While equity raises are dilutive for companies, when mortgage REITs raise equity above TBV, it actually increases the TBV, so it is a positive. Is AGNC stock a buy? AGNC is still generating enough income to cover its large dividend, and it expects its net spread and dollar roll income to stay in the mid- to high-$0.30 to the low- to mid-$0.40 range, which should help support it. However, for the stock to really work, it needs to see its TBV rally. The Fed seems reluctant to lower interest rates at the moment, although the biggest TBV catalyst for the mREIT would be tighter MBS spreads. Wide spreads can be beneficial to AGNC when it's putting money to work and investing in MBSes, as it can get higher returns. However, it needs the spreads to eventually narrow for the stock to benefit. AGNC said that a high percentage of its mortgage-backed securities is in specified pools with favorable prepayment attributes, so it is not likely to see a lot of refinancing with lower rates. As such, lower rates and spreads would be a big benefit for the stock. With MBS spreads near historical highs, I think risk-tolerant, income-oriented investors can buy the stock at current levels, as I think further TBV downside appears limited. However, the current stock price does appear to somewhat reflect this. Should you buy stock in AGNC Investment Corp. right now? Before you buy stock in AGNC Investment Corp., consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and AGNC Investment Corp. 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 $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% 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 Geoffrey Seiler 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. AGNC Investment: After Another Tough Quarter, Can the Stock Maintain Its Dividend? 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
26-07-2025
- Business
- Yahoo
Despite Some Recent Challenges, This 15%-Yielding Dividend Looks Safe
Key Points AGNC Investment navigated several challenges during the second quarter. The mortgage REIT capitalized on opportunities to grow during the period. The company believes it can continue to pay its monster monthly dividend. 10 stocks we like better than AGNC Investment Corp. › The second quarter got off to a rocky start following the Trump administration's "Liberation Day" tariff announcement in early April. Stocks and other financial assets initially tumbled due to increased uncertainty about how tariffs might impact the economy. However, most financial assets recovered throughout the quarter as the administration ultimately delayed its tariff plan. Agency mortgage-backed securities (MBSes) -- residential mortgage pools protected against default risk by government agencies like -- were the exception as they underperformed. While this negatively impacted AGNC Investment's (NASDAQ: AGNC) results, it did not alter the company's outlook on its 15%-yielding monthly dividend. Navigating a challenging period Interest rate volatility and a sharp negative turn in investor sentiment posed challenges to the mortgage market during the quarter. Those issues weighed on the value of MBS assets. As a result, AGNC Investment reported an economic return of negative 1% in the period, while it posted a comprehensive loss of $0.13 per share. Despite those negative headline numbers, the mortgage REIT navigated the quarter's challenges effectively thanks to its robust risk management and strong liquidity. This allowed AGNC to preserve its portfolio and add assets at attractive levels. Its solid preparation heading into the period allowed the company to sustain its massive monthly dividend despite the volatility. A favorable outlook While the MBS market experienced some turbulence last quarter, it's still an attractive investment market. "We continue to have a favorable outlook for levered and hedged Agency MBS investments," said AGNC Investment CEO Peter Federico in the second-quarter earnings press release. He noted that "mortgage spreads to benchmark rates remain elevated by historical standards and range-bound, an extremely favorable return environment." Further, he remarked that the supply of MBSes is in balance with demand, which should strengthen as anticipated regulatory changes allow banks to increase their MBS investments. AGNC Investment believes these positive market conditions will continue even if the Trump administration makes changes to the status of mortgage agencies Fannie Mae and Freddie Mac. The administration has floated the idea of ending the Federal conservatorship of those entities by taking them public. However, the administration has made it clear that it plans to preserve the pristine credit profile of agency MBSes. AGNC Investment believes this move would be a positive step for the mortgage markets and MBS investments, as it could help lower costs. Meanwhile, despite the recent turbulence in the mortgage market, AGNC continues to earn a high enough return on its MBS investments to cover its cost of capital (its operating costs plus dividend payments). Federico noted on the second-quarter earnings conference call that in the current environment, AGNC is earning a return on equity of around 19%. While that number fluctuates from quarter to quarter, it currently aligns well with its cost of capital, suggesting it can continue to pay its current dividend level. Additionally, the mortgage REIT sold 92.6 million shares of its common stock during the second quarter, raising $799 million in proceeds. It put about half that capital to work in the period by opportunistically investing in MBSes. As it continues to accretively deploy that capital, it will further boost its returns in a way that supports its dividend. AGNC plans to continue seeking accretive opportunities to raise capital and increase its scale, which will help lower its operating costs and therefore, its cost of capital. A higher-risk, high-reward passive income stream AGNC Investment stands out for its massive 15%-yielding monthly dividend, which remains safe even amid recent market turbulence. By seizing opportunities to expand its MBS portfolio during a turbulent period and maintaining its disciplined risk management, AGNC has demonstrated its ability to sustain this high-yield payout. Despite all that, this ultra-high-yield REIT may not be suitable for everyone. It has a higher risk profile that investors must watch closely. However, for those with a higher risk tolerance, it can potentially provide them with a huge reward in the form of its lucrative monthly dividend. Should you buy stock in AGNC Investment Corp. right now? Before you buy stock in AGNC Investment Corp., consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and AGNC Investment Corp. 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 $634,627!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,046,799!* Now, it's worth noting Stock Advisor's total average return is 1,037% — a market-crushing outperformance compared to 182% 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 Matt DiLallo 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. Despite Some Recent Challenges, This 15%-Yielding Dividend Looks Safe 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
23-07-2025
- 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
