John Reese
Validea
Jim Powell
Global Changes & Opportunities Report
Timothy Lutts
Cabot Stock of the Month
John Buckingham
The Prudent Speculator

Annaly: Preferred play on mortgages


Bookmark and Share
by Dr. Marvin Appel, editor Systems & Forecasts

There are a number of mortgage REITs that pay fat dividends. However, there are few preferred stocks in this sector. Annaly preferred A (NLY-A) is one that I recommend.

The annual dividend payout is $1.97/share, which is very attractive in the current rate climate. There are two potential downsides to this stock.  

First, it is callable at any time for $25/share. That means that you should not pay more than that price to purchase the shares.  


The preferred stock has slipped from a peak of $27.00 at the end of February to just $25.60 now (adjusting for the March 30 dividend). If the shares decline below $25/share, I recommend buying as a long-term hold for the dividend.

The other problem with Annaly is one shared by most mortgage REITs: the spread between their borrowing costs and the yield available from mortgage-backed securities of high credit quality is shrinking.  

As a result, mortgage REIT common stocks, including Annaly (NLY), have been reducing their dividends. This does not affect the preferred dividend, but does reduce the margin of safety.  

Fortunately, a review of Annaly’s financial statements reveals that the company’s profi ts of $344 million in 2011 remain far in excess of preferred stock dividends of $17 million (10-K filed with SEC). Annaly preferred A is a buy at $25 per share or lower.

Learn more about this financial newsletter at Dr. Marvin Appel's Systems & Forecasts.

Related articles:

Advertisement
Banner
News Flash

United Natural: A play on Whole Foods
by Mark Skousen, editor Hedge Fund Trader Alert

We’ve recommended Whole Foods Market (WFM) from time to time, and the stock has moved up sharply in the past three years, but I’d like to suggest an alternative -- one of Whole Foods’ primary suppliers, United Natural Foods (UNFI).


Read more...

 

Timing expert eyes India
by Sy Harding, editor Street Smart Report

The money flow and momentum reversals in India's Bombay Index have now been enough to trigger buy signals on intermediate-term indicators. With this new buy signal, we have added a position in the iShares India 50 ETF (INDY) to our portfolio.


Read more...


   

Value investor goes with Guess
by Charles Mizrahi, editor Hidden Values Alert

Guess?, Inc. (GES) is a holding in our special situation portfolio; its strong product quality has created brand name recognition and a loyal consumer following.


Read more...

 

MGAM: Bingo, lotteries, casinos
by Jim Oberweis, Jr., editor The Oberweis Report

Multimedia Games Holding Company (MGAM) makes innovative gaming systems for Native American and commercial casino operators in North America, lottery operators, and charity and commercial bingo operators.


Read more...

 

Fidelity expert: Bowers' bond bets
by Jack Bowers, editor Fidelity Monitor & Insight

If you’ve been worried that the bond market might take a big hit, you can relax. Indeed, while bond funds may lag stock funds over the next 5-10 years, they still have a decent shot at keeping up with inflation, and they remain an excellent way to cut risk in a blended portfolio.


Read more...

 

Tesla: 'Out of the ball park'
by Timothy Lutts. editor Cabot Stock of the Month

Tesla (TSLA), our previously featured Stock of the Month and our top stock pick for 2013, knocked the ball out of the park in its latest quarter. The company exceeded analysts' expectations on all counts: cars sold, revenues, earnings, gross margins and more.


Read more...

 

5 ways to speculate on Cuba
by Jim Powell, editor Global Changes & Opportunities Report

With the death of Hugo Chavez in March, and Venezuela’s economic decline, the heavily subsidized oil lifeline is likely to be cut or sharply reduced. I think the resulting energy squeeze will force Cuba to allow greater foreign trade and investment.


Read more...

 

Big gains in nanotechnology?
by Doug Fabian, editor Making Money Alert

The nanotechnology niche focuses on very small, even microscopic, technology. Nanotech has produced technological developments in medicine (lasers), electronics (ink jet systems) and biomaterials (chemical and bio-detectors).


Read more...

 

Gold: Reasons for continued caution
by Jim Stack, editor Investech Market Analyst

In October 2011, we questioned the run-up in gold prices to $1,895 an ounce and called prices “bubblish”.  We were criticized for not understanding the new paradigm. Nonetheless, the price of gold has fallen significantly, and I feel more comfortable sharing my personal perspective of what lies ahead.


Read more...

 

Buffett's Berkshire is still a buy
by Geoffrey Seiler, editor BullMarket.com

Recommended List selection Berkshire Hathaway (BRK.B) reported a 51% increase in net income for the first quarter, powered by profits from its extensive insurance businesses and strong results from the railroad unit.


Read more...

 



Banner



Close
Select Offer: Schwab Options Market Commentary