Rising Star Buy: Annaly Capital

High unemployment, a dour housing market, overleveraged consumers, and dallying legislators -- what's a Fool have to do to earn a return in this market? I see the answer in Annaly Capital (NYSE: NLY) , which my Special Situations portfolio is buying tomorrow. Annaly can still benefit from this set of ugly circumstances, as the economy returns to normalcy only in fits and starts. And we get to cash the company's 13.8% dividend. The businessAnnaly's business model is focused around the interest rate spread it earns between borrowing short-term money and buying long-term mortgage-backed securities that are guaranteed by the government and collecting the interest on them. Since Annaly is a mortgage REIT, it pays out nearly all of its earnings, and so it has that gaudy dividend you see.... Read more

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