A Dividend Reduction Of 15% Is Likely For Annaly

Annaly Capital (NLY) has long been considered one of the safest and most well-run agency mortgage real estate investment trusts (mREITs). However, this may no longer be the case. Annaly has not only paid out lower dividends than other similar mREITs, but has also not shown the book value increases that the others have. Annaly did not aggressively raise its leverage ratio when interest rate spreads were high, and therefore its investors lost out on potential gains. Annaly also recently announced the acquisition of CreXus (CXS). This is a confusing move since CreXus contains a different mix of assets than Annaly. Fellow SA contributor Zvi Bar wrote a nice piece on what Annaly maybe looking for in buying CreXus. Annaly has been consistently underperforming its peers it is sector over the last couple of years. Rivals in the agency mREIT sector include CYS Investments (CYS), Hatteras Financial (HTS)... Read more