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Annaly Capital Management, Inc. (NLY-PG)
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NLY share price is primarily reflective of it's EPS. Earnings increase over time diividend increase. Earnings decrease over time dividend decrease. It's not complicated.
New to this. New to dividend stocks. That stage of life when growth stocks are no longer sexy but dividends are. :-)
so how does this work? I buy 1000 shares, I get paid $220 per quarter. Is that correct? Are these dividends reinvested or are these dividends cashable? I am looking to live off the dividend income.
sorry for basic questions. insights appreciated.
happy weekend folks.
Now that the Fed Taper Appears Priced In, Mortgage-Backed Securities May Deserve a Second Look
Article publishedBy: Andrew Szczurowski, CFA & Chip Driscoll, CFA Article published on: October 6, 2021
Boston - While spreads have ground tighter this year in almost every sector of the bond market, there is one AAA-rated sector that has bucked the trend and now sits at cheaper levels than in January. We are referring to the second most liquid bond market in the world (behind U.S. Treasurys) — the agency mortgage-backed securities (MBS) market.
For many investors in the agency MBS market, summer 2021 could not end soon enough. Excess returns relative to Treasurys began deteriorating in early May as talk of the Fed potentially tapering its asset purchases picked up steam, causing MBS spreads to widen by more than 20 basis (bps). Meanwhile, spreads across most other high-quality fixed income sectors like investment grade (IG) corporates saw little change, which resulted in a large relative performance gap.
Agency MBS have underperformed IG corporates so far in 2021
We believe that after this summer's underperformance, agency MBS look cheap relative to other high-quality areas of U.S. fixed income, and the sector warrants a second look from bond investors who want to go up in quality and yield at the same time.
Why have MBS spreads been widening?
The prospects of the Federal Reserve slowing its current monthly pace of $40 billion in new MBS purchases has certainly been a headwind for the sector in recent months, as other investors will have to absorb reduced demand from the Fed. Falling long-end Treasury yields often suggest lower mortgage rates and faster prepayment activity, which can also lead to wider MBS spreads.
We feel that the market has exaggerated this second impact in recent months. Yes, rates have fallen since the start of the summer, but the average 30-year mortgage rate is still 20 bps higher than the all-time lows we hit back in February.
We also believe rates are likely to rise this fall as additional Treasury supply comes into the market and the labor market continues to heal. As a result, we don't expect another wave of refinancing activity, which the market seems to be pricing in.
Some might ask, "Why should I invest in agency MBS when the Fed is going to pare back their purchases in the market? Shouldn't I be selling?" We have believed that the Fed would taper their MBS and Treasury purchases by the end of 2021, and now this seems likely to occur at the November FOMC meeting. We would keep in mind that the MBS market — like every market — is forward looking: Events get priced in long before the day they happen.
How did MBS perform during the last taper cycle?
History gives us a good guide into this when we look at the taper tantrum in 2013. Agency MBS spreads actually widened relative to Treasurys well before then-Fed Chair Ben Bernanke mentioned the word "tapering" on May 22. MBS tapering wasn't officially announced until the December FOMC meeting. By the time tapering actually started in early January 2014, MBS spreads had almost completely retraced all their pre-taper widening. Admittedly, history doesn't have to repeat itself, but it often rhymes.
MBS spreads widened long before and actually tightened after Bernanke's announcement
Where does that leave spreads today?
The recent moves in the agency MBS and IG corporate markets have pushed spreads into rare territory. Since 2010, agency MBS spreads have traded on average roughly 6 bps tighter than single-A rated corporate bonds, which might be expected since agency MBS are AAA-rated, government-guaranteed securities.
However, the headwinds we have discussed recently pushed spreads on agency MBS to more than 25 bps wider than single-A rated corporates — a spread differential that has only been breached twice since 2010. And each time, agency MBS went on to outperform single-A corporates over the ensuing 12 months.
Agency MBS have outperformed IG corporates after spreads widened
What would cause agency MBS spreads to tighten?
Many scenarios could cause agency MBS spreads to tighten. We think the most obvious catalyst would be U.S. money managers covering their massive underweight in agency MBS. They have been net sellers of more than $600 billion of agency MBS over the past two years and now sit at their lowest allocation since the beginning of 2016.
Money managers have reallocated away from agency MBS
Many moved into IG corporates for core bond funds over that period, which has worked out well for money managers. But we suspect the ability to go up in yield and quality could prove too compelling for them to pass up going forward.
The second tailwind that could provide a nice boost for the agency MBS market would a backup in Treasury yields. Supply has been running two to three times normal levels on a daily basis — thanks to not only a strong housing market but also near
Seasonality suggests upward bias for NLY, as Nov and Dec have been up months 90% of the time the last five years. Past performance is no guarantee of future success.
Average analyst rating is outperform. Average analyst PT is $8.50 to $9.25. Today is profit taking and debt default fretting. I'm still accumulating shares on pull backs. Thinking about future share appreciation and potential 2022 dividend increase.
Thanking the Piper analyst who downgraded NLY and AGNC, allowing me to buy more at a lower price, at a higher yield. Now waiting for the day when the same analyst upgrades them (which will be my sell signal). Wall Street analysts are notoriously bad at timing.
NLY has been mostly $8.50 all year long.
Will it ever rebound to pre-pandemic levels?
I’m thinking once the FED raises the rates to 2%+ like they was before that may do it.
Hopefully before 2025
Piper Sandler analyst Kevin Barker downgrades Annaly Capital Management (NYSE:NLY) from Overweight to Neutral and lowers the price target from $9 to $8.5.
Nice to see it close at the highest share price of the day.
Buying in July and paying over $9 was certainly a mistake in the short run for me. At the current rate of performance I'll just about break even in one more quarter unless it goes even lower. Hopefully the dividend won't be cut again any time soon in which case this will turn out to be a good long term investment. Win some and lose some.
The share price for this stock follows the dividend. 10% is the magic number. If the dividends goes up, the stock price will follow and vice-versa. If the company is sincere about a stock buyback, then a lower stock price is obvious which means no dividend increase. I don't think a stock buyback will happen anytime soon so the possibility of a dividend increase is possible.
I have owned NLY for about 14 years and have reinvested the dividends , It’s been terrific ., it’s yields are excellent I started with 3000 shares and bought about 3000 more in the open market, now I have over 17400 shares . I would highly recommend it , I have represented many athletes and wouldn’t hesitate to have them accumulate shares, objective isn’t appreciation of share price but rather yield and accumulating more shares by reinvesting its dividends
For the last 5 quarters NLY has made nearly 30 cps (core earningsJ). When will they raise the dividend? What about the 90% reit test?
To everyone who replied regarding my housing, thank you.
I just extended my closing with zillow because I cannot find another home/townhome to buy here in Raleigh. Things have gone up another 10% in 60 days in some spots. I may back out of the whole thing but I did want to move and zillow offered me $100K more than Offerpad.
Zillow and Offerpad both "claim" markets are slowing. Well, it isn't actually the case when you have 1 day to decide on spending $500,000 hard earned dollars. I did find a short-term living situation that is cheap and I can clear my head.
Housing here in Raleigh is still hyperinflationary due to the Apple and Google effect and a few other companies moving in. I have been in my home for 12 years and I can say I sold/gave away most of my things in preparation for my move and now.....
Thank you everyone for your feedback.
Expectation of favorable interest rate environment allows for more "Bingo".
Hello. I'm new and don't usually do this sort of thing. I've inherited my holdings and now need to deal with the business end of things. I guess we have been an owner for quite awhile. Roth, and 401K, and the folio from my family, I have some learning curve to cater to. Be back soon. GLTA Rickie
Looks like the post dividend trauma is over. The yearly chart looks like a continued upward trend to 9 to 9.25 before the next dividend. CALLS the last few days were way too cheap to pass the up.
Dang it….missed buying those $8.50s again. Good money to be made in those weekly calls. From 2 cents to $15 cents. Ouch. Such is life.
Turning off my automatic DRIP. Seeing a pattern here over the past year where my DRIP buys at the higher level. That's not fun.
Feb 18, Annaly celebrates 25 years as a company.
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