Real estate stocks can see a rush from income-focused investors to real estate stocks because they typically deliver high returns. With this in mind, it may be tempting to stock up on Annaly Capital Management (NYSE:NLY) shares to take advantage of the company’s hefty quarterly distributions.
There’s no question that it’s important to know exactly what these distributions will be. At the same time, investors should consider the size of their positions, as Annaly Capital Management’s share price can be volatile and the company’s quarterly dividends may not be as impressive in the future.
Know Your Own
First and foremost, investors should think about owning shares in companies they really like and understand, rather than simply chasing high dividend yields. After all, when stock prices are volatile, dividends aren’t such a sweet prize.
It’s important to know what you own. Therefore, you should know that Annaly Capital Management is not just a real estate company. It is a mortgage real estate investment trust (REIT), which means it is highly sensitive to complex factors such as mortgage demand, repayment trends, delinquency rates, and interest rate changes.
Annaly Capital Management’s share price has been very volatile so far this year, performing worse than the S&P 500. Therefore, this stock may be at high risk of volatility.
How much is Annaly Capital Management’s dividend?
Annaly Capital Management recently declared a second quarter dividend of $0.65 per share, which will be paid to shareholders of record on June 28th. With Annaly Capital Management’s stock trading at around $20, the annual dividend of $2.60 equates to a projected annual dividend yield of 13%.
Annaly Capital Management reported quarterly GAAP earnings for the first quarter of 2024. However, this is not a guarantee of consistent dividends, as Annaly Capital Management has cut distributions in the past.
Thus, adverse changes in the mortgage market could jeopardize Annaly Capital Management’s future distributions. Volatility can provide opportunities, but it does not guarantee safety to income-seeking Annaly Capital Management shareholders.