NLY - Is Annaly Capital the Best Ultra-High-Yield Stock for You?
2024-07-14 05:44:00 ET
What should investors make of a real estate investment trust (REIT) with a yield over 13%? That's the first hard question you'll face when it comes to Annaly Capital (NYSE: NLY) , and it will likely be followed by an even harder one: Should you buy it?
Your answer will depend heavily on what you are trying to achieve with your portfolio. And somewhat counter-intuitively, if your goal is income, you'll probably conclude that this ultra-high-yield stock is not for you. But that doesn't mean it isn't a good fit for some investors.
Most real estate investment trusts buy physical properties and then lease them to tenants, collecting the rents and using that cash flow to distribute dividends to investors. In fact, REITs were specifically created to allow retail investors to participate in institutional-level property markets. Their business model is, basically, the same one you would use if you owned a rental property. It's just scaled up to large portfolios of apartment buildings, offices, and warehouses, among other property types.
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Is Annaly Capital the Best Ultra-High-Yield Stock for You?